• See Pestle and Swot Analysis of Huawei 2018

• See Huawei Porters Five Forces Analysis 2018

5.0 Huawei China BCG Matrix 2018

Huawei has four major strategic business units (SBU’s) namely; the Carriers SBU, Consumer SBU, Enterprise and the Cloud services. In 2017, Huawei’s revenue grew at a CAPR of 26% from $75,103million in 2016 to $92,549million in 2017 with a $7,276million net profit (Huawei Annual Report 2017).    

5.1 Huawei Stars

Huawei’s consumer strategic business unit, spearheaded by the smartphone segment is categorized as a star because of its rapid growth. The consumer business unit had total revenue of 237,249million Yuan, a 31.9% year on year increase (from 2016) contributing 39.3% to Huawei’s total annual revenue. Its growth is attributed to the increase in smartphone sales, induced by the release of Huawei Mate 10 in 2017, the first smartphone at the time with an embedded artificial intelligence chipset. Huawei has a 23% market share in China’s smartphone market and given its fast-growing smartphone market share, it should further invest in the consumer business unit to help it break the US smartphone market. While tis will not be easy due to political tensions, it will enable Huawei improve its global smartphone market share and revenues thus developing this star into a cash cow (Wang 2017).

5.2 Huawei Cash cows

Huawei’s Carriers, a strategic business unit that sells network equipment to mobile carriers has been operating as a cash cow for Huawei for several years since it is highly profitable and has achieved consistently high revenues. According to the 2017 annual report, Huawei’s Carrier SBU had 297,838million Yuan in revenue, a 2.5% increase from 2016 revenue, accounting for 49.3% of Huawei’s total annual revenue (Annual Report 2017). However due to slow growth in Carrier business markets across major markets, this business unit does not need further huge investments to maintain the high revenues but rather, Huawei can invest in other businesses units such as the consumers business unit and enterprises, to attain bigger market shares and revenues (cash cows) to support other strategic business units (Statista 2018).  

5.3 Huawei Question marks

Huawei’s enterprise business unit can be categorized as a question mark for the Chinese group because of its uncertain growth. Although the business unit has shown rapid growth over the years, it has failed to raise significant revenues for Huawei. In 2017, the enterprise business unit had total revenues of 54,948million Yuan, and while it experienced a 35.1% year on year growth (from 2016), it only contributed 9.1% to Huawei’s total annual group revenue. However, given the high growth opportunities in this segment such as data centers, artificial intelligence and Internet of Things (IoT) a market expected to grow at a CAGR of 26.9% from US$170.57billion in 2017 to US$561.04billion in 2022, Huawei should invest in its enterprise business unit to turn it into a potential star and future cash cow with solid revenues to fund other business units (PR Newswire 2018). 

5.4 Huawei Dogs

Huawei’s cloud services business unit is relatively new and classified as a dog in Huawei portfolio of SBUs because its growth is unpredictable. Even though Huawei has invested heavily in the unit to enable its growth, the cloud services SBU has failed to return significant revenue. Nevertheless, the cloud computing market is expected to grow rapidly over the next years driven by demand for big data, so Huawei should continue investing in this unit. Huawei launched three data centers in Hongkong to serve as infrastructure for its cloud services business in the international market so this may be a sign the company is determined to press on with this unit despite low growth and market share (Tao 2018).

References

Annual Report (2017) “Huawei investment & Holding Co., Ltd” [Online] at http://www-file.huawei.com/-/media/CORPORATE/PDF/annual-report/annual_report2017_en.pdf?la=en [Accessed on 15^th June 2018]

Arabian gazette (2017) “Global smart phone trends 2017” Nexis.com [Accessed 31 Jan 2018].

Auchard., and Jiang, S. (2017) “Huawei aims to challenge Apple and Samsung on technology as well as price” Reuters [Online] at https://www.reuters.com/article/us-smartphone-huawei-tech/huawei-aims-to-challenge-apple-and-samsung-on-technology-as-well-as-price-idUSKBN1CL1SQ [Accessed 31 Jan 2018]

Auchard, Eric (2017) “China’s Huawei enters PC market to take on Lenovo, HP, Dell” Reuters [Online] at https://www.reuters.com/article/us-huawei-tech-computers-idUSKBN18J1ST [Accessed on 23rd.5.2018]

PR Newswire (2018) “The Internet of Things (IoT) market is expected to grow from USD 170.57billion in 2017 to USD 561.04billion by 2022, at a Compound Annual Growth Rate (CAGR) of 26.9%” [Online] at https://www.prnewswire.com/news-releases/the-internet-of-things-iot-market-is-expected-to-grow-from-usd-17057-billion-in-2017-to-usd-56104-billion-by-2022-at-a-compound-annual-growth-rate-cagr-of-269-300585814.html [Accessed on 15th June 2018].