PCs: Huawei Rolls Out Notebook PC, Eyes Lenovo

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Bottom line: Huawei’s debut notebook PC will get mixed reviews and so-so sales due to its lack of experience, but future models will rapidly improve and propel the company to one of the world’s top 5 brands in the next 2-3 years.

Huawei rolls out MateBook PC

Fast-rising smartphone maker Huawei has formally rolled out its first PC model, and is saying quite boldly that its ultimately target in this new product area is struggling hometown rival Lenovo (HKEx: 992). The move comes a month after media first reported that Huawei would enter the stagnating PC space, where traditional desktop models are rapidly disappearing and even growth for portable notebook models is slowing sharply. (previous post)

The move isn’t a huge surprise, since lines are rapidly blurring between traditional notebook PCs and a newer generation of portable devices led by smartphones. Many large-screen smartphones, often called phablets, and tablet PCs are nearly as large as notebooks and have similar functions. Likewise, a growing number of notebook PCs now have detachable screens that can be used like a tablet PC.

Huawei’s first attempt in notebook PCs is one such a detachable-screen model, the MateBook, which the company debuted at the world’s biggest telecoms show taking place this week in Spain. I’m personally not convinced that this kind of 2-in-1 computer is the wave of the future, since tablet PCs are quickly losing favor to smaller, large-screen phablets and smartphones that fit more easily into a pocket or handbag.

Still, the move represents a natural expansion into the market for larger computing devices that Huawei should be making to offer a more complete product line. The move will pose a direct challenge to Lenovo, which is the world’s top PC maker but is struggling to move into the market for smaller devices like smartphones.

Richard Yu, who has led Huawei’s recent surge into smartphones, was strongly implying that Lenovo is the main target of his new campaign into PCs, saying in interviews that his aim is to become the world’s top notebook brand. (Chinese article) Yu’s lofty target didn’t have a time frame, though he has previously said that he aims to make Huawei the world’s top smartphone brand within 5 years.

Competitive Prices

All that said, let’s look at the specifics behind Huawei’s notebook PC debut, which will sell for $699 to $1,599 in the US, and 799 euros to 1,799 euros in Europe. (English article; Chinese article) The relatively low pricing, especially in the US, show that Huawei will aggressively promote these new models in both markets that are now dominated by Lenovo, alongside US giants HP Inc (NYSE: HPQ) and Dell.

Apart from the detachable screen, the new PCs are also notable for using the Windows operating system (OS), even though most Huawei smartphones use Google’s (Nasdaq: GOOG) free Android OS. Huawei also says the MateBook can operate for up to 10 hours on a single charge, which would be quite a bit more than most models now on the market.

Huawei’s older smartphone business struggled for several years before it finally began to gain major momentum last year, propelling the company to the world’s third largest brand in the fourth quarter. (previous post) I attributed the sudden success largely to marketing, since Huawei has always been a strong product developer but lacked the sales experience and channels for consumer devices.

In this latest case, notebook PCs are a completely new area for Huawei and thus the company will probably need at least 2-3 generations of models before it finds the right formula for success. I suspect this new MateBook will get mixed reviews, and will achieve so-so sales due to the fading popularity of tablet PCs that I previously mentioned. But I do think the company should make major advances with each new model, and it should easily be able to become one of the world’s top 5 brands in the next 2-3 years.

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