Honor is leading the 50 series to move towards the high-end. Can it reproduce the glory of Huawei?

After 2.5 hours of pre-sale, the Honor 50 series has already won the sales champion in the 2.5-3K price range across all online platforms. This shows that Honor still has a certain voice and popularity in the market, and the Honor 50 series is shouldering the mission of truly participating in market competition after Honor's independence.

Since Honor officially separated from Huawei in November last year, most of its models have been out of stock due to US chip sanctions against Huawei. In the first half of 2021, Honor successively released the V40 and V40 Lite Edition, both of which use MediaTek chips, successfully pulling its market share back from the lowest point of 3% to 9.5%.

On June 16, Honor officially launched its high-end digital series Honor 50. With Honor's funding, senior personnel, technology research and development, product development and other aspects relatively stable and orderly, the Honor 50 series is the first product released by the Honor team after it became truly independent. It is its new beginning, and its performance can be said to affect Honor's market trends in the second half of the year.

"Most of the appearance design, chip components, etc. of the V40 series were determined before Honor became independent. Strictly speaking, it is not the first product after Honor was spun off." A person close to Honor products told reporters, "The Honor 50 series was determined to be the first to use Qualcomm Snapdragon 778 chips before its release, which to a large extent shows that Honor and Huawei have been completely separated in the supply chain."

In addition, from the Honor 50 series, we can also get a glimpse of Honor’s information about the positioning of future products, development goals, and supply chain construction.

Impacting the high-end market and directly challenging Apple

After the Honor 50 series launch conference, Honor CEO Zhao Ming accepted interviews from media including Jiwei.com. He talked about how Huawei’s shipments had dropped sharply due to sanctions, and the vacated market was mainly seized by Apple’s rapid return.

"Honor must break into the high-end market, which means that Honor will compete directly with Apple in the future. Therefore, Honor needs to create products that are comparable to or even exceed Apple in terms of product performance and experience," said Zhao Ming.

In Zhao Ming's strategic planning speech released on March 31, 2021, he stated that the Honor 50 digital series and Magic series will be Honor's high-end and flagship products. Zhao Ming believes that the latter will have hardware design and experience that surpass the Mate and P series, which means that Honor will surpass Huawei's high-end and flagship series at the product level, "usurp" Huawei, and directly compete with Apple in the high-end mobile phone field.

Liang Bin (pseudonym), a person familiar with Honor, told reporters: "After Honor separated from Huawei, it took nearly half a year to reorganize and sort out its supply chain. It not only had to reposition its products, but also had to clarify its market strategy and goals. In addition, its products were also produced in a race against time under the premise of lagging behind its competitors in the market."

"Honor's goal is very clear, which is to capture the remaining high-end users of Huawei's Mate and P series. Successfully snatching these users from Huawei will be Honor's most important task. Of course, this requires good products to speak for themselves. The Honor digital series and Honor Magic series shoulder this responsibility." Liang Bin said.

At the Honor 50 series launch conference on June 16, Zhao Ming publicly disclosed the development plan of Honor products for the first time. He divided the Honor brand into three series, namely Magic series, Digital series, and X series, and the Play series will become Honor's online sub-brand, indicating that the previous V series will be eliminated from history.

In April this year, Zhao Ming said in an interview: "From a strategic point of view, Honor is preparing for a comprehensive rise in the high-end market by mid-year." The Magic series is Honor's sword to move towards high-end flagships.

As Huawei's shipments have dropped significantly, domestic mobile phone manufacturers including Xiaomi, OV and others are also vying for the market vacated by Huawei. In the 2021Q1 global smartphone shipment data released by IDC, Huawei and Honor have fallen out of the top five and are classified as "Others". On the other hand, Xiaomi, OV, Apple and Samsung have all seen their market shares increase to varying degrees.

According to IDC's specific data, Honor shipped about 4.07 million units in Q1 2021, a year-on-year decrease of nearly 68%, accounting for only about 0.9% of the global Q1 mobile phone market shipment share, less than 1%. It should be noted that in Q1 2020, Honor shipped about 12.92 million units, accounting for about 3.6% of the global market share at the time. Combined with Huawei's shipments, it accounted for 13.7% of the global market.

In terms of the domestic mobile phone market share, Honor’s market share once peaked at 16.7%, then fell to its lowest point of 3%, and has now risen to 9.5%.

According to Honor's previously disclosed product roadmap for 2021, the second half of the year will be the time for Honor to officially attack the high-end flagship, and Honor 50 will be the beginning of this battle. Honor Magic is believed to be the protagonist in the impact on the high-end.

Of course, the impact on the high-end market cannot be achieved by just talking, but by products. Yan Feng, a person in the smartphone industry chain, said: "High-end mobile phones are not only generally priced higher, but also determined by their consumer groups. Only when this mobile phone is recognized by high-spending groups can it gain a firm foothold in the high-end market."

In the past, under Huawei, Honor was positioned as an Internet mobile phone brand, and its direct competitors would be Xiaomi, Redmi, etc. It seems a bit difficult to quickly enhance the brand effect after being independent for half a year.

"Nowadays, to see whether a mobile phone product is high-end, in addition to looking at the hardware configuration, we also need to work hard on the experience of the software and hardware collaborative ecosystem. These all require strong technology and ecology as support. Simply put, it is the construction of product experience and ecosystem." Yan Feng believes.

In the past, Honor relied on Huawei to share advantageous resources such as technology, supply chain, and brand. Without Huawei's protection, Honor will lose Huawei's halo and become independent. Some people are worried that Honor without Kirin chips will lose its own characteristics if it adopts Qualcomm and MediaTek chips, and will be unable to differentiate itself from other Android manufacturers. After all, Honor's functional selling points based on Huawei's chips are unmatched by other competitors.

Honor, which has already fully switched to Qualcomm Snapdragon and MediaTek Dimensity chip platforms, will continue to differentiate its products in the first step. "Interaction may be a relatively easy breakthrough point. After all, Honor's previous multi-screen collaborative interaction function on its own mobile phones and other smart products was built on Huawei's software and hardware system. If Honor can extend and supplement this function well, it will be of great help in improving the stickiness of existing Honor mobile phones or other smart terminal products." Yan Feng said.

Compared with other mobile phone brands, Honor's core R&D team has inherited Huawei's technology, but it is still unrealistic to rely on this advantage to make its products successful in the high-end market. After all, with all major manufacturers using the same chip platform, Honor's core technology selling point still needs time to be tempered.

Opportunities for domestic supply chains

Obviously, in Honor's script, in addition to snatching away Huawei's retained high-end users, it also has to fully return to the entry-level, mid-range, and mid-to-high-end markets, and restore or even surpass its former 16.7% domestic market share.

It is worth noting that Zhao Ming stated at the press conference that Honor 50 will be sold in more than 40 countries around the world, so the market it is targeting is not just China, but a global operation.

Undoubtedly, in today's mobile phone market, the Matthew effect is intensifying. In the future, there will only be two or three companies left in the entire mobile phone market, and Honor has the strength to become one of the few remaining mobile phone players.

On May 21, Honor CEO Zhao Ming stated at the "2021 Qualcomm Technology and Cooperation Summit" that since Honor became independent on November 17, 2020, Qualcomm has been one of the first manufacturers to quickly complete the supply certification for Honor and sign a comprehensive supply agreement. Honor's chip supply will be fully restored from June.

As leading supply chain manufacturers such as Qualcomm and MediaTek fully advance their cooperation with Honor, the supply chain system for components other than mobile phone main chips will gradually be established. "The leading chip manufacturers still have a strong driving effect, and other small and medium-sized suppliers can also feel more at ease doing business with Honor," Yan Feng added.

According to Zhao Ming, Honor R&D personnel spent five months to complete the debugging and integration of various aspects of the Snapdragon 778G chip platform, from the signing of the agreement between the two parties to obtaining chip-related information. Although the R&D team obtained chip information 45 days later than the industry, they developed the Honor 50 series 30 days ahead of their competitors.

"It is impossible to reduce the workload. They have no holidays since the first day they received the chips," Zhao Ming said.

Zhao Ming said in an interview earlier that some major international supply chain manufacturers, including AMD, Intel, Micron, Samsung, Qualcomm, Microsoft, MTK and other manufacturers will gradually resume cooperation with Honor in June.