May 15, 2018 / 5:24 PM / 9 days ago

Huawei seeks to defend European gains with mid-priced Honor 10 phone

LONDON (Reuters) - China’s Huawei is targeting Europe with a new smartphone that costs half of what premium phones from Samsung and Apple do as it stakes out market share gains in its biggest region outside its home base.

George Zhao, the president of Huawei's Honor line of phones, joins fans of the brand at the launch of China's Huawei's new mid-priced flagship smartphone, the Honor 10, in London, Britain, May 15, 2018. REUTERS/Eric Auchard

Europe is key for Huawei beyond China, because it has been excluded from the lucrative U.S. market based on unspecified national security concerns the government has leveled against Chinese firms Huawei and ZTE.

The new Honor 10, launched in China last month, is being introduced in Western Europe’s five largest national markets on Tuesday, with 21 additional international markets from Asia to Africa to follow.

The new phone, part of the mid-priced Honor line, will retail for 400 pounds (449 euros), it said.

Huawei smartphones have been gaining market share in Europe from regional market leader Samsung of South Korea, even while being forced to fend off rising competition from Chinese rivals like Xiaomi and OnePlus and a revived Nokia phone brand.

“Huawei has had an open goal in Europe,” said Peter Richardson, an analyst with smartphone market research firm Counterpoint Research.

“Now with Xiaomi coming in to the region, Huawei has a big thorn in its side,” he said. The two smartphone vendors are arch-rivals in China as well as fast-growing India.

“Until now it enjoyed a relatively benign competitive environment in Europe, while market leader Samsung has not been very dynamic in the mid-range segment,” he said. Huawei moved into Europe with its Honor line of phones three years ago.

The appeal of Honor, a sub-brand in Huawei’s broader smartphone portfolio aimed at the youth market, is that it packs many of the advanced features of the company’s premium line of Huawei-brand phones at significantly lower cost.

For example, the Honor 10 boasts a dual-lens camera with smart photo-taking features based on artificial intelligence technology it sells in high-end models.

Huawei and Xiaomi have been grabbing share from Samsung in the region’s market for mid-range smartphones as well as from smaller brands such as TCL’s Alcatel, Sony and LG, according to first-quarter data published by market research firm Canalys.

Samsung, which accounts for roughly one-third of Europe’s smartphone shipments, saw its growth decline by 15 percent during the first quarter. Apple, with 22 percent of smartphone shipments, saw growth decline by 5 percent by the same measure.

Huawei captured 16.1 percent of the market as its shipments jumped 39 percent, Canalys said. Newer entrant Xiaomi snatched 5.3 percent of the regional market, while and HMD Global’s revived Nokia phones grabbed 3.5 percent.

Huawei is the world’s No.3 smartphone vendor, with 11 percent of the global market in the first quarter, according to Strategy Analytics. More than one-third of Huawei phone shipments are under its Honor brand, the research firm said.

Reporting by Eric Auchard in London; Editing by Keith Weir

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