Huawei & Leica 2016

Abstract

This case addresses the decision of a long-term strategic partnership from two very different perspectives to produce the P9 - a premium dual-camera smartphone in 2016. The first perspective is that of Chinese telecom giant Huawei. Huawei’s aggressive objective is to be the number one smartphone maker in the world amid growing competition from domestic rivals, and global leaders Samsung and Apple. Huawei had recently faced accusations of espionage; to boost its image, the company spent vast amounts on marketing and branding for its Consumer Business Group. The case highlights the use of Hollywood stars to promote Huawei’s phones, as well as previous collaborations with Google and Swarovski. The second perspective is that of German optics specialists Leica, and its need to diversify with newly hired chief executive officer Oliver Kaltner. Leica had carved out a niche with its expertise in microscopy, gaining loyal followers in the interchangeable lens market, with its “red dot” branding becoming a status symbol. Leica had so far survived the digital era but due to the threat of smartphone camera technology, the company urgently needed to pursue strategic transformation. The case gives a historical comparison with Kodak’s bankruptcy, and stresses the importance of the trend towards sharing photos on social media applications such as Snapchat, Facebook, and Instagram. The main discussion point in the case involves Huawei’s decision to use Chinese manufacturer Sunny Optical to produce the lens for the P9 (rather than use the expertise of Leica), and the brand and quality perceptions that followed. Given Huawei had made a huge investment in research and development to create the P9, critics wondered whether the partnership was just a quick fix to beat Apple to releasing a multi-lens camera. The case also touches on the stagnant smartphone markets worldwide, and asks whether Huawei should pursue the extremely competitive emerging Indian market with a premium smartphone.

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