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How phone manufacturer Honor plans to become a top-three mobile brand

Never heard of Honor phones? That may not last long — here’s how the brand has carved a disruptive path in the marketplace.

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President of Honor, George Zhao unveils two new Honor products; Honor 7X a full view screen display handset and Honor V10, a new artificial intelligence handset, at the global launch event on December 5, 2017 in London, England.
Joe Maher/Getty Images

2017 was a challenging year for many smartphone manufacturers. The smartphone market continued to grow, but at a slower rate. According to IDC, the worldwide smartphone market would reach a total of 1.5 billion units shipped in 2017, up 1.7 percent from 2016. And market consolidation also continued. In mid-2014, the top five mobile brands accounted for less than 50 percent of market share. This year, their share exceeded 60 percent. In this tough environment, Honor recently announced a goal to be a top-three global mobile brand in five years.

In an open letter to its employees, Honor president George Zhao unveiled the strategy and rationale behind this aggressive plan. While some mobile brands were struggling, Honor had another record year in 2017. According to Sino Market Research, Honor had topped the online smartphone market in China, in both sales volume and revenue between January and November 2017. Honor is also the number one and a top-three mobile player in Finland and Russia, respectively. Its flagship Honor X series marked a 40 million unit sales milestone last month. The latest smartphones generated over $600 million sales on Singles’ Day in China and achieved three-digit growth on Black Friday across the United States and Europe.

Joe Maher/Getty Images

How did Honor go from startup to major player? It focused in on an Internet-powered model.

Honor attributes its success to its simple (though not necessarily easily executed) strategy: Offer smartphones with the latest premium features at an unmatched price point, excite customers with cool designs, and communicate with them directly.

A fast and successful global expansion is critical to Honor in the next five years. For smaller players, a quick-win strategy is to sell low-price products to gain market awareness and share, often sacrificing brand value, quality, and long-term trust. On the other hand, established players use a calculated, longer-term tactic to build their brands while sacrificing growth.

Honor dares to choose a different way. A startup in China only four years ago, it was the new kid on the block when it came to conquering overseas markets. Since then, Honor has leveraged an asset-light, Internet-powered business model and focused on innovation, quality, and services. More importantly, Honor focused on young people, understanding their needs and winning their trust through technologies, cool experiences, and the new digital lifestyle. For example, to impress and satisfy young users and earn better reviews, Honor works closely with laboratories, supply chains, and industry partners to create new and innovative products.

Out of those resulting tests came Honor’s new focus on gaming: Honor builds its products as ultimate gaming devices, since they’ve become primary gaming platforms for younger generations. Honor has worked closely with game developers like Gameloft to optimize mobile games and create special packages for its phones. That unique strategy has won new customers’ support and purchase intent.

Honor’s dual-brand strategy maximizes results.

The dual Huawei and Honor brand strategy plays an important role in making the latest technologies affordable and accessible. It allows Honor to tap into Huawei’s rich resources, talent pools, and new technologies. By focusing on young generations, Honor’s clear differentiation in the marketplace — phones for the next generation — ensures the success of both brands. Moreover, Honor leveraged the Internet to connect with people directly, avoiding expensive marketing platforms like billboards and TV commercials. The savings was put back in product development, enabling Honor to offer phones with unmatched technologies and affordability.

The Honor 7X.

From the Honor 7 and Honor 5X with metallic chassis and fingerprint sensors to Honor 8 with premium 3D glass design to the Honor 6X with dual-lens cameras, Honor always tried to be the first to bring latest premium smartphone features to the mainstream market. In 2017, the latest Honor 7X offers a bezel-less full screen at a very affordable price point, while Honor View 10 incorporates artificial intelligence that few phones can match. And there’s a lot more to be expected in 2018.

Honor’s next move? To explore uncharted waters.

Honor’s motto is “For the Brave.” Honor put forward its goal to become the world’s third-largest smartphone manufacturer at a press conference held in London in December. “Currently, Honor’s overseas business contributes 15 percent of our total revenue. I expect China and foreign markets to contribute equally on revenue by 2020, and overseas business to surpass China by 2022,” George Zhao, the president of Honor, said. “Our passionate and dedicated people is the driver of this ambitious strategy. 2018 is a crucial year, and we are confident to mark another milestone to realize our vision.”

Read the letter from Zhao at Honor’s website and learn more about the Honor line of smartphones.

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