Huawei Stumbled in 2019 as Xiaomi Surged

Posted on March 31, 2020 by Paul Thurrott in Hardware, Mobile, Android with 0 Comments

On track to become the world’s biggest smartphone maker last year, Huawei stumbled badly because of U.S. sanctions and reported its smallest sales increase in three years. By comparison, Xiaomi surged 27 percent in the final quarter of 2019 and says that China has already rebounded from the Coronavirus.

Granted, these reports concern pre-Coronavirus quarters.

“We will need to further adapt to the long-standing restrictions imposed by the Entity List, while also addressing the impact of the ongoing COVID-19 pandemic,” Huawei chairman Liang Hua said. His firm reported a net profit of $8.9 billion in 2019 on revenues of $121.5 billion; that profit represents an increase of just 5.6 percent year-over-year, its smallest gain in three years. The good news? Its smartphone business experienced a 34 percent revenue jump YOY.

But Huawei’s smartphone sales were driven mostly by China, where it commands 38.5 percent of the market, up from 27 percent a year earlier. And sales outside of China were troublesome: Huawei experienced a 13.9 percent decrease in revenue in the Asia-Pacific region while sales in Europe and the Middle East sales grew just 0.7 percent.

Xiaomi, meanwhile, ended 2019 in good shape: The firm posted a net profit of $320 million on revenues of $8 billion in the fourth quarter of 2019, a gain of 27.1 percent and well ahead of analyst expectations. And Xiaomi, unlike Huawei, is surging outside of China. Xiaomi says that MiUI, the version of Android it uses on its smartphones, now has 310 million monthly active users, 109 million of which are in China.

“Despite headwinds from the Sino-U.S. trade war and global economic downturn, Xiaomi stood out in 2019 with a commendable set of results,” Xiaomi founder and CEO Lei Jun said. “While the entire world is still under the dark shadows of COVID-19, we have maintained our keen focus on efficiency to tide over this economic ‘black swan’ with everyone. At Xiaomi, we firmly believe that our long-term business success is underpinned by technological innovations, and to that effect, we plan to invest … as we relentlessly focus on technological innovation and user experience to grow our loyal Mi Fan base.”

According to Xiaomi, China has “fully recovered” from the Coronavirus and the smartphone market is back to 80 to 90 percent of the normal level. That won’t help its Q1 sales, of course, but Xiaomi expects to see a sales recovery by May.

“If we take reference from China’s experience, I think smartphone demand is resilient,” Xiaomi CFO Shou Zi Chew said. “It is a daily necessity in life. I think it will rebound quickly.”

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