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(ITU) (Yonhap Interview) Huawei official says Samsung's struggle no surprise

2014/10/22 11:53

By Kim Eun-jung

BUSAN, Oct. 22 (Yonhap) - South Korean tech giant Samsung Electronics Co.'s faltering smartphone business in face of tougher global competition is no surprise because that's the nature of the fast-changing mobile industry, said a senior official at Huawei Technologies Co., the local company's rising Chinese handset rival.

Wen Tong, vice president of Huawei Canada R&D Center, made the remark as Samsung Electronics, the world's largest handset maker, has come under growing pressure from the rise of Chinese gadgets in the lower end, while being outclassed by Apple's iPhones in the high-end market.

Samsung Electronics is heading for its first annual earnings drop since 2011 after it earlier this month revealed its third-quarter profit would be the lowest in more than three years due to declining sales in smartphones.

"This is totally not surprising because the king of the phone already disappeared, and there are some new players that rise up and disappear again, so industry is like this," Tong told Yonhap News Agency during Tuesday's interview held on the sidelines of the International Telecommunications Union (ITU) conference underway in Busan.

A subway bulletin board commercial presents X3, the latest smartphone model of Huawei Technologies Co., China's No. 2 telecom equipment producer. (Yonhap file photo)   A subway bulletin board commercial presents X3, the latest smartphone model of Huawei Technologies Co., China's No. 2 telecom equipment producer. (Yonhap file photo)

The Huawei fellow was referring to Nokia, which had previously held the crown for 14 consecutive years. The Finnish company last year sold its mobile phone unit to U.S. tech giant Microsoft for almost $8 billion, taking a bitter blow from the rise of iPhones and Android phones over the past decade.

"It is almost difficult or not possible to stay at the top position for a very long time because of changes in the consumer side and the technology innovation," Tong said.

Tong said his company could fast grow to the No. 2 Chinese telecoms equipment provider by making products that end users love under the "customer-centric innovation" strategy.

"We have focused on smartphones with unique features in terms of phone design and hardware capabilities," Tong said. "That's where the growth and rapid advance for the company is really based on."

   As part of the global outreach effort, Huawei last month announced its plan to tap into the South Korean smartphone market with its latest X3 model.

Despite the limited supply and lower brand image, Huawei's move into South Korea was considered a potential threat for Samsung Electronics because its mainstay mobile business has been losing market share in recent months.

Tong said Huawei will target the Korean market with quality products considering the high number of tech-savvy consumers.

"The Korean mobile and telecommunication market is innovative and leading adopting new technology," Tong said.

Developing smartphones based on Android phones provides user-friendly platforms, but at the same time, it poses challenges of competing with other phones running on the same platform, he said.

Tong said Huawei's long-term goal is to develop a "pipe business," which would connect all different wireless devices through the advanced mobile network, to thrive in the competitive business environment.

For that goal, the Chinese company has been making efforts to develop the fifth-generation network jointly with research institutes and universities. In November, Huawei said it will spend $600 million on R&D on 5G technology in the next five years.

China, which introduced the 4G LTE service in December 2013, moved into the world's No. 2 position in LTE smartphone sales as of the second quarter. The Asian giant has the world's largest mobile phone market by subscribers with about 1.27 billion users as of August, according to data from the country's three telecommunications operators.

Tong stressed the importance of having a standardized network solution to develop new products in a more efficient, simple way.

"When five or six years ago, our customers had multiple networks, 2G, 3G, even 4G coming. So there was a lot of burden to maintain all these parallel networks," he said. "Huawei innovation is to have a very simple one solution to deal with many generations that simplifies the customer investment and makes easier operation and migration of the network."

   ejkim@yna.co.kr

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