China’s top smartphone makers are ready to challenge Apple on its home turf after trouncing the iPhone maker in their own market.
Huawei Technologies and Xiaomi are in talks with US wireless operators about selling flagship smartphones to American consumers as soon as next year, according to people familiar with the matter. The handset makers are negotiating with carriers including AT&T and Verizon Communications, said the people, asking not to be identified because the matter is private. Talks are still fluid and it’s possible no agreements will materialise, they said.
Apple has a lot at stake in the US, where it is the leading smartphone maker. In past years, it’s been insulated from competition by strong support from carriers, which used to subsidise its expensive iPhones and lowered the upfront price for customers. These subsidies or discounts have gone away, as carriers moved to phone financing that spreads costs over two years.
Huawei has already tried selling its flagship Mate 9 phone in the US via e-commerce websites like Amazon.com, but working directly with wireless partners would give China’s No. 1 phone maker a wider presence across the US through retail stores, carrier websites and TV commercials. Huawei is in talks to sell a flagship line via US carriers, but the Chinese company also plans to sell the Mate 10 device through e-commerce channels, the people said.
Xiaomi executive Wang Xiang said the firm aims to roll out phones in the US within two years, but noted that the process of working through specifications with each carrier is time-consuming. Xiaomi is also weighing opening retail stores in the US to build its brand and sell its fitness trackers, thermostats and vacuum cleaners before a phone launch, he said. Those products are already sold online in the US; Verizon, AT&T and Huawei declined to comment.
The Chinese handset makers are targeting the US market at an opportune time. US carriers are cutting subsidies so consumers increasingly pay full price, in some cases more than $1,000, for high-end phones. Chinese rivals often sell phones far cheaper. Huawei’s Mate 9 was on sale on Amazon.com for $400 on Thursday.
The US phone market is dominated by Apple and Samsung Electronics. Since most phones are purchased through carriers, it’s nearly impossible for a manufacturer to gain serious market share without support from AT&T or Verizon, the two largest US wireless networks.
The telecom companies have supported challengers. Verizon sells Google Pixel phones, and Sprint offers Andy Rubin’s Essential handset exclusively. ZTE, another Chinese phonemaker and thus far one of the most successful one in the US, sells its dual-screen Axon model in the US via a deal with AT&T.