May 2019 saw the US President sign an executive order banning ‘foreign adversaries’ from dealing with America’s telecoms industry.
The unnamed ‘foreign adversary’ is Huawei.
Huawei is already banned from building US 5G cellular networks. The order also stopped US companies from working with Huawei’s phone handset business.
This meant Google suspended its business with Huawei. That was a blow for the Chinese phone maker, Huawei phones run on Google’s Android software.
The ban goes beyond Android. It means Huawei phones can’t use the Play app store. Nor can they use Google Maps, Gmail or the official Search app. Google Mobile Services features are central to the Android phone experience.
Huawei makes some of the best Android phones. It has a huge market share, now second only to Samsung. Yet the company sells little in the US.
With Huawei phones unable to ship with Google apps installed, sales have fallen outside China.
Otherwise, Huawei appears to be in good shape. In October it announced revenues were up 24 percent on the previous year. The company signed 60 contracts to build 5G networks last year.
Huawei could sit out the ban. Many think it is as much about US trade protectionism as anything to do with security.
Subscribers to this school of thought believe the US could lift the Huawei ban as part of trade negotiations.
While that is plausible, Huawei never wants to be in this position again. It cannot afford to be dependent on Google when the US could turn off the tap again at any moment.
Huawei has offered Chinese customers a non-Google version of its phones for years. It isn’t a problem there. It is more of an issue in places like New Zealand, Australia and Europe where people rely on Google services.
To get around the ban, Huawei is replacing Google Mobile Services with its own services. It aims to spend US$ 3 billion this year getting developers to improve Huawei Mobile Services. It has set aside another billion to market those services.
Harmony in my head
Huawei is also developing its own HarmonyOS. It scheduled release for early this year. Now Huawei says it is running late and could take years to emerge.
The acid test for Huawei’s post-Google life is the P40 phone launch. It will have no Google services. Huawei expects to lose some market share.
The original plan was to launch in March. This could be set-back by the recent corona virus outbreak.
Joining Huawei are Oppo, Vivo and Xiaomi. For now, the other Chinese phone makers are not locked out of Google. Yet the move amounts to admission they fear the ban could extend to them.
Between them, the four account for 40 percent of handsets sold worldwide. Yet for now they restrict their project to nine regions including India, Indonesia, Malaysia and Russia.
It is still early days. Yet it seems the US ban on Huawei is speeding up Chinese tech companies becoming independent of US ones. They already buy less American hardware, software and services. Google and Android remain strong, but one outcome of the ban is to undermine the near monopoly.