Editor’s note: Huawei, like Lenovo born in China, is emerging as a new threat in the world’s PC business where Lenovo leads or shares the top spot with HP. Huawei is expanding its high-tech footprint with a push into personal computers, and Technology Business Research sees the firm as a “potent competitor.”

HAMPTON, N.H. – Having monitored the PC market for several years, Huawei will leverage the recent recovery and improved long-term prognosis of the global PC market to make an all-in push into PCs.

On June 8 Wan Biao, chief operating officer of Huawei’s consumer business group, stated Huawei will become the No. 1 PC vendor globally in five years.

[VIDEO: Watch an overview of Huawei at https://www.youtube.com/watch?v=RNrTTeTBStE ]

[MORE COVERAGE: Highlights of Huawei’s recent tech event in Europe at http://www.huawei.com/en/events/hid-europe2017?utm_medium=sm&utm_source=youtube&utm_campaign=hid ]

The announcement is emblematic of the company’s typically bold attitude and highlights its strengths.

• Strong cash position:

Huawei has nearly $19 billion in cash on hand, according to its 2016 annual report.

• Huge installed bases:

With nearly 140 million smartphones and over 670,000 x86 servers shipped in 2016, Huawei’s installed base serves up a massive number of potential PC customers, especially in APAC and EMEA.

• Global sales reach:

Huawei operates and manages more than 40,000 retail outlets across 170 countries.

Large operator and service provider customer bases create sales channels for devices.

• Substantial, well-funded R&D workforce: o In 2016 approximately 80,000 employees — about 45% of Huawei’s total workforce — were engaged in R&D.

Each year Huawei typically invests 10% or more of its overall annual revenue in R&D

Huawei’s opportunity and strategy

Success in the smartphone market — the number of smartphones shipped by the company in calendar 2016 was up almost 30% year-to-year, to 140 million, trailing only Samsung and Apple — has transformed Huawei into a consumer device powerhouse, and Huawei is fixated on extending its consumer brand into adjacent markets.

Huawei has likely been waiting for an opportunity in the PC market to present itself, whether through shifts in consumer PC market pricing and form-factor trends, partnerships and alliances with OEMs, or vendors exiting the market. TBR believes recent recovery in the PC segment globally from late calendar 2016 into mid-2017 and the segment’s improved long-term prognosis were the likely catalysts for Huawei’s all-in push into PCs.

TBR believes Huawei’s PC business strategy will mirror the multistage approach Huawei employed in its smartphone business: explore, land and then expand.

• Explore:

The company seeks to expand its ecosystem of devices sold to its massive global consumer addressable market and mine new (to Huawei) device markets for revenue and profits.

In its 2016 annual report, the company reported its consumer revenue grew more than 35% year-to-year to $27 billion, or 34.5% of its total revenue in 2016. Expanding into the PC market will help sustain this momentum.

• Land:

Huawei will prioritize PC market share over profits, targeting APAC — especially China — and utilizing lower-priced PCs to raise brand awareness.

Much like its smartphone business, Huawei’s scale will allow it to endure less profit per device sold and tolerate operating this new line of business at a loss for an extended period.

• Expand:

Once the business achieves 5% market share globally, Huawei will begin to instill greater price discipline in its PC business and seek to balance market share growth with its profit and margin objectives for the PC business.

As market share grows, likely rapidly due to Huawei’s brand strength in China’s consumer market, the company will leverage its brand strength and device-selling strategies to dictate average selling price (ASP) and customer trends, as it has with APAC’s smartphone market.

Part two: Huawe’s impact on its competitors

(C) TBR