Weibo: Huawei, ZTE Chase “Cool”, Xiaomi Chases Apple
Stodgy telecoms giants ZTE (HKEx: 763; Shenzhen: 000063) and Huawei were fighting a heated battle in the microblogging realm to be the “New Cool of School” last week, as each trumpeted niche smartphone brands aimed at copying the success of the ultra-trendy Xiaomi. But the original “King of Cool” had no time for the pair of challengers, and instead hinted at a major new global distribution deal as it chases its own role model, global tech giant Apple (Nasdaq: AAPL). The subtext of all this is that everyone making smartphones ultimately wants to imitate Apple, whose careful cultivation of a premium and trendy image over the years has helped it to stay on top in the fast-changing world of high-tech gadgets for far longer than most companies.
Huawei Vice President Yu Chengdong was blitzing the blogosphere nonstop after his company’s high profile re-launch of its Honor brand smartphones at an event in Beijing. The company formally spun off Honor from its mainstream Huawei-brand phones, taking aim at the same image-conscious young, trendy consumers who have made Xiaomi into China’s King of Cool.
Most of Yu’s microblog posts trumpeted 3 newly launched Honor models, including one costing less than 1,000 yuan ($160). Yu makes no secret of who his main target is, at one point challenging online buyers to compare the new Honor models with comparable ones from Xiaomi. (microblog post)
In an interesting tactical move, Yu even solicits an endorsement from Zhou Hongyi, the founder of controversial security software maker Qihoo 360 (NYSE: QIHU). Zhou has his own contentious relationship with Xiaomi co-founder Jun Lei, so perhaps it’s not too surprising to see him throwing his support behind Huawei and Honor. In one of his own microblog posts, Zhou has special praise for the Honor 3C model costing only 798 yuan, exactly 1 yuan less than Xiaomi’s low-cost Hongmi model rolled out during the summer. (microblog post)
Meantime, ZTE’s Ni Fei was also blitzing the airwaves with his own series of microblog posts hyping his company’s Nubia line of smartphones. ZTE re-launched the brand in China 2 weeks ago, using a major online campaign that looked strikingly similar to the kind used by Xiaomi. (previous post) Unlike Huawei, ZTE’s new Nubia models cost 1,499 yuan and 1,999 yuan, taking aim at Xiaomi’s more mainstream models.
Ni and ZTE Vice President Kan Yulun were both full of praise for themselves for another online promotion that saw the Nubia z5s mini model, which costs 1,499, log orders for 83,000 units in the first 1 minute and 48 seconds of the sale. (microblog post) The posts are purely promotional and not really worth repeating here, but they do show that ZTE and Huawei are suffering from a serious case of Xiaomi envy. Whether or not Honor or Nubia will succeed in copying Xiaomi’s “cool” business model is an open question for now; but if I were betting I’d put the chances for success at less than 30 percent in each case.
While ZTE and Huawei were both squarely focused on China, Xiaomi’s own attention was fixed on the global market as it aims to export its trendy model to the rest of the world. Hints of a new major distribution agreement that could help it achieve that goal were coming from Hugo Barra, the former high-level executive in Google’s (Nasdaq: GOOG) Android division who defected to Xiaomi over the summer.
In one of his microblog posts week, Barra says simply that Xiaomi co-founder Lin Bin has just held a meeting with Marcelo Claure, founder and CEO of Brightstar, one of the world’s top smartphone distributors. (microblog post) The post includes a photo of Lin, Claure and 2 others playing a game of foozball during a break from one of their meetings, with the strong implication that Barra was also present at the meetings and snapped the photo.
One of Lei Jun’s major objectives in hiring Barra was to drive Xiaomi’s global expansion beyond China and Asia. The company currently counts China as its main market, but has also recently expanded into Hong Kong, Taiwan and some Southeast Asian countries. I’ll admit I don’t know much about Brightstar, though its website says it has a presence in 50 countries and is the world’s 58th largest privately owned firm. Look for Xiaomi and Brightstar to ink a distribution deal soon, if they haven’t already, and for some big announcements about the company’s move into new global markets shortly after that.
