Can Huawei go it alone?

Will the US backed tech war put the brakes on the world’s second biggest phone company?

Walnut’s latest look at the smartphone market comes at a time of global turmoil for Huawei. On the product side they have an impressive range of smartphones, with their latest flagship P30 Pro getting rave reviews – Tech Advisor going as far as to say they are taking smartphone photography to a new level.

Huawei’s reputation however is proving tough to uphold, with ongoing negative headlines over their involvement in the 5G telecom infrastructure and Google withholding services from future Huawei launches, meaning a restricted Android system and potential loss of key apps like Maps and YouTube.

So now is a crucial time to keep an eye on consumer attitudes to the Big 3 smartphone brands as they react to restrictions of one of the market dominators. Are these headlines having an impact on Joe (and Jo) Public?

Huawei now up to third (from fourth) for brand consideration

We surveyed 2,000 mobile phone owners1 just before Google’s big announcement (May 20) so we can put a marker down for the last days of the ‘pre-Google split’ era. We’ll revisit public sentiment in a few months to see if opinions have changed.

Huawei will be relieved that consideration of their brand has remained stable over the past 7 months at 17% – it seems any negativity from the 5G network infrastructure media coverage has failed to resonate – and been offset by the positive reputation created by their head turning smartphone products.

There are several ways to look at this:

1. When we’re in that emotional moment of purchase we focus in on the exciting stuff like a good camera, easy functionality and look & feel rather than ‘macro reputational issues’ and anything Donald Trump has said…
2. The media stories were about technology, that’s niche, most people would have zoned out when the phrase ‘telecoms infrastructure’ was mentioned.
3. If you did make an effort to listen to or read the media stories, you may have concluded that they weren’t personally relevant as they were not about smartphone security, but instead such high-level issues as state security and possible cyber-crime.

In fact, while Huawei have maintained their brand consideration levels, they actually moved up the brand consideration scale into third place in part thanks to Sony’s gradual decline from 19% in Oct 2018 to 15% in May 2019.

The Google – Huawei split announcement: who benefits?

Perhaps now focusing more on Android competitors in the rear-view mirror, Samsung are the most likely beneficiaries. The split is a potentially huge brake on Huawei’s continuing rise and may mean they accelerate their plans to create their own operating system (OS) to replace Android, a move Huawei did anticipate. Behavioural economics does however tell us that:

• People are inclined to stick with what they know – unless the evidence to change is compelling and hints that they will lose out by not changing (status quo bias).
• We tend to develop a preference for things merely because we are familiar with them (familiarity bias). If however a new Huawei OS looked and felt similar to Android, this bias would be minimised.
• We go to greater lengths to avoid losses than we take risks to obtain gains (loss aversion). Sales staff could be particularly effective in playing on this fear, if recommending other Android brands.

Therefore asking people to move OS away from Android to something that is unproven and unknown is not usually a recipe for success – especially if the past is anything to go by (Windows Phone, anyone?).

Brand trust

Samsung leads the way on being trustworthy

Looking at how owners think about their own phone brand, despite the quasi-religious levels of Apple loyalty, this doesn’t translate into devotional levels of trust for iPhone over and above competitors, with Samsung more than matching them.

What is interesting to see is that Huawei owners don’t have the same degree of trust in their handset brand than their big rivals. For a less well-established brand, this is not a surprise. What will be really interesting though will be to see if this starts to decline over the next 6-12 months if the Google split is maintained.

Huawei phones seen to be worth the money

It’s also quite evident that iPhone owners know they are paying top dollar for the Apple experience; how low can the worth the money metric fall without impacting levels of switching? One for Apple to monitor.

Huawei users have a clear delight with the experience they have purchased at this point in time, likely based on the phone’s hardware; and if Google stick to their promise and continue to support current Huawei devices with app and Android software updates then today’s owners will be OK – but what of tomorrow’s?

They’re equally innovative & cutting edge

One thing that’s agreed on equally is that my brand is innovative & cutting edge. A new OS for Huawei would give them a point of difference over Samsung and another chance to leap ahead, but it’s a very risky path to navigate, unless it can match Android on user experience, but what of app availability?

Huawei’s brand story: can they go it alone?

Huawei have a big task on their hands to steady the ship in these turbulent times, and they need to simultaneously build the brand story and reassure existing customers over the viability and life span of their current handsets and, if it comes to pass, their new bespoke OS.

Their rivals will be looking to capitalise, so maybe now is the time to use the current spotlight to communicate this story?

How Walnut can help

Walnut have a team of telecoms and retail sector experts who are adept at helping clients understand true customer needs and purchase drivers, identifying ‘white space’ to evolve brand positioning in crowded markets and employing cutting edge techniques such as our industry leading neuroscience practise to get to the heart (or brain) of what customers really think. That’s what makes us the human understanding agency.