We can choose to support Windows Mobile, Qualcomm [BREW], or Symbian, and indeed we’re currently in conversations with Microsoft about Windows Mobile, said Meddy Lu, director of integrated marketing communications for the Chinese manufacturer’s terminals division. Our focus is not on the choice of OS, but on the operators and their requirements.

This agnostic stance typifies the vendor’s overall strategy in handsets, which is to develop strictly in accordance with what its operator customers say they want. Lu didn’t mention Linux by name, but gave the impression that if enough customers ask for it, Huawei will develop on it too.

The company is also flexible with its branding strategy. In Europe it has pursued an ODM model, white-labeling products for operators to feature their own brands on the devices. In other markets there are Huawei-branded phones, and in the US, where a first ODM phone from Huawei will be unveiled by a leading mobile operator next month, Lu said the overall branding strategy has yet to be defined.

She was equally non-committal as to which radio access mode the company’s first smart phone will support. Huawei has been in the CDMA market for over a decade, and currently makes cdma2000 1x and EV-DO handsets for operators in countries including China and India. It shipped 5 million CDMA handsets last year and has already gone over the 10 million mark.

In terms of connectivity, Huawei has all the main wireless WAN technologies in its arsenal, including both the main cellular trains (WCDMA/HSPA/LTE and cdma2000 and its successors) and WiMAX. Lu said she expects to see WiMAX cropping up first in data cards and only later in handsets. She said Huawei is committed to supporting all the main frequencies for all the radio access modes, which means multiple 3G bands and the various WiMAX bands under consideration for licensing in different parts of the world.

ZZZZZZHuawei is more lukewarm about wireless LAN technology, which several mainstream mobile handset vendors are starting to build into phones to enable fixed-mobile convergence where calls in a cellular environment can be transferred onto a wired infrastructure when the user is within range of a WiFi access point.

Huawei positions FMC as central to its strategy for offering carriers technology for both consumer and business services, but is less enthusiastic about the flavor of FMC enabled by dual-mode cellular/WiFi phones. It’s on our roadmap, but there’s no clear demand from the market yet, said Lu.

This may be because Huawei is talking mainly to mobile carriers, who tend to view hand-off to a WLAN as lost revenue for them, combined with an operational challenge of maintaining call quality when a user goes onto the unlicensed spectrum of WiFi connectivity. Vodafone has even been forced to admit that it was asking to Nokia to supply it with Eseries business phones with the WLAN radio disabled so that subscribers wouldn’t stray from its cellular services.

Enterprise IT departments, on the other hand, or at least those that favor a DIY approach to FMC rather than relying on a managed service from a carrier, are likely to express more enthusiasm for the dual-mode phone route.

Victor Xu, VP and MD of Huawei’s technical sales department, said the company’s fixed carrier networks division is developing femtocell technology as a means of extending mobile coverage into the home while leveraging a subscriber’s existing broadband internet connection for backhaul.

It is a technology that appeals to, and will be delivered by, mobile operators. It also enables them to offer an FMC service via a flexible tariffing scheme, with cheaper call rates when the call is going over a femtocell, without the loss of revenue or QoS issues of dual-mode phones. Xu described femtocells as a sharp knife with which operators will be able to differentiate their services. For Huawei, this technology has the added potential advantage that its terminals business unit already manufactures CPE kit for carriers and other service providers, including integrated access devices and set-top boxes.

Our View

Huawei’s handset strategy is firstly to focus on the mainstream rather than more niche plays, and secondly to respond to requests for products from its carrier customers. The fact that it is developing a smart phone offering at all, when smart phones are still a tiny percentage of the overall billion-unit annual market for mobile phones, indicates that its customers are asking for such a device, probably as a white-labeled product they can stamp their own identity onto.

If this turns out to be the business model for Huawei smart phones, it will take it into territory pioneered by Taiwanese player HTC, which spent its early life as an ODM-only vendor developing products on the Windows Mobile OS. After initial success with the likes of Orange and T-Mobile, it has since muddied the waters by beefing up its own-brand offerings, so part of Huawei’s move into smart phones may be at the invitation of carriers keen to have another ODM supplier to replace HTC. In this case, the OS chosen would almost certainly be Windows Mobile, a fact Lu hinted at when she mentioned the company’s conversations with Microsoft.

Windows Mobile would also have other potential benefits for Huawei. The smart phone market is currently dominated by Symbian, which represents about 70% of the devices shipped annually, so Windows Mobile represents an opportunity for differentiation, not to mention endearing Huawei to Microsoft. Symbian is notoriously weaker in North America, a region Huawei’s terminal business unit is only just starting to develop.

On the other hand, the fact that Lu mentioned both Symbian and BREW suggests that there are other conversations under way besides those with Microsoft.

The Qualcomm/BREW angle is an interesting one because it might open doors for Huawei in the North American CDMA market, as well as bolstering its offering to existing CDMA customers in India and China. The attraction of those three-billion-plus GSM subscribers may prove too great for Huawei, and though BREW can in theory work with any radio access mode, the OS choices for a smart phone to sell into GSM operators will surely be either Windows Mobile or Symbian.