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The Platform

Insights from our global team of experts in eMaterials value optimization

Sneak attack: How an outlier smartphone maker becomes a decade-long overnight sensation

By David Mayer, Manager, Solution Design and Business Development

When surveying the market for the latest smartphone, most look to consumer electronics leaders such as Apple and Samsung, not low budget poseur brands. One Chinese manufacturer, however, has set out to shatter preconceptions.

Huawei, the world’s third-largest smartphone manufacturer, is now on a mission to not only compete with Apple and Samsung, but to actually beat these consumer electronics giants at their own game. During a recent industry event in London, Huawei surpassed its two leading rivals, unveiling a high-tech smartphone that features a first-of-a-kind dual-lens camera.

Engineers from Huawei and German optics company Leica Camera, collaborated for nearly a year to develop the technology. The new smartphone, dubbed the Huawei P9, is the company’s new flagship product and the one it says will transform Huawei’s image from cheap-phone maker to a formidable alternative to Apple and Samsung. Huawei is unique in that, unlike other Chinese-based manufacturers, it is pushing upscale, high-ticket products expressly to build its brand cache.

What’s ahead for Huawei

“We want to become No. 1 as a premium brand,” said Richard Yu, Huawei’s consumer electronics chief, in an interview with The Wall Street Journal. He added that Huawei plans to introduce a flagship phone to the U.S. market later in 2016. (While the company is not willing to provide any further details at this time, perhaps they will introduce the P9 to the US market in time for Christmas.)

Last year Huawei outspent Apple in research and development, spending a reported $9.2 billion compared to Apple’s $8.1 billion. But will all this spending make a dent in the finicky, always-label-conscious West?

In fact, it just may. Investments in research and new technology and product development is exactly what put Samsung over the top a little over a decade ago, when, after as many years of determined effort, the company became the world’s dominant and most profitable consumer electronics company, knocking venerable market leader Sony off its longstanding perch.

A unique approach to innovation

In an article published in Fortune magazine in September 2005, author Peter Lewis describes Samsung as a “perpetual crisis machine,” where engineers operate within a “uniquely paranoid culture,” evoking images of only the obsessed succeeding. The bedrock of this success, and the reason for Samsung’s continuous No. 1 ranking atop the consumer electronics world, has been the sheer depth and scale of its technical research. No other tech company — not Intel, not Microsoft, not Sony or Apple — spends a higher percentage of revenue on research and development. In addition to this all-consuming R&D effort, Samsung deployed a unique approach to innovation, called TRIZ.

TRIZ is a Russian acronym for the Theory of Inventive Problem Solving. This approach postulates that there are patterns of innovation common to the evolution of all scientific and technical advances, and that inventiveness and even creativity could be taught just like physics or math. Thousands of Samsung engineers have been trained in TRIZ.

Not surprisingly, Huawei is very much following in the footsteps of Samsung, not only matching its level of R&D spending, but now also in its pursuit of TRIZ. In fact, this past July, at the 2016 TRIZfest held in Beijing, China, the head of technology at Huawei issued a directive that TRIZ must be deployed and fully integrated within all engineering programs at the company. He also mentioned that it’s fully consistent with Marxist-Leninist theory. Ironic, considering Genrikh Altshuller, the creator of TRIZ, was thrown into a gulag by Stalin for suggesting that TRIZ could be useful to the advancement of Soviet society.

Targeting the high-end consumer

On the marketing side, Huawei continues with its efforts to capture a high-tier consumer, sponsoring events such as Milan’s Fall Fashion Week in celebration of Vogue China’s 10th anniversary, where it introduced the new P9 to the upscale audience. In this all-out effort, on both the technology and marketing fronts, Huawei founder and Chief Executive Ren Zhengfei seeks to quintuple the company’s revenue to $100 billion in five years.

Not bad for a company founded (1987) by a former engineer of the People’s Liberation Army. Apple and Samsung better keep a close ear to the ground. …

Featured photo is used under a Creative Commons license. Photographer: Sharon Hahn Darlin

David Mayer

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