Most smartphone brands are worthless

New research from IHS Markit reveals that, beyond Apple and Samsung, people aren’t loyal to smartphone brands.

This conclusion is based on a multinational survey (US, Brazil, UK, Germany, Japan, and India) conducted last year, in which IHS asked punters how they go about picking a mobile. The most common reason was the hardware, which is reassuring, and on the whole it found that people were less brand loyal ask they earned less money.

A big reason for that last trend will surely be the fact that the brand that attracts the most loyalty is also the most expensive – Apple. The only other brand that HIS found people expressed a large degree of loyalty towards was Samsung. It’s presumably no coincidence that these two companies spend far more money on marketing than any of the others.

Apple and Samsung combined claimed a customer loyalty rate of 69%, while all the rest could only manage 33%. When two thirds of your customer base are disloyal, it’s fair to say your brand is essentially worthless in that context, especially since a lot of brand loyalty can simply be attributed to inertia.

“Apple and Samsung have worked diligently over many years to build their brands, spending heavily on marketing and advertising to maintain a strong following among consumers,” said James Allison, Analyst at IHS. “As a result, these two companies have been able to erect competitive bulwarks that insulate them from the pressures faced by other brands. For companies not named Apple or Samsung, conditions in the smartphone business are intensely competitive, as companies battle over a few percentage points of market share without the benefit of a leading brand name.”

IHS didn’t give specific brand loyalty numbers for Apple and Samsung but it seems safe to assume Apple’s is higher. How much of this is down to brand alone, however, is debatable, since IHS seems to consider upgrading from a phone of the same brand to be evidence of brand loyalty. Since Apple uses a different OS and content ecosystem from all other smartphone makers, for many of its customers moving away from it is just too much hassle, so their ‘loyalty’ is more a matter of pragmatism than sentiment.

Huawei elects Canadian courtesy over US aggression

Huawei founder Ren Zhengfei has said the R&D business unit in Silicon Valley will be uprooted and relocated to Canada.

The closure of R&D functions in the US should come as little surprise considering the Entity List and President Trump’s xenophobic tendencies, though the Canadians will be pleasantly surprised at being selected.

“The research and development centre will move from the United States, and Canada will be the centre,” Ren said to Canadian newspaper The Globe and Mail.

“According to the US ban, we couldn’t communicate with, call, email or contact our own employees in the United States.”

Although the specifics have not been unveiled, Huawei has had to let go of some employees as a result of the ban on working with US companies, and this news will not be welcomed by the remaining. Huawei will continue its presence in the US, it is still in the courts fighting the US Government, though it does appear the bulk of operations will be shifted north to the politer side of the border.

What impact this will have on the relationship between the US and Canada remains to be seen. Although the Canadians would have gained some favour in during the arrest of Huawei CFO Meng Wanzhou, relations have been often strained between Trump and Canadian Prime Minister Justin Trudeau.

Last October saw the end of tension between the two nations ended as the duo came to a trade agreement. Once again, Trump was throwing his weight around, but this time it worked, as Trudeau bowed to pressure easing barrier to entry for US firms into the Canadian diary market.

Canada is an interesting country for Huawei, as there is no official, long-term position for the firm in the communications infrastructure ecosystem. The Government is yet to make any concrete statements, though as there are existing relationships with some of the telcos, there is a lot on the line.

In February, Telus said its 5G deployment strategy would be delayed by a Huawei ban. The company uses Huawei radio and optical transmission equipment for its 3G and 4G networks and continues to believe the company does not present a national security risk to Telus or its customers. Bell has said it would not be convenient but not the end of the world, which Rogers primarily works with Ericsson.

For Huawei, this could be a very positive move. Opening an R&D lab in the country could bolster relationships in a new market as it is quite clear there will not be any material wins in the US.

R&D spend is increasing in UK, but still not at the top table

Figures from the Office of National Statistics (ONS) suggest investment towards R&D is heading the right direction, though there is still work to be done to compete with the worlds’ best.

Across all sectors in the UK, R&D spend by private companies increased by 5.8% to £25 billion. Drilling down into these figures, telecoms accounted for £947 million, a year-on-year increase of 25.4%, making it the fastest growing segment. This figure is still significantly down on the historical high of £1.5 billion spent in 2007, though growth is always an encouraging sign.

“The telecoms industry is extremely important to the UK strategically and it is reassuring to see such growth in investment,” said Mark Tighe, CEO of R&D tax relief firm Catax.

“There is still some way to go if this investment is to recover to levels seen before the financial crash, however, and it is vital this happens if Britain is to continue to be a key technological player on the world stage.”

Investment in R&D has become quite a point-of-interest to the UK Government, and measuring R&D investment as a percentage of Gross Domestic Product (GDP) is a key performance indicator of the Industrial Strategy. By 2027, the Government objective is for R&D to make up 2.4% of GDP, though this target also factors in public investment which the ONS figures do not.

In comparison to other nations which the UK aims to compete with the technology segments, the story is perhaps not as encouraging.

Country Percentage of GDP Total in USD ($) billions Researchers per million population
China 1.5 286.4 1096
Finland 2.1 4.9 7011
Germany 1.9 74.1 4318
Israel 3.5 11.6 8250
Japan 2.6 131.8 5328
Korea 3.7 57.2 6856
Sweden 2.1 9.5 6877
USA 1.9 340.7 4217
UK 1.2 33.3 3765

Statistics courtesy of UNESCO (latest available figures)

As may have been suspected, the bigger economies are contributing more cash to R&D efforts, though those who are creating more investment friendly landscapes are also thriving. Israel or Finland might not be spending the most, though the number of researchers is much more concentrated. This is clearly having a positive impact on innovation.

Looking at the comparative figures, the UK might claim to be prioritising R&D to ready the nation for the future, but the numbers do not necessarily support this. If R&D is an indicator of where profits and influence will lie in the future, other technology-orientated nations are in a better place.

What is also worth noting is the figures mentioned above are private investment, not including any expenditure from Government agencies on testbeds, as an example, or academic research. Certain governments have been more proactive when it comes to spending money on innovation in pursuit of glories in the digital world, and the UK is certainly one which has been quite vocal.

Although R&D investment is increasing, across the board the UK is not competing with those nations which would be considered the most innovative. What is worth noting is that the most successful countries are generally those where private industry investment makes up a considerable percentage of GDP, or the larger economies where investment in real terms is eye-wateringly high. Looking at these numbers, the UK falls into neither category.

Ericsson and Nokia up their R&D game to compound Huawei misery

Whenever Huawei is facing scrutiny, rivals simply have to sit back and reap the benefits, though Ericsson and Nokia are upping the focus on research and development to compound the gains.

This is the opportunity which is being presented to Huawei’s rivals. When it is banned from certain markets, there is a gain. When there are security concerns shown, there is a gain. When there are questions about the resilience of the supply chain, there is a gain. All the likes of Ericsson, Nokia and Samsung have to do is sit back and do what they have been doing for years. The worse beating Huawei takes, the better their alternative looks.

What is clear is these companies will have to be as careful when capitalising on the misfortune, tip toeing over broken glass as gunfire rages overhead. Just look at the trouble Nokia CTO Marcus Weldon got himself in when criticising Huawei a couple of months back.

However, looking more closely at the financial reports of the rivals, there is perhaps evidence of an attempt to compound the gains by increasing R&D investments. There are of course numerous reasons why this would be done.

Firstly, if Huawei is considered the market leader for radio and transmission equipment, this is an opportunity to close the gap. Secondly, this is a chance to seize the initiative in the 5G race while the reputation of Huawei is picking up dents. Looking at the numbers, this story becomes a bit more apparent.

Vendor R&D investment as % of total revenues
Huawei c.15%
ZTE 14.9%
Nokia 21.2%
Ericsson 18%

The numbers above are taken for the first six months of 2019. Huawei hasn’t given numbers for the first half, only a full year commitment, so this is more of a rough guess. Samsung does not break-out financials for its network equipment division, keeping up its reputation for being less-than-transparent, so it is difficult to offer a comparison.

Including Samsung with the other four major network infrastructure providers might raise some eyebrows, but with a strong 5G RAN product Samsung now deserves to dine at the top table according to Heavy Reading Analyst Gabriel Brown, particularly in markets where it has made long-term, sustained investment in R&D and in customer support, such as the US, India and South Korea.

After years of investment and working to meet customer requirements, the US market offers promise to Samsung. Without Huawei and ZTE in the game, operators are looking for credible alternatives to the Nokia and Ericsson duopoly in RAN, while its Korean domestic market clearly offers some wins. There is a clear opportunity for growth, though as Brown points out, there are other considerations.

In terms of the 5G RAN, Samsung has competitive base station products according to Brown. However, it doesn’t necessarily have the breadth of portfolio, relationships or footprint to compete globally. Brown stated this is often an area which is underestimated and is expensive to build-up and maintain. Outside of its priority markets Samsung does not have the local support that telcos have come to expect nor the long-term in-country presence that gives operators confidence to do business.

However, it is still an opportunity, with the team is making the right noises, producing the right demonstrations and making the right connections to grow and claim market share.

The numbers above are taken for the first six months of 2019. Huawei hasn’t given numbers for the first half, only a full year commitment, so this is more of a rough guess. Samsung does not break-out financials for its 5G network equipment division, keeping up its reputation for being less-than-transparent, so it is difficult to offer a comparison.

Including Samsung with the other four major network infrastructure providers might raise a few eyebrows but work done over the last few years has raised their game. According to Heavy Reading Analyst Gabriel Brown, Samsung now deserves to dine at the top table, with strong focus on the US, India and South Korea.

Samsung is a company which is clearly benefiting from the Huawei misery. The US is a market which will offer promise to Samsung, though it will have some difficulties considering an ex-CEO of Ericsson is in charge at Verizon, while its domestic market clearly offers some wins. There is a clear opportunity for growth, though as Brown points out, there are other considerations.

In terms of the 5G base station product, Samsung is up there with the best according to Brown, though as it doesn’t necessarily have the relationships or product inventory in place it might struggle in certain areas. Brown stated this is often an area which is underestimated, as Samsung may well struggle to meet the timelines demanded by telcos in Switzerland or Columbia (for example). It doesn’t have the ‘feet on the ground’ or scaled manufacturing experience of its rivals, an element many telcos will have come to expect.

However, it is still an opportunity and the team is making the right noises, producing the right figures and making the right connections to grow and claim market share.

Back to the R&D investments, this is an important metric to judge vendors by and will gain interest from potential customers. At Ericsson, the 18.7% ratio invested in R&D is certainly an increase from the 14% and 15% it spent in 2015 and 2016 respectively. Nokia’s investments are also up from this period, though it has consistently hovered around this level. As a percentage of net sales, R&D accounted for 20.5% and 21.2% for 2018 and 2017 respectively at Nokia.

Although both of these firms are leaping ahead when it comes to the percentage, another factor that you have to take into account is that Huawei is spending more in real terms.

Vendor Total R&D investment in US$
Huawei $8.38 billion
ZTE $900 million
Ericsson $1.93 billion
Nokia $2.53 billion

While Huawei is vastly exceeding the amount spent by its rivals, it has a much broader scope. Ericsson focuses on mobile predominantly, while Nokia has both mobile and fixed businesses, as well as licencing payments from its former glory days as a leading mobile phone manufacturer.

Huawei has its fingers in a lot more pies. Not only does it focus on both mobile and fixed, it also has a subsea cable business and an enterprise unit, while the consumer group is now the largest contributor to total revenues. Looking at the consumer unit alone, Huawei will be investing R&D funds into smartphones, laptops, wearable devices and a new operating system to potentially replace Google’s Android.

This $8.38 billion figure should always be considered when comparing the R&D investments from all the rivals, but it should also be weighed against the broader business exposure Huawei as.

There are of course numerous factors to consider when judging who is winning the 5G race, geopolitical trends are close to the top of the list, but the percentage of revenues being attributed to R&D is another very important one. Although these numbers do not tell the whole story, perhaps it does indicate rivals are attempting to make the most of Huawei’s misery while they have a chance.

ZTE gains confidence on the back of solid earnings growth

Perhaps ZTE has just been enjoying an uncomfortable silence and an expensive milkshake in recent months, but its financials for the first half of 2019 are screaming for attention.

It is quite difficult to measure the performance of the business looking at the financials alone, ZTE found itself in the Trump crosshairs in H1 2018, though the team is hyping itself up now, seemingly to gain attention in a very noisy segment. ZTE is often overlooked when considering the major network infrastructure vendors, but it certainly does warrant mention.

Revenues for the first half of 2019 stood at roughly $6.23 billion, up 13.1% year-on-year, profits increased a massive 118% to $210 million. The team is now forecasting profits between $530-640 million for the first nine months of the year.

These numbers might sound very impressive, but it was at this point last year when President Trump and his administration targeted ZTE. In May 2018, ZTE announced its major operating activities had ceased after the US Department of Commerce’s Bureau of Industry and Security (BIS) placed an export ban on the vendor. Without the US complement in the ZTE supply chain, the firm was almost extinct, though concessions were made and now it appears it is business as usual.

This is why the year-on-year gains are largely irrelevant. ZTE was a shell of a company at this point last year, fighting for its very survival.

That said, the company is surging towards the 5G finish line just like its rivals, and now it needs to convince potential customers it is a stable, reliable and innovative partner. Being selected to supply equipment to any telco will be after intense scrutiny, and thus the charm offensive has begun.

First of all, lets start with the R&D spend. ZTE has suggested it has spent roughly $900 million on R&D for the first six months of 2019, a 14.5% ratio of the total revenues for the period. This is an increase from the 12.8% share of the same period of 2018, with the new figure just ahead of the 13.8% share of revenues (estimate) Huawei allocated to R&D last year. The domestic rival has promised to increase this figure by 15-20% for 2019, though the overall percentage will not be known until the full year financial figures are known.

In comparison, Ericsson said it attributed 18.5% of net sales revenue to R&D over the course of 2018, a figure which increased to 18.7% by the end of the first six months of 2019. At Nokia, 18.4% of net sales revenues were directed towards the R&D department for the first six months of this year.

This part of the business has largely been focusing on the development of basic operating systems, distributed databases and core chipsets most recently. The company has completed the design and mass production of the 7nm chipsets, while it is currently undergoing the R&D phase for 5nm chipsets.

All this work has resulted in 3,700 5G patents being granted to the firm, though this number might notably increase in the near future. ZTE has also said it is partnering with various Chinese universities to source 5,000 new employees to bolster the R&D ranks. Once again, these are numbers which are being cast into the public domain to enhance the reputation of the business at a time where vendors are facing scrutiny at an unprecedented level.

Of course, when we are talking about creating a perception of stability and reliability, as well as increased scrutiny, you have to discuss security.

ZTE might have managed to avoid US aggression over the last couple of months, Huawei has been the primary target, but as a partly state-owned entity, such questions will never be that far away. This is where the cybersecurity centres will play an important role.

Opened in Nanjing, Rome and Brussels, the cybersecurity centres will allow potential customers to test and validate the security credentials of the firm prior to installing any equipment or software in the network. Some will not be convinced this is a fool-proof way to ensure resilience, though it is an act of transparency which the industry and governments have been crying out for.

The result of this work is 60 memorandums of understanding (MoU) with telcos around the world, 50 5G demonstrations in 20 industry verticals, 300 strategic collaborations and 200 5G products to date.

It is often easy to overlook ZTE and designate the firm as a poor man’s version of 5G network infrastructure, but the numbers justify inclusion at the top table. The challenge which ZTE now faces it making prominent strides into Western markets, the very ones which are getting twitchy over security and price today.

US consumers need more than incremental gains from 5G

The last few years has seen an increasing number of consumers hold onto devices for longer, and the trend does not seem to be changing right now.

According to research from NPD, the second-half of 2018 saw the number of consumers in the US holding onto devices for longer increase yet again. The global slowdown in the handset market has been well documented, and this report demonstrates the difficulties users are having to dig deep into pockets to fork out for much the same.

“Rising price tags, extended longevity of new generation devices, and lack of innovative features beyond imaging enhancements, are a few factors reducing consumer motivation to upgrade,” said Brad Akyuz of NPD.

“The emergence of 5G could help to accelerate upgrade cycles, as consumers will look to leverage faster speeds for mobile entertainment, but despite strong consumer awareness, this is expected to be a longer-term result.”

When asked how old devices were, 29% of US consumers said at least two years old. Less than 20% of the respondents indicated they were ready to upgrade their device in the first-half of 2019.

This is perhaps not the news many in the industry were looking for. 5G is supposed to be a shiny new red ball to get the consumers excited, but NPD does not appear to believe it will be enough to turn current trends.

The issue which many in the consumer world seem to be facing is a lack of innovation. New devices are appearing each year, but there doesn’t seem to be anything new. The camera is better, the battery lasts longer, the device is lighter and shinier. But these are all incremental upgrades perhaps not justifying the price increases. Unfortunately, 5G seems to be falling into the same trap.

What does 5G offer you according to the telcos today? Faster download speeds. An improvement, but not exactly the breakthrough many were hoping for, especially when you consider the incredibly limited coverage maps. It is being sold as another incremental upgrade right now, and that clearly does not get the consumer excited anymore.

Heading back to the research, only 33% of consumers stated they would have an interest in purchasing a 5G device when it become available. Note the word ‘interest’ here; the actual figure is likely to be a lot smaller when the realities of handing over money come into play.

Although these reports are far from gospel, they do indicate market sentiment and give the industry a nudge in the right direction. 5G is being sold as an incremental upgrade on speed alone and that doesn’t seem to be good enough. Admittedly, there is little more which can be sold at the moment, but telcos and the handset manufacturers will have to dig deeper into the creativity mines if they are to turn the trends of the last few years.

Samsung is already planning for 6G leadership – report

Samsung has reportedly announced the formation of the Advanced Communications Research Centre, which will have the mission of creating a 6G leadership position for Samsung.

5G is barely with us and we’re already talking about 6G. This should come as little surprise, such is the length of time it will take to bring the technology to fruition. According to the Korea Herald, Samsung has begun it’s 6G mission as part of the wider Samsung Research business unit.

A currently un-named official announced the news, stating “the current team on telecommunications technology standards has been expanded to start leading research on the 6G network.”

What 6G actually is remains to be seen, but such are the rewards in leading each generation of mobile technology, it would appear it is never too early to cast an eye on the horizon.

Unfortunately for Samsung, it is not the first to the party. In January, LG Electronics and KAIST announced a joint 6G Research Centre in Daejeon. LG has said it wants to use the research centre to pre-emptively secure technology for 6G.

Work has already started for 6G standards. In March, a small group of scientists gathered in Levi, Finland, to host one of the first global summits on the 6G Wireless standard. This was not the most of complex of meetings, though it was aiming to start work on the most important questions; why does the world need 6G?

The answer is relatively simple for the moment; we don’t know.

The technological and business case for 6G will emerge eventually as 5G gains more traction around the world. As with 5G in the 4G era, forward-thinking engineers predicted the demand for increased speed, more efficient spectrum use and efficiencies to drive profitability. 5G does of course offer more, but you only need a framework to build on to start with.

This is what the initial 6G forays will be based upon, but it is important to understand what the short-comings of 5G are. The problem needs to be understood before a solution can be crafted, otherwise, what’s the point?

Security is a concern, especially as it can hit bank accounts now

New research from EY suggests British businesses are more concerned than ever about security. Funny that, considering there’s now a whopping fine to worry about.

Security is one of those areas which is constantly discussed but little is done to address. Irrelevant as to how many CEOs tell you its top of the agenda or how many statements start with the phrase ‘our customers security is our number one concern’, it’s an aspect of the technology world which has been swept aside. But not according to this research from EY.

“It’s not surprising that businesses are most concerned with the threat of cyberattacks,” said Adrian Baschnonga, Global Lead Telecommunications Analyst at EY. “The introduction of 5G will help organisations unlock new growth opportunities, but this transition comes at a time when fears regarding data breaches and network security are especially pronounced.”

While you always have to take statements like this with a pinch of salt, it might be right this time. Why? Because if you want to make executives care about something aside from their annual bonuses, you have to fight fire with fire.

Under the General Data Protection Regulations (GDPR) brought into play last May, any company which is found to have inadequately protected customer or employee data are subject to fines of 3% of annual turnover or €20 million. GDPR fines are proportionate to the risk posed by a breach, allowing flexibility for regulators to tackle the problem, but it certainly seems to have caught some attention.

According to professional services firm RPC, in the 12 months prior to September 30 2018 (the period in which GDPR was introduced) the Information Commissioners Office issued fines totalling just over £5 million, a 24% increase on the previous period of 12 months. Considering the ICO only had a couple of months to swing the GDPR stick at offenders, it would be fair to assume the watchdog is fully embracing the new powers offered to it.

This also seems to have hit home with those investing in new technologies. 40% of respondents to EY’s survey are worried about 5G and cyberattacks, while 37% saw IoT as a risk. These numbers aren’t particularly high, but they are the biggest concerns.

Another factor to consider is the consumer. While many will have been blind to the risk of data breaches in by-gone years, this does not seem to be the case anymore. Recent Lloyd’s research claims 44% of UK consumers believe there is a risk to personal safety in the sharing economy, perhaps indicating they would be hard-pushed to share data. If enterprise organizations are going to benefit from the data boom, they’ll have to convince customers that their personal information will be safe.

Whether this translates to appropriate security investments remains to be seen, as there seems to be a lack of ownership over security overall. Enterprise organizations are looking to suppliers for security to be built into products, while it is perfectly reasonable for suppliers to ask enterprise organizations to do more. Security should be built into products, but if an individual buys a front door, the manufacturer cannot be blamed when it is left open or an inadequate lock is used.

More often than not the carrot is used to incentivise business, but it seems the GDPR stick is an effective tool in bringing security to the front of executive’s minds. Hopefully now there will be less pandering for PR headlines and more affirmative action.

Gartner claims people are warming to AI

The power of artificial intelligence is unquestionable, but what remains unknown is how long it will take for the technologies to be considered mainstream. Are people afraid of the power of AI?

With every technological breakthrough it takes a considerable amount of time for mainstream adoption. There are of course early adopters who will reap the benefits of AI, but bell curves exist for a reason; the vast majority will be slow to react, scared of the unknown, resistant to any form of change or dismissive of the benefits. Despite this pretty much being an inevitability, Gartner is confident adoption is going pretty well.

“Four years ago, AI implementation was rare, only 10% of survey respondents reported that their enterprises had deployed AI or would do so shortly,” said Chris Howard of Gartner. “For 2019, that number has leapt to 37% – a 270% increase in four years. “If you are a CIO and your organization doesn’t use AI, chances are high that your competitors do, and this should be a concern.

“We still remain far from general AI that can wholly take over complex tasks, but we have now entered the realm of AI-augmented work and decision science – what we call ‘augmented intelligence’.”

This is where some of the biggest benefits can be realised according to Gartner. With a continued shortage of IT skills (and also in some niche/highly qualified professions) throughout the world, AI can be introduced to ensure the chasm of ability does not negatively impact revenues. How this idea has been implemented across the ecosystem does seem to vary quite considerably.

The research indicates 52% of telcos have deployed chatbots to assist with customer service operations, while 38% of healthcare providers rely on computer-assisted diagnostics. Fraud detection and IT security are other areas which have seen AI implementation, while the breadth of services will only increase across 2019. With the smart home, and smart speakers in particular, becoming increasingly normalized in the eyes of the consumer, this looks like a blossoming space.

Interestingly enough, today also marks the day the UK Office of National Statistics unveiled employment numbers for the year. The number of people now employed in the UK has reached an all-time high of 32.54 million, while the number of job vacancies rose by 10,000 to a record 853,000. Although the early adopters, those with extraordinary technology ambitions, will focus on the added value benefits of AI there will of course be those who use such a breakthrough to reduce headcount.

This is the reality of AI which we will have to meet head on. Jobs will be replaced by automation and software, people’s livelihoods will be made redundant, unless retraining is offered. But, for retraining to be a realistic ambition first there has to be an acceptance of the negative consequences of AI.

The Fourth Industrial Revolution will be incredibly painful for some, but industry and politicians don’t seem to want to admit this, instead just focusing on the benefits. Every Industrial Revolution has been painful for those who have not adapted for the future, but somehow the rhetoric seems to be this one will be different. Putting PR spin on the issue will not help in the long-run, we need to be realistic.

Huawei R&D faces export ban in Silicon Valley

The US Commerce Department has refused to renew an export licence at a Huawei subsidy in Silicon Valley, meaning China cannot access new developments at the site.

According to the Wall Street Journal, Huawei R&D outfit Futurewei was informed over the summer that the US Department of Commerce would not be renewing the license meaning some of the technologies developed at the site, but not all, could not be exported back to China. It’s a new strategy in the conflict between the US and China, but it could prove to be an effective one.

Silicon Valley is not the hotspot of the technology world because of the favourable climate or the presence of helpful regulations, it has one of the most talented workforces around the world. There are of course challengers to this claim emerging, India or Eastern European for example, but companies flock to Silicon Valley to open up R&D offices to tap into this resource. Such a ban from the US Commerce Department means Huawei is going to miss out on some of these smarts.

The block will prove problematic to overcome as there does not appear to be any logical way to combat the move. The rationale behind the blockage is quite simple; national security. Seeing as Huawei is currently being trialled and punished without the burden of evidence, there seems to be little the vendor can do to combat such passive aggressive moves by the US.

This is of course just another stage is the incrementally escalating conflict between the US and China. The tension between the pair does seem to have escalated over the last few days following a minor hiatus at Christmas. Rumours are circling the Oval Office concerning an all-out ban on Huawei and ZTE technology in the US, while suspicions will only increase following the arrest of a Huawei employee in Poland on the grounds of espionage.

With all the drama before Christmas and the hullaballoo kicking off again now, perhaps we should expect some sort of retaliation from Beijing. The Chinese governments has not been anywhere near as confrontation as the US, though there might be a breaking point somewhere in the future.