In 2011, Xiaomi was at its peak, and to seize the internet smartphone market, Huawei launched a similarly positioned product—Honor.
For many years thereafter, Honor, as a sub-brand of Huawei, fought fiercely in the mid-to-low-end market. Until 2020, when Huawei faced &#34;supply cuts,&#34; and on November 17 of the same year, it announced the sale of Honor.
Splitting from the parent company and becoming independent was not easy. In April of the following year, Honor's market share in the domestic market plummeted to 3%, whereas at its peak, Honor had held a market share of 16.7%.
Now, Honor has been independent for four years. According to the latest data from Canalys, in the third quarter of this year, Honor's smartphone shipments reached 10.3 million units, capturing 15% of the domestic market share, ranking third, just behind Huawei's 16% market share.
Honor has come a long way in these four years. Along the way, it has often been labeled with Huawei's &#34;surname,&#34; while also needing to write its own new story.
At the launch event for the Magic 7 series, Honor CEO Zhao Ming expressed in an interview, &#34;After separating from Huawei, we enjoy the very good genes and capabilities we had before, but at the same time, can Honor develop even better after independence? The market will have many such questions.&#34; Therefore, Honor will take a more aggressive approach in many aspects and break more ground in innovation.
Although Honor originated from Huawei, from the very first day of independence, changes had already begun. In addition to its traditional core, it also developed an AI core. To some extent, Zhao Ming believes that in terms of AI strategy and planning, Honor and Apple are more like &#34;different paths leading to the same goal.&#34;
Recently, Honor launched an AI operating system and AI smartphones, while also announcing the creation of the GT series, taking over the role of internet smartphones before Honor's independence. In contrast to Huawei's decision not to go public, Honor clearly put its IPO on the agenda last November and has recently brought in a new round of investors.
&#34;I think it's more important for Honor to be the best version of itself,&#34; Zhao Ming said. After four years of independence, Honor is trying to carve out its own path.
Creating &#34;Autonomous Driving&#34; for Smartphones
A week ago at the Honor MagicOS 9.0 launch event, Zhao Ming's smartphone could order him a drink; a week later, at the Magic 7 series launch event, this smart assistant was able to directly place an order for 2,000 drinks.
Reconstructing the OS with AI has been a direction Honor has been laying out since its independence. It wasn't until four years later, with the launch of Magic OS 9.0, that Honor's AI OS layout truly took a substantial step forward.
&#34;Honor's real advantage lies in reconstructing the entire service with AI,&#34; Zhao Ming mentioned. Early product development relied on a single-minded logic to solve problems, leveraging the capabilities of the hardware itself. AI+ hardware gives the hardware a soul and proactive capabilities.
Zhao Ming likened this capability to &#34;autonomous driving&#34; for smartphones, which is also the direction for Honor's future AI development.
Previously, Honor, in collaboration with the China Academy of Information and Communications Technology, released the &#34;Terminal Intelligence Level Research Report,&#34; which categorizes the intelligence level of terminals into five levels, L1-L5, based on the degree of understanding of user intent, the degree of learning and memory of user information, task planning, and task completion, ranging from low to high: intelligent response level,
Intelligent Assistance Level, Intelligent Assistant Level, Intelligent Collaboration Level, Autonomous Intelligence Level. Currently, the Magic7 series equipped with MagicOS 9.0 has reached L3 level.
Honor CEO Zhao Ming, source of the image: company provided
However, developing AI and reconstructing operating systems is almost the path that every mobile phone manufacturer is currently taking. For example, Huawei's native HarmonyOS NEXT 5.0, released on October 22, also integrates native AI capabilities into the operating system.
Regarding the differences between the two, Zhao Ming made an analogy, stating that Honor and Huawei sprouted from the same stem, and while there are many similarities, the gap will widen as they grow independently.
He emphasized that since the day Honor became independent, its core has been changing. In addition to the traditional core, Honor has also built an AI core, with the goal of achieving &#34;autonomous driving&#34; for mobile phones, based on edge AI and edge large models. This is different from the positioning and problems that HarmonyOS needs to solve, which involves addressing the ecological issues of the original operating system and reconstructing the original core and internet ecology.
Additionally, Zhao Ming believes that the AI path taken by Honor and Apple's Apple intelligence leads to the same destination. The &#34;same&#34; aspect is that both are pursuing autonomous driving for mobile phones and the execution capabilities of apps, while the &#34;different&#34; aspect is that Apple's ecosystem is rich, with platforms for music, email, etc., making underlying calls and information service flows relatively easy, whereas Honor needs to directly cross third-party apps for services, which is a greater challenge.
&#34;Honor insists on focusing on terminals; we do not engage in content, maintaining a collaborative relationship with internet companies,&#34; Zhao Ming stated. Honor's intelligent agents are divided into two types: one that completes operations within each service and application, and another that collaborates with other intelligent agents. For example, Honor has established a mutual trust system with China Mobile's Lingxi large model, allowing for information queries about phone bills. Honor has built an intelligent agent store for large models, enabling various internet companies to connect and cooperate based on mutual respect for each other's business logic and principles.
At the launch event for the Magic 7 series, Honor CEO Zhao Ming also announced the introduction of a new independent product line focused on online channels—the Honor GT series, with the first product set to be released by the end of the year.
The GT series for Honor is akin to what Honor was for Huawei back in the day. Zhao Ming believes that this is only possible because Honor has sufficient technology and innovation &#34;spillover&#34; to support an entirely new series.
Honor originally emerged as an internet online brand, and through the GT series, Honor aims to carry forward the core genes of internet phones, positioning itself as a performance phone targeting young people.
IPO Process Accelerates
While refining products, on the other hand, Honor's listing process is also advancing rapidly.
On October 31, it was reported that Honor has brought in investors including China Telecom, funds under CICC Capital, cornerstone funds, TeFa Fund, and a new round of agent investment platform (Jinshi Xingyao)
Among them, China Telecom is the second operator to invest in Honor after China Mobile; Jinshi Xingyao is the investment platform for Honor's channel partners, managed by CITIC Jinshi Investment Management; TeFa Fund is a special fund managed by Shenzhen TeFa Group, with the largest shareholder being the Shenzhen State-owned Assets Supervision and Administration Commission; Cornerstone is one of China's earliest venture capital and private equity investment institutions; CICC Capital is affiliated with China International Capital Corporation.
Back to November 2023, Honor clarified to all employees through a board announcement its active intention to promote the company's listing on the capital market through an initial public offering (IPO). At that time, Honor's board announced that the company would attract diversified capital and promote its entry into the capital market through the IPO.
Since the beginning of this year, Honor has frequently introduced new shareholders. In August, Honor received investment from the operator China Mobile, but did not disclose the specific investment amount. In the same month, Honor also stated that it plans to initiate corresponding shareholding reform in the fourth quarter of this year and subsequently start the IPO process at an appropriate time, during which relevant financial data will be disclosed.
In September, an affiliated enterprise of China Reform Holdings Corporation Limited, Hangzhou Weitong Equity Investment Partnership (Limited Partnership), invested in Honor. The former is a central enterprise managed by the State-owned Assets Supervision and Administration Commission of the State Council. In October, A-share company Sanrenxing (605168.SH) announced that it intends to contribute RMB 51.5 million as a limited partner to Wuhu Borui Cornerstone Equity Investment Partnership, which will make a special investment in Honor.
According to Tianyancha, as of November 2, Honor's shareholders already include Hangzhou Weitong Equity Investment Partnership (Limited Partnership), China Mobile, BOE Technology Group, CICC Qizhi (Shanghai) Equity Investment Center (Limited Partnership), among others, totaling 17 entities. The latest introduced companies have not yet been included.
Image source: Tianyancha
On October 31, Zhao Ming also posted on Weibo, stating that four years ago, no one believed AI could reconstruct operating systems, and Honor resolutely invested in platform-level AI; four years ago, no one believed foldable screens could become mainstream, and Honor invested more than 10% of its revenue in related R&amp;D each year; four years ago, no one believed Honor could return to the international stage. This year, Honor activated the global top-level domain HONOR.com for the first time, &#34;We are using our own name to reach our own distant place.&#34;

HUAWEI

After four years of independence, Honor is gradually carving out its own development path. Since separating from Huawei in 2020, Honor's market share has rebounded from 3% to 15%, becoming the third-largest smartphone brand in the country. CEO Zhao Ming stated that Honor will innovate more aggressively, especially in the AI field, planning to launch an AI operating system and the GT series of phones. Unlike Huawei's decision not to go public, Honor has put an IPO on the agenda and is bringing in new investors, committed to becoming a better version of itself

Four years after independence, Honor wants to follow its own path: "parting ways" with Huawei and "reaching the same destination" as Apple