Huawei NZ sales fall $29M as focus shifts from volume to value

Huawei NZ sales fall $29M as focus shifts from volume to value

Tech giant targeting higher end of the handset market with a smaller range of phones

Huawei New Zealand recorded sales of $151 million, down $29 million, for the year ended 31 December 2017.

Net profit grew during the year, however, from $4.1 million to $5.7 million as costs also fell.

Services income grew marginally, from $22.3 million to $23.5 million, while both construction revenue and the sale of goods suffered, accounts filed with the Companies Office show.

Huawei New Zealand deputy managing director Andrew Bowater said the decline in sales was neither overly concerning nor surprising, citing three main factors at play.

In the consumer handsets and smartphones business, Huawei changed approach to focus on a longer term brand shift to the higher end of the market.

During the year, Huawei moved away from pushing high volumes of lower end of market handsets and pushed its focus onto around five phones models - P Series, Mate 10 series and Nova - instead of almost 20.

"We believed the time was right to shift our brand position and you can see that reflected in our current campaign for the P20 which we launched with a high profile free concert on Federal St with Sky City as well as the above the line campaign featuring NZ rugby stars Nehe Milner Skudder and Jordie Barrett as well as the Phoenix," Bowater said.

Secondly, Huawei is providing around 30 per cent of the technology for the UFB rollout. The projects it has been involved with are either nearing completion or are fully rolled out.

"We are optimistic with the recent trials of 5G that the future is bright in the New Zealand carrier network market and we expect as those projects and the expansion of the Rural Broadband Initiative take hold the market will grow again," Bowater said.

"It is quite normal in the carrier network industry to have flatter years between the big 4G and 5G types of projects and we remain confident the New Zealand market will push ahead and we are confident the choices we have made with regard to our consumer business will set us up to become a big player in that market longer term."

The third factor was currency shifts. Bowater said Huawei's five-year, $400 million plan to build a cloud data centre based in New Zealand are progressing.

"Our initial main focus has been on the growth of our University partnerships within our Global Huawei innovation and research programme and we continue to talk with potential local partners for the data centre project," he said.

"There has been a lot of interest in that particularly from regional centres which is exciting."

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