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It’s understandable people worry about Huawei phones. Recent news reports suggest the company either is, or could one day, use its network equipment to help China spy on or disrupt other nations.

If that’s true, then the company’s phones may also be weaponised.

Huawei phone owners can relax. Well, actually you can’t, read on to find out why. But, unless you work in an important strategic role, Huawei’s brand on your handset is not your biggest phone problem.

While it is possible China’s spies are interested in hearing you call home to say “I’m on my way” or knowing how often you watch cat videos, it’s unlikely.

Easier routes to your data

And anyway it would take a lot of resources and energy to get that information from your phone when there are easier tools at a spy’s disposal.

As another recent online snooping scandal shows, spies can and probably do buy the information they need from Facebook or Google.

We’ve heard that Russian trolls know enough about individuals to target them with vote-changing propaganda.

The level of data available from Facebook or Google is so intimate that motivated snoops can know things about you that none of your close acquaintances do.

They know…

They know if you are closeted. They can know you’re pregnant before your family does. They definitely know if you’re unhappy. They know your prejudices and you musical taste.

The most chilling revelation about Cambridge Analytica is that even seemingly disconnected data helps build a picture of your mood. It reveals what you are thinking.

A Huawei phone’s inherent insecurity has less to do with its country of origin, more to do with the Android operating system.

That means much of your personal information automatically goes back to Google and is for sale. It knows where you’ve been, what you bought, who you talk to and so on. We’re told the data is anonymous, but that doesn’t stop companies from being able to identify and target you.

You agreed to be spied on

You agreed to this when you bought an Android phone. You confirmed your agreement when you clicked on the permission button when setting up the phone software. You agreed all over again when you first used Google Maps. And so on.

If you’d like to double down on enabling malevolent snoops, install a Facebook or Instagram app. Once one of these is on your phone, little you do remains a mystery to anyone with curiosity and a budget. Facebook takes this snooping to another level.

Some people reading this will think it’s quaint and old fashioned to be concerned about personal privacy and security. Perhaps it is.

In most cases the nature of information gathered by Facebook and Google is more valuable to spooks than having a back door into your phone. And a lot less trouble.

Insecurities

One other thing to consider. Given that Facebook has, and continues, to act in bad faith, you can’t trust the company’s promise it keeps your data safe. Spies may be able to buy your Facebook data. State sponsored attackers probably know how to steal it.

All the above applies to any other Android phone whether it is made in China or South Korea.

If you worry about owning a Huawei phone, you should worry about it being an Android phone.

Things are more serious if you work in the military, in a strategic sector or deal with trade secrets. Spies are as likely to be interested in blueprints for cutting-edge engineering as they are in troop placements.

Risk management

Another set of rules applies if you work in those roles. Foreign governments would like phone level access to your data. Even if there’s any truth in the allegations Huawei phones are only marginally more risky than, say, a Samsung phone. That said, extra prudence won’t hurt.

It may also pay to invest in extra security features. Samsung has a nice line of enterprise-grade phone security.

An iPhone looks safer, although Apple isn’t entirely squeaky clean in this department. While Apple gathers data, the company makes a virtue out of protecting its customers in a way the Android phone makers do not.

Apple’s business model is selling hardware and services. Google’s Android business model relies on collecting personal data. It’s that simple.

By all means be cynical about Apple’s claims. Skepticism is healthy. The world would be a safer place if more consumers thought these things through before buying devices. And also be aware that you can blow much of Apple’s protection the moment you install Facebook or any other pernicious data gathering app.

You have no business worrying about Huawei handing over your phone data to Chinese spies if you’re happy to hand over the same information to the likes of Facebook and Google. It’ll probably end up in the same hands either way.

Disclosure: Bill Bennett has travelled to China and elsewhere as Huawei’s guest on three occasions. He owns an iPhone and keeps tame Androids for testing purposes. 

Huawei is no longer welcome as a phone network build in some western democracies.

There’s an unproven suspicion the company is already spying for China. Even if it is not spying, western governments are wary of depending on a Chinese firm for critical infrastructure.

Sooner or later those fears about Huawei network equipment will spill over into phone handsets.

Negative headlines and ministerial statements here and overseas have already damaged Huawei’s brand. It could get worse.

Implications

What could fear of Huawei mean for the phone market?

It may lead to reduced choice, higher prices and less innovation. Mind you, the second two are already happening, with or with a Huawei effect.

Last year Huawei was the fourth most popular phone brand in New Zealand. It sits behind Samsung, Apple and Vodafone. Huawei had roughly ten percent of the market by unit numbers. The top two brands dominate by a long way.

Because Vodafone-branded handsets are at the low-end of the market, Huawei was number three in terms of revenue. Huawei’s share of revenue was also about ten percent. This number matters more than unit sales.

Huawei fast growing

Also important, Huawei was by far the fastest-growing phone brand in New Zealand both in terms of unit sales and revenue growth. It took market share from both Apple and Samsung.

Huawei plays an important role in New Zealand’s market. It puts pressure on the top two brands and ensures Android phone buyers have a plausible alternative to Samsung.

New Zealand is one of Huawei’s better markets. The phones are invisible in the US. In Australia Huawei is number five in the market, but with a much smaller share. Apple sells roughly 18 phones for every phone sold by Huawei. Samsung sells about 12.

Both Australia and the US have been wary of Huawei network hardware for some time.

Fear spill over

Of course other factors are at play, but it’s reasonable to assume those network security fears have something of a knock-on effect in the handset market.

It’s likely something similar will happen here.

Phone buyers might reason that if ministers and intelligence agencies are concerned about snooping at the network level, the same might apply to Huawei mobile phones, tablets and personal computers.

At the same time, people might look askance when a phone owner reveals they own a Huawei handset. Phone snobbery is real enough already, this is another level.

Employers might decide they don’t want employees doing business on a Huawei handset. There doesn’t need to be an outright ban, a lot of frowning will have a chilling effect.

Retail

It may even become harder to buy a Huawei phone. If things get worse, it’s possible the telcos will want to distance themselves from the brand. That means you either won’t see the handsets in Spark, Vodafone or 2degrees stores or they will be relegated to almost under-the-counter status.

Huawei may decide it needs to ramp up its marketing to calm customer fears. It’s possible, the company is good at talking to the industry, but consumer communication has not been a Huawei strength.

Who wins?

If consumers and retailers turn their back on Huawei, it will take price pressure off rival phone makers. Samsung will benefit most. Huawei has been snapping at Samsung’s heels for some time. Huawei Android phones tend to be as good as Samsung models, but cost a little less.

Apple stands to benefit too. We’ll come back to that point in another post.

There’s every possibility that unease about Huawei phones will spread to other Chinese brands.

Oppo has made a splash here, but the brand needs to work hard to explain why it should not be tarred with the same brush.

After all, if the Chinese government can bully its most prestigious technology company into handing over data, stomping on a smaller player will be simple.

All of this is speculation. It’s possible the scare goes away. It could be that New Zealanders don’t follow Americans and Australians in treating the Huawei brand with caution or suspicion. But on overseas evidence, we should prepare for a phone market shake up.

In my next post about Huawei, I’m going to look at why spying-related suspicion about the company’s phone handsets is misplaced.

Disclosure: Bill Bennett has travelled to China and elsewhere as Huawei’s guest on three occasions.

There’s more to the Western restrictions on Huawei than meets the eye.

Behind the headline news story there’s another story. It’s one you don’t hear or see in the mainstream media.

There has been plenty about Australian and US claims the company spies.

You may also have heard something about a possible hidden kill switch that could allow Huawei or the Chinese government to disrupt or even halt communications.

This week US prosecutors filed criminal charges against the firm.

These actions, and others, may or may not be justified. It’s hard to know for sure.

Protectionism

At least some of the ill-will towards Huawei comes down to trade protectionism. US prosecutors launched their latest action days before the trade negotiations. That timing is no accident.

The scare stories will frighten off some customers even if, in the long term, we find out it was all a false alarm.

Huawei’s reputation is already damaged. Mission accomplished. It’s the ultimate non-tariff trade barrier.

Let’s put all these matters aside for the moment and look at something else.

Huawei too good for its own good

Many in the West fear Huawei because the company is too good at its core business.

By the way, Huawei’s core business is not making mobile phones. The big money comes from designing and building communications networks. This includes old school telephone, fibre broadband and cellular networks.

Huawei has a clear technology lead over its main rivals in this sector. Off the top of my head, I’d say from what I’ve seen and heard from Huawei, the company is anything up to 18 months ahead of rivals.

The company also has a cost advantage over its competitors. Whether you think this is a fair cost advantage or not is neither here nor there. When has business success even been about fairness?

China’s tech success story

This adds up to Huawei having better technology, better products and services at a lower cost. That’s a hard trifecta to beat. It sums up the problem.

A decade ago almost no-one in the West had heard of Huawei. Companies like Nokia, Cisco, Ericsson and Alcatel-Lucent dominated network equipment.

Since then Ericsson dropped out of sight. Nokia merged with Alcatel-Lucent. Cisco is not the force it once was.

In round numbers, Huawei accounts for a third of the global telecommunication network equipment market. It is the biggest IT network equipment company with about a quarter of the market.

Big in 5G

Before these recent actions, Huawei looked set to win the lion’s share of contracts to build next generation 5G mobile networks.

Huawei’s total market share continues to grow at the expense of its rivals. It is already the dominant telecommunications network hardware player. If things were to continue as they have in the past, in a few years Huawei would be unassailable. It is not unreasonable to talk about a potential monopoly.

That’s what scares Western governments. Telecommunications networks are strategic infrastructure. They are as important, some say more important, than roads, railways or shipping lanes.

Forget kill switches

Forget kill switches. Allowing one company to dominate strategic infrastructure is bad full stop. It’s like the plot of a James Bond movie.

Older readers might remember the computer business when IBM was the only game in town. Less ancient readers might remember when Microsoft and Intel called the shots in PCs. This could be worse.

Then you get to the part where we mention that Huawei is a Chinese company. China’s emergence as a global power has taken longer than Huawei’s rise to the top of network hardware. It threatens many people and governments on various levels.

Huawei is a threat even if China doesn’t pull its strings. Add this to fears about China’s ambitions and you have a potent mix.

Geopolitics

In that case, dominating critical infrastructure isn’t about business, laws or trade disputes. It becomes a geopolitical challenge.

There’s another aspect to this. Huawei is a Chinese national champion. The company reflects China’s prestige. It’s not a direct comparison, but is some ways Huawei is the Apple of China’s eye.

Diminishing Huawei’s prestige has to be part of what’s going on.

This whole episode is far from over. It may take us into places no-one expected.

Disclosure: Bill Bennett has travelled to China and elsewhere as Huawei’s guest on three occasions.

Communications Minister Kris Faafoi says New Zealand could ban Huawei from building 5G mobile networks. In New Zealand could bar Huawei Newsroom reports:

Faafoi said that companies had approached him saying they would like to use Huawei’s technology, but he said New Zealand could ultimately follow Australia in barring the company from contracts relating to crucial infrastructure.

“We’re obviously cognisant of the concerns the Australian authorities have had. It’s a pretty crucial piece of infrastructure for the future of the mobile network,” Faafoi said.

Australia and the US already ban Huawei from building communications networks.

Huawei is best known in New Zealand for its mobile phones. The new Huawei Mate 20 Pro is arguably the best Android phone on the market today.

Network hardware

The company’s main business is making the behind-the-scenes hardware that runs telecommunications networks.

A little Huawei equipment is in the UFB broadband network. But that’s small compared to Huawei’s role providing hardware for the 2degrees and Spark 4G mobile networks.

Huawei is a private company. It is Chinese. Some critics say it has links with the Chinese military. Huawei denies those links are active.

What it can’t deny is that it operates from a base in a totalitarian country where pressure can be applied to even the largest independent business.

That said, by law large US companies like Amazon and Microsoft must hand information stored on cloud servers over to US government agencies on demand.

GridAKL Huawei
Huawei’s GridAKL shows the company is keen to be a good corporate citizen

Spooks

Our partners in the Five Eyes intelligence alliance are uneasy about Huawei playing an important role in New Zealand’s key communications infrastructure.

There’s no evidence that Huawei uses its telecommunications equipment to spy on voice or data traffic. There is evidence of Chinese state-sponsored online intelligence gathering elsewhere.

China’s government doesn’t need to use Huawei to snoop, it has other options as Juha Saarinen points out in his NZ Herald story.

If anything, China’s government is likely to want to protect Huawei’s brand. After all, Huawei is a potent demonstration of China’s technical and economic prowess. It is a global giant with the potential to be as influential in technology as Apple, Google, Microsoft or, in its day, IBM.

Huawei New Zealand

Huawei has a close relationship with both Spark and 2degrees. Earlier this year, Huawei and Spark held an impressive demonstration of next generation 5G mobile network technology in Wellington.

Spark expects to build a new 5G network in time for the America’s Cup. It is negotiating with potential hardware partners. Huawei will be on the short list.

There is also trade protectionism behind the pressure for a ban. It suits US economic interests to spread doubt about Chinese equipment makers.

Nokia is not an US company, but somewhere in the conglomerate is the remains of Lucent, which was Bell Labs. At one time that was another American prestige brand. There are US jobs at stake.

Huawei ban problems

Banning Huawei is harder than it seems. The company dominates communications network hardware. Its products and services are often cheaper and better than those from its rivals.

Huawei has been so successful and risen so fast that today its only serious competitor for network hardware is Nokia. That company was Finnish and still has headquarters there. Nowadays Nokia is a multinational. It is made up of businesses that struggled to compete with Huawei on their own.

There’s also Sweden’s Ericsson, but that had faded from the scene before the Huawei spying fuss blew up. It has revived a little since with carriers unable to buy from Huawei looking afresh at its wares.

Meanwhile, Samsung has entered the network equipment market, in part to capitalise on the anti-Huawei sentiment.

Push up prices

Huawei is competitive on price. Ban Huawei and there’s less pressure for Nokia to sharpen its pencil.

A ban will increase the price of building next generation networks. It gives carriers fewer options and less opportunity to differentiate their networks from rivals.

Over the next decade or so New Zealand’s three main carriers will spend the thick end of a billion dollars upgrading phone networks. Equipment makers like Huawei only get a small slice of the pie. Even so we are talking in tens of millions. Keeping Huawei out of the picture will add millions to the cost.

Technology

You can also argue that Huawei has a technical edge over its rivals. Without Huawei we won’t be getting the best possible networks. Our carriers certainly won’t have as much choice when it comes to planning network infrastructure.

There is another practical argument against Huawei, although it is not a justification for banning the company. An unshackled Huawei is so strong that it could soon become a dominant near monopoly in network hardware in much the same way that IBM once dominated computer hardware. That’s not desirable.

Spyware?

Despite all this, the big question remains: Is Huawei spying?

We don’t know.

We do know the Chinese spy on communications networks. So do other powerful governments. Hell, our intelligence service does it too.

Whether a private company is helping the spooks is almost neither here nor there.

Even if it is not spying today, Huawei could be pressured by a future Chinese regime to hand over its keys to spooks. As mentioned earlier, US law requires the likes of Amazon, Microsoft and IBM to let American security agencies look at data stored in the cloud.

Huawei not alone

That said, there are no guarantees the other hardware companies are not also spying. We know Facebook, Google, Amazon and others collect vast amounts of information on us without much fuss. Perhaps this is how the world operates in 2018, that all information is, in effect, considered fair game.

There is one way we can guard against this and that would be to use strong encryption.

Weirdly under the circumstances, Western governments are moving to ban us from encrypting our data. They want to be able to spy on us. At the same time they warn us that other nations are spying.

If Huawei and China are such a threat isn’t that an argument for upping our encryption game?

Huawei phones

What message does a ban, even a potential ban, of Huawei network equipment send us about Huawei mobile phones?

Part of the deal with any Android handset is that you have to give over a lot of information to get the benefits of an operating system that knows your preferences.

Could some of that data passing through a Huawei handset end up with Chinese state security organisations? If anything, this could be a bigger worry.

Huawei is the third largest phone brand in New Zealand. It struggles to sell phones in countries where there is a network hardware ban. A government imposed ban will have a knock-on effect there too.

Mid-October is as late as a phone launch can be for the new model to feature in the all important Christmas sales quarter. Today Huawei showed New Zealanders the Mate 20 Pro. It clearly aims to challenge Samsung for space under the Christmas tree. Huawei needs to get a move on. While customers can order the phone from Friday, it doesn’t official go on sale until the first week in November.

The Huawei Mate 20 Pro is the first mainstream phone to sport a fingerprint reader embedded in its display.

Like most other premium phones this season, the Mate 20 Pro has a huge screen. Unlike most rival models, it has three cameras on the back.

Huawei has gone for a 6.4 inch QHD Oled display on the Mate 20 Pro. It’s big, so is the battery Huawei rates it it at 4,200 mAh. The non-Pro Huawei Mate 20 is a fraction larger again.

The battery charges fast, to 70 percent in 30 minutes. There’s also a slower wireless charging option. One nice twist is that you can wireless charge suitably equipped accessories such as ear buds from the phone.

 

7 nanometre processor

In contrast the technology in the Kirin 980 processor that powers both phones is tiny. It’s Huawei’s first 7 nanometre phone processor.

This puts Huawei in line with Apple which also uses 7 nm technology in the A12 chips found in the company’s 2018 iPhones.

That’s not the only on-paper similarity to the iPhone XS. The Mate 20 Pro has 3D face recognition software.

While you may not need both face recognition and a fingerprint scanner in the same device, having the two is an impressive show of techno prowess.

Glass slab

Doing away with a separate fingerprint reader makes the phone an even more featureless slab of glass.

There are obvious physical comparisons with the Apple iphone XS series, yet in the hand the Mate 20 Pro looks and feels more like a Samsung Galaxy S model than an iPhone. Indeed, from the front it’s hard to tell the Mate 20 Pro from the Galaxy S or the iPhone XS Max. Either phone designers all think alike, or they’re playing follow-the-leaders. 

As always with modern premium phones, marketing emphasises the camera or in this case cameras. There are three on the back include a 40 megapixel camera, a second 8 megapixel camera with a telephoto lens and 20 megapixel wide-angle camera.

This last camera replaces the monochrome camera that is in Huawei’s P20 Pro. I’ll let you know how this works in practice when I get some hands-on time with the phone.

Android 9

Huawei has upgraded EMUI, its Android overlay software. For me this has always been one of the weakest links in Huawei phones. It still looks a lot like iOS to the casual observer. I swear some of the app icons are direct copies of Apple’s icons. Huawei’s other weak link has been tardiness when it comes to upgrading phone software. There’s a promise this will improve. At the launch Huawei told journalists there is already an upgrade for the software in the review phones.

As the name suggests, EMUI 9 is a variation on Android 9. Huawei says it optimised the software to speed up regular tasks.

Given the processor has also had a speed bump, the phone should be a lot faster and smoother than earlier models. Having said that, speed and smoothness never felt like problems with recent Huawei phones.

First thoughts

Like Apple Huawei has ditched the headphone jack in favour of wireless connections. This is something that upsets some people. It’s time to accept that a physical jack is now an anachronism.

The Mate 20 Pro goes on sale at NZ$1599. That puts the Mate 20 Pro on a par with the Oppo Find X and makes it $200 cheaper than the $1700 Samsung Galaxy Note 9. My impression is that Huawei wants to stay competitive on price in New Zealand. On paper Huawei has the price edge,

It needs too. Samsung dominates the Android phone market. For many users it is a tried and tested brand with, one exploding model aside, a clear track record. Huawei is not well established yet. It sales are tiny compared Samsung’s phone numbers in New Zealand hence the aggressive price. I’ll write about whether it is worth the money when I give it a proper test.