Only the strongest in the smartphone sector can dodge consolidation

The harsh economics and massive investments needed to remain competitive in the smartphone market will result in consolidation of companies, according to Consumer Chief of China’s Huawei Technologies.

“In the future, only three to four vendors can survive, maybe only less than four,” Richard Yu told reporters at of the Mobile World Congress (MWC), as reported by Reuters.

In the longer term, only a few firms will make enough money to survive, he added, with those with less than 10 percent market share losing money.

“If your market share is less than 10 percent you cannot be profitable. Over at 10 percent, at least, you can break even (and) over 15 percent you can make money,” Yu said.

Some smaller Chinese vendors are already consolidating, and will eventually disappear, due to a lack of resources and investment in research and development, marketing, and branding, added Yu.

After Samsung and Apple, Huawei is the world’s third-largest smartphone maker, with a 10.2 percent market share in the fourth quarter, according to market surveys from IDC and Strategy Analytics.

At the MWC, Huawei launched a new notebook PC and two Android tablets.

According to Yu, Huawei’s smartphone business grew by around 30 percent in 2017 and is expected to flourish further this year. The company has already seen steady growth in January and February so far.

Yu thinks that Huawei could become the second largest smartphone maker in the world, and eventually the largest.

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