HUAWEI Consumer Business Group Announces 2017 Business Results

LAHORE (PRESS RELEASE)

HUAWEI has released its audited financial results for 2017, reporting solid business growth. The company’s total annual revenue was CNY 603.6 billion (USD 92.5 billion based on year-end exchange rates), an increase of 15.7% over 2016. Net profits were CNY 47.5 billion (USD 7.3 billion), an increase of 28.1% year-on-year.

In HUAWEI’s consumer business, the HUAWEI and Honor brands ran full speed ahead, leading to rapid growth in their respective markets. HUAWEI shipped a total of 153 million smartphones (including Honor) in 2017, and reported CNY 237.2 billion (USD 36.4 billion) in annual revenue, up 31.9% year-on-year.

Creating synergy between the HUAWEI and Honor brands

In 2017, our dual HUAWEI and Honor brand strategy took the market by storm. Together, the two brands provide a full portfolio of flagship products. Focusing on innovative features and superior experience, the HUAWEI brand made many breakthroughs in the high-end market, served a wider audience, and worked hard to deliver the best possible end-to-end experience to consumers. Honor delivered stylish new tech, striving to become an online-only mobile brand that stakes a solid claim in the hearts of younger generations. We made the following achievements in 2017:

• HUAWEI’s flagship products, the HUAWEI P and Mate series, were hits among consumers around the world, boosting HUAWEI’s influence in the global high-end market. Overall shipments of the HUAWEI P10 and HUAWEI Mate 9 Series exceeded 20 million units.
• The HUAWEI nova series and Honor’s dual flagship series (the V and digital flagship series) further enhanced their presence, with a striking combination of technology and aesthetics. They became trendsetters among young, fashion-savvy consumers, and were generally well received.
• This was a year of market breakthroughs for the G and Y series, and multiple mid-range Honor models. A solid combination of performance and price competitiveness led to rapid, large-scale growth.
• Brand awareness, recognition, and reputation are growing among global consumers, and our market share has risen rapidly. Some of the major breakthroughs achieved in 2017 include:
• HUAWEI and Honor smartphones together secured more than 10% of the global market share. We are now firmly positioned among the top three phone makers in the world.
• Overall global brand awareness increased from 81% in 2016 to 86% in 2017. Outside of China, brand awareness rose from 64% to 74%.
• The number of consumers considering a HUAWEI device in non-Chinese markets saw a year-on-year increase of 100%, which put HUAWEI among the top three global vendors in this category for the first time.
• Our flagship products remained bestsellers after their launch, which raised the market share of our high-end models priced over USD 500 to over 10%.

HUAWEI’s smart devices have also been well received in regional markets. 2017 highlights include:

• HUAWEI (including Honor) held onto the largest share of the smartphone market in China. We became the most recommended brand in China’s mobile phone industry – a first for a Chinese brand. This award was issued to us by leading brand rating agency, Chnbrand, based on the China Net Promoter Score Index (C-NPS).
• In Europe, HUAWEI smartphones won high acclaim from consumers in countries such as Germany, Finland, Denmark, Spain, and Italy, improving both our market share and reputation. HUAWEI ranked as the second most considered brand in a portion of these countries.
• In Asia Pacific, HUAWEI made new breakthroughs in Japan, Malaysia, and Thailand, where market shares continue to grow. In key countries like Japan, brand consideration doubled.
• In Latin America, the Middle East, and Africa, HUAWEI’s smartphone business grew steadily, with a market share of over 15%. In key countries including the UAE, Saudi Arabia, South Africa, Mexico, and Colombia, HUAWEI ranked in the top three for brand consideration, and the gap between HUAWEI and the top two brands continues to shrink.

Improving experience across the consumer journey

Our Consumer BG focused on improving user experience in 2017 as market share and brand awareness steadily increased. We centered our efforts on product innovation, mobile services, channel transformation, and customer service to continually enhance user experience and reinforce our foundations as a premium global brand.

In product innovation, we focus on the practical needs of consumers and common usage scenarios, using artificial intelligence (AI) to improve product performance and design intelligent phones that truly understand us. In October 2017, we launched the HUAWEI Mate 10 series, a true milestone in the industry. This device is the first major step in our evolution from smartphones to intelligent phones:

• The HUAWEI Mate 10 series comes complete with AI cameras, AI-powered smart battery management, intelligent assistants, and intuitive HiTouch functionality. These functions deliver an experience that is both positive and personal, pushing the boundaries of what traditional smartphones can offer.
• EMUI 8.0 leverages AI technology to reduce Android lag, powering phones that are born fast and stay fast.
• In mobile services, the HUAWEI AppGallery is committed to building a secure and reliable app platform for users, providing a four-layer security check mechanism that helps users defend against app security risks. In 2017, there were 61 billion downloads from the HUAWEI AppGallery, which also offered more than 600 paid apps across 18 categories. In 2017, progress in HUAWEI’s proprietary apps and software services included the following:
• HUAWEI Pay supported more than 66 banks and was available in 20 device models, including smartphones and smart watches. It can be used for public transport in Beijing, Shanghai, Guangzhou, Shenzhen, Suzhou, Wuhan, Guangxi, and many other cities.
• HUAWEI Video, HUAWEI Music, and HUAWEI Reader gained traction among a growing number of consumers.
• Skytone, an overseas data service, was available in over 80 countries and regions. With this service, consumers can access mobile Internet around the world without a SIM card.

With superior mobile services, our user base continues to expand. As of Q4 2017, HUAWEI’s mobile service users surpassed 340 million, with over 30 million in markets outside of China. In retail and channel development, as of December 2017, HUAWEI had more than 45,000 retail stores around the world, a year-on-year increase of about 10%. We continue to focus on a simple, compelling, and inspired high-end experience, doubling down on quality over quantity. Specific developments include:

• Establishing high-end experience stores in Italy, the UAE, Malaysia, Thailand, and many other countries, bringing the total number of experience stores to over 3,000 worldwide, a year-on-year increase of over 200%.
• Transforming channel operations, simplifying channel policies, and optimizing channel structure.
• Delegating more authority to regional sales teams, improving the efficiency of channel operations, and motivating channel partners.

In customer service, we are constantly expanding service coverage to more regions and exploring new forms of service to provide users with a more convenient and personal experience.

• Offline services: As of Q4 2017, the Consumer BG had over 1,400 offline service centers in 105 countries and regions, including nearly 800 HUAWEI-branded service stores. Our stores provide a range of basic repair services. Consumers can visit stores for repair. They can also book appointments, receive home service, or mail in their devices. Value-added services like screen insurance, extended warranties, and trade-ins are also available at our stores.
• Online services: Online customer service is now available in 111 countries and regions in 65 languages. Services are available via hotline, the Internet, social media, email, and various selfservice modules, giving consumers access to more convenient, timely, and efficient support.
• In 2017, HUAWEI accepted 329 consumer requests for local optimization of products and services.

Embracing the future with an open ecosystem

Smartphones are an important point of entry to the intelligent world of the future, and as such, they themselves will evolve from smart to intelligent. Going beyond a personal tool, smartphones will become a natural extension of the human body and provide consumers with AI-powered assistance. Through machine learning and data analytics, intelligent phones will play many roles in everyday life. They will serve as our housekeepers, personal trainers, nurses, drivers, secretaries, and teachers, ultimately providing consumers with more attentive and personal experiences.

In HUAWEI’s Consumer BG, intelligent products and ecosystem innovation are managed in accordance with this vision.

• In 2017, we released the Kirin 970, an AI chipset with a dedicated Neural Network Processing Unit (NPU). This chip powers the HUAWEI Mate 10 series of smartphones, helping break bottlenecks in computing performance and laying the foundation for new potential in human-machine interaction.
• Our Kirin chips are the foundation of the HiAI ecosystem. Built on HUAWEI’s distinct advantages in AI for chips, devices, and the cloud, this ecosystem integrates Kirin chips, the EMUI smart engine, and smart services into an AI mobile computing platform. This platform is open to global developers and partners, giving rise to a new world of intelligent applications.
• To deliver a smart experience in every scenario, HUAWEI is expanding its presence across PCs, tablets, wearables, smart homes, and connected vehicles. Such efforts include the following:
• Shipments of Huawei tablets saw a year-on-year increase of 40% despite an otherwise sluggish market, making HUAWEI one of the world’s top three tablet manufacturers in terms of market share.
• We launched the second generation of our MateBook, and the MateBook X won a series of top awards at CES Asia, including Best PC or Tablet and Best Experience, for its sharp design and powerful performance.

Smart homes will be a key component of an intelligent world. Our Consumer BG is advancing the deployment and operations of the HiLink smart home ecosystem with an eye on three stages of broader ecosystem development.

• The first stage is growing connectivity, during which all devices will be connected.
• The second stage is full connectivity, during which people, devices, and services will be connected in a closed loop.
• The third stage is intelligent connectivity, during which devices will be capable of independent learning and intelligent collaboration across a range of complex application scenarios.

Through the HiLink smart home ecosystem, Huawei has been working closely with more than 80 brands, involving more than 50 product categories. The ecosystem has launched over 300 products together with partners in the smart home, home appliance, real estate, and content service domains.

HUAWEI’s Consumer BG believes that competitiveness begins and ends with consumers. With this in mind, in 2018 we will continue to innovate in core technologies – including AI, AR, and VR – to guide evolution from smart devices to intelligent devices. With end-to-end capabilities that optimize synergy between chips, devices, and the cloud, our ultimate goal is to provide an experience that our consumers have never seen before, and lead the transformation of the smart device industry.