Huawei's Smartphone Shaken, IoT Strategy Including Smartwatches Also Faces 'Backlash'

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[Asia Economy Reporter Joselgina] Japan has pointed out that Huawei, the world's largest telecommunications equipment company, has faced a backlash in its Internet of Things (IoT) strategy. This is because the smartphone business, which forms the foundation of the strategy, is itself being shaken due to additional U.S. sanctions.

The Nihon Keizai Shimbun reported on the 24th that Huawei held an online briefing in Japan to promote the performance of two smartphone watches, but the IoT strategy itself is exposed to backlash.

According to market research firm IDC, Huawei's market share in the Japanese smartwatch market in the second quarter (April to June) was 15.6%, ranking second after Apple. However, as the smartphone business falters, it is expected that market share in IoT devices could be taken away by companies like Xiaomi, which emphasize low-price competitiveness.

The smartwatches unveiled at the briefing held by the Japanese branch were the ‘Huawei Watch GT2 Pro’ and ‘Huawei Watch Fit’. They were priced locally at 30,000 yen and 13,800 yen, respectively. The Nihon Keizai Shimbun focused on the enhanced linkage features with Huawei smartphones, allowing users who own Huawei smartphones to transfer photos with a single touch and set them as wallpapers. This is seen as a move to expand the IoT strategy within Japan.

However, the Nihon Keizai Shimbun viewed that Huawei’s smartphone business facing difficulties will inevitably have a negative impact on the overall IoT strategy, including smartwatches.

First, the weakness of the sales network is cited as the foremost issue. According to Euromonitor International, Huawei’s market share in Japan was only 5% as of 2019. Due to U.S. sanctions blocking the use of applications like YouTube and Google, Huawei’s new smartphones are not sold through Japanese mobile carriers.

Additionally, recently enacted supplementary regulations have further burdened Huawei. The additional sanctions, effective from the 15th, prohibit supplying Huawei with products produced using U.S. equipment, software, or design technology without prior approval from the U.S. Department of Commerce. This is a strong measure that effectively halts transactions with third countries following the U.S.

The Nihon Keizai Shimbun pointed out, “If semiconductor inventory runs out, smartphone production will inevitably be hit,” and “In the long term, it may become impossible to offer smartphones even in Japan.” It further predicted, “As the smartphone business falters, market share in IoT devices will also be taken by other Chinese companies.”