According to a new report, it appears that although Huawei’s overall sales grew significantly last year, their profits actually declined. It’s been well reported that Huawei’s phone shipments increased by 30% in 2016 to a total of 139 million units. Naturally, considering the company’s history, most would expect the company’s profit to also increase. This doesn’t appear to have been the case, though, with the company reported to have made only $2 billion in profit last year, which is actually down from the $2.2 billion it made the previous year.
Now, many factors could have led to this significant drop in profits, though the most likely culprit is a big increase in marketing costs. Although the rising prices of components may have hit the company’s profits slightly, the increase would not have been significant enough to cause such a drop. Marketing, on the other hand, most likely did lead to a big drop, mainly because of the company’s shipment goal. In order to reach their goal of 130 million units, spending extra money on marketing was a necessity, but unfortunately for the company, this has undoubtedly affected their profit margin on each device sold. On the bright side, though, the company is said to have internal goals of $4 billion in profit for 2017, so perhaps some of the extra spending last year may have been worth the cost in order to boost profits this year.
As well as this, though, it’s rumored the company will be raising the price of their 2017 flagships, the Huawei P10 and P10 Plus, something that will surely help the company increase their overall profit margin. Aside from profit, though, there is the possibility that the company is focusing on increasing its awareness at the expense of profit. After all, the company has made no secret of its goal to become the number one manufacturer worldwide by 2021. For 2017, though, it’ll remain to be seen how much the company can increase its shipments without it affecting its profits too much. Nonetheless, whether the company decides to focus on profit or shipments in the long run, all eyes will be on the company’s upcoming flagships within a couple of weeks at MWC, both of which will make up a large proportion of the company’s 2’17 shipments.