President Donald Trump has seemingly been on a mission to cripple the prospects of Huawei and it seems one of the haymakers have finally landed.
If the quest to undermine the carrier business group through influencing allied nations towards bans is failing, the entry onto the Entity List to supper plans in the consumer unit seems to now be causing the desired level of discomfort. Speaking to the Financial Times this weekend, a Huawei executive confirmed the absence of Google’s Android and the various services is proving troublesome.
“After the entity list, we were able to figure out some of the alternative solutions,” said Joy Tan, VP of public affairs at Huawei’s US business. “The most challenging part is Google-managed services. We can continue to use the Android platform, since it is open-source, but we cannot use the services that help apps run on it.”
This was always going to be a challenge to circumnavigate, though it certainly took some time to bed in. Whether it is because Android is arguably the best operating system on the market, Google services are widely utilised or there is a strong feeling of trust towards Google, replicating or replacing these elements on the smartphones was a big ask.
Officials in the White House might have been frustrated, as despite efforts to tarnish the reputation of the Chinese firm, sales continued to grow. For the first nine months of the year, Huawei sales grew 24% year-on-year, an increase from the last earnings statement, which suggested growth was 23% year-on-year for the first two quarters. However, this revelation will spur on some confidence in the Trump vendetta.
Google has proven to be the stumbling point for Huawei. Much to the horror of US suppliers, the firm has largely managed to replace US components in its supply chain, it has even started producing 5G base stations completely void of US parts, though the smartphone business has bore the brunt of the damage.
In launching its own operating system, which is based on the Android open-source code, the building blocks of an OS are there, but many would have suspected it was little more than a pale imitation. Firstly, Huawei would have to bridge the trust question which lurks at the back of the mind of many Western customers, and secondly, it would have to prove it could match the standards of Android. Let’s not forget, Android currently accounts for roughly 76% market share in the OS segment.
This is the toughest part of the equation. Huawei has pushed huge amounts of cash towards creating a developer ecosystem, but the number of applications simply are not going to be able to meet what Android offers. Secondly, time is not a friend here. Tan highlighted the Google Maps product is difficult to replicate, but unfortunately there is no quick-fix here.
The Google Maps product is market leading because of years of investment, billions of man-hours of tweaking and a colossal amount of data which has been fed into the machine to improve accuracy and performance. There is no substitute for time here and it is one of the reasons few can dream of competing with Google in this segment.
Unfortunately for Huawei, this is a monumental blow to the attractiveness and performance of its smartphone devices. Android and the Google services are trusted by billions around the world and, in some cases, are the best on the market. We’ve already seen what happens when some smartphone OEMs attempt to produce their own OS; it very rarely works out for the better.
This is not the end for Huawei as a business, or as a smartphone manufacturer. It still has a domestic market which boasts roughly a sixth of the world’s population and China’s influence on the global stage should hold strong in some markets. But in the Western markets, the very ones which have underpinned success for the smartphone business, which has in turn fuelled growth across Huawei during the last few years, it does not look good.