Honor hints at a new foldable smartphone after the release of Magic Vs

Honor CEO George Zhao has a simple philosophy — build the best products and the Chinese smartphone maker’s sales numbers will follow.

In a wide-ranging and rare interview with global media, Zhao talked about the company’s strategy to compete with Apple and Samsung and hinted at a new foldable phone.

He also shrugged off concerns that Huawei’s spinoff Honor could potentially be hit by the same US sanctions that crippled its former parent company’s business.

Honor launched its Magic Vs foldable phone outside of China this week, priced at nearly $1,700. It also took the guard off the Honor Magic5 Pro, a high-end flagship phone.

Under Huawei, Honor focused on mid-range smartphones. But now the company is looking to enter the high-end market dominated by Apple and Samsung.

Zhao is aware of the challenges Honor faces in its pursuit and is cautious about growth.

“Our ambitions [is to] To make things better today … and in the future, we aim to satisfy our customers. And also how to build trust and relationships with our partners. And these two things [if] we make it healthy, then the growth, the goal, the number of sales will come to us automatically,” Zhao said.

“If you’re just going for more volume … eventually you’re going to lose it.”

Honor released its first phones outside of China just last year after Huawei sold out in 2020. And now is a tough time for Honor to enter the market. In 2022, smartphone shipments fell to their lowest level since 2013. However, high-end smartphones costing more than $800 accounted for 18% of the total phone market in 2022, up from 11% in 2020, Canalys data shows.

That’s why Honor is chasing this category. But Honor still lags behind Apple and Samsung.

According to Counterpoint Research, the company’s share of the global market in 2022 was 4.6%, compared to 21.2% for Samsung and 18.3% for Apple.

At Mobile World Congress in Barcelona this week, Honor had a huge booth showcasing its latest wares, underscoring its ambitions to be a global player. It was next to Samsung’s exhibition, underscoring its desire to be seen in the same vein as the South Korean giant.

Honor had a big poster for Magic Vs with the tagline, “Unleash Your Magic.”

Difficult was the star of the Honor show. The pioneer of foldable devices was Samsung, which released its first smartphone of this kind in 2019. They were followed by other companies, mostly Chinese. And now they are starting to release them on the world stage. These smartphones have a flexible screen.

Oppo released the Find N2 Flip last month, and the CEO of Motorola-owned Lenovo told CNBC that another foldable Razr phone will be released this year.

According to research firm IDC, sophisticated devices accounted for only 1.1% of total smartphone shipments in 2022, and their share is expected to grow to 2.8% in 2026. But Zhao believes there is a future for these devices, even as he acknowledged challenges including the weight and battery life of these smartphones currently.

Zhao would not get involved in discussing sales targets, but said he is focused on building better sophisticated products that will in turn help growth.

“Our ambition and goal is to develop the best foldable phone to become the number one foldable phone technology. And if we do that, I think the market will get better and better, and the brand, all these things can develop based on this product,” Zhao told CNBC.

Currently, The Magic Vs is being compiled as a book. Other firms, including Samsung and Oppo, have released devices that fold up like traditional flip phones. Honor doesn’t have such a smartphone, but Zhao said the company is “seriously” considering it.

“To be honest, we have that opinion. As and when, I can’t reveal too much. But that’s a direction we’re … seriously considering,” he said.

Honor was a brand of Chinese telecommunications giant Huawei. But US sanctions in 2020 stripped Huawei of critical chips and access to Google’s Android software, undermining the company’s mobile business. Huawei was once the number one in the world.

To help the brand survive, in 2020 Huawei sold Honor to a consortium of buyers that included the government of Shenzhen, the city where the company is headquartered.

This allowed Honor to regain access to the critical chips and software it needed. Honor launched its first phone as an independent brand in January 2021.

Until now, Honor has remained aloof from the geopolitical and technological battle between the US and China. And CEO Zhao isn’t worried that sanctions similar to those imposed on Huawei will eventually be imposed on independent Honor.

“Why should we worry about it? Our business model is similar to Oppo, Vivo and Xiaomi,” Zhao said, referring to other Chinese smartphone makers that have also not been sanctioned.

“We provide the industry and the end consumer as well as the market, our partners, we provide our value. Also you know it’s open competition and open market. We follow all policies, we develop our business in that country.”