It took less than two days after the announcement of President Trump’s executive order to increase the scrutiny of business between foreign and US technology companies for the first major hurdle: Huawei is expected to completely lose access to the applications and services of Google, as well as future Android updates approved by Google. And unlike the previous government intervention that only affected the ability of Huawei to sell their smartphones in the US. UU., This decision has ramifications for the global operations of the company, and if it comes to fruition, it will irreparably damage Huawei’s smartphone business.
Huawei, like all the other companies that sell Android phones successfully, relies on Google support. Android is open source, yes, but as it has been shown over and over again, an “Android” phone without applications and Google services is not something that consumers want. (This is, coincidentally, exactly what the European Commission and Google are constantly fighting for). The actions of last week by the US government. UU They have made Google simply can not provide certification or applications and services to Huawei. And as such, Huawei seems destined to have to withdraw to sell only phones in China, where it does not have access to Google services as it is, and certain very specific price segments and markets where Google services are not so important.
Many companies have tried to make Android devices without Play Store, and while there are a number of success stories in the space of technology in general, there is more than a long list of failures when it comes to smartphones. It is simply not reasonable in 2019 for any company to launch a phone outside of China without the services of Google and expect it to be sold. You can have the best cameras, hardware, specifications and main operating system that we have seen, but unless you have the Google applications and, fundamentally, the Play Store, effectively, no one will be interested in buying it. I am sure that Huawei can (and does) make a good phone with all its own services, but if it intends to compete in a market filled with 100% of the phones that have access to Google services and the Play Store, it has to have them too
It can be difficult to get out of our US perspective. UU And realize how important Huawei is in the world of smart phones. Although their phones are indeed a non-important factor here, Huawei’s global smartphone market share is approaching 20%, which is now above Apple. It increased most of that market share by providing consumers around the world with a value mindset, getting phones with specifications and strong capabilities at exceptional prices. But even in high-income countries, Huawei has finally managed to venture into the highly competitive flagship phone space. It is a true competitor in most of the important countries of the world and a leader in some. Now, you are destined to lose all that momentum.
Even if the ban only existed for a short period, only to be revoked by some kind of specific agreement with China or a future administration of the United States, the damage would already be done. Consumers are, in the end, inconstant: the first time someone buys a Huawei phone and discovers that it does not have Google services, the Huawei brand will be tarnished and you can bet that they will not be looking at Huawei. the next time they are updated. Ultimately, it will be extremely difficult to recover that lost ground, even with a short period of time trying to sell phones without the services of Google; and things would not be better if Huawei skipped a year or two of not being in the market with new devices of any kind.
Huawei, of course, has a history of manufacturing phones for China without services or Google support. And there are more than 1.3 billion people in China, that’s a healthy market in its own right. Huawei has almost 30% market share there as it is. He has created his own operating system, services and partnerships to make his phones competitive in China, and this would lead him to think that, in theory, he could do the same worldwide. But there are clear differences that make that idea not a starting point, namely, the history of Google services was never available in China, which means that Huawei has been competing on equal terms with other companies that build their own ecosystems and do not adopt Google’s superior.
You can bet that Huawei’s market share in China will grow if it is indeed the only market in which to invest. But considering its strong participation in the global market and its sales, only selling in China would mark a dramatic reduction in its smartphone operations. A consolation prize
The question remains how fast Huawei will choose to disconnect or pause its smartphone development outside of China. Fortunately, we know that existing Huawei devices will continue to be supported by Google and will receive updates, which obviously will keep things going for some time. But if this prohibition of the US government. UU A business operations comes into effect in the long term, we only have a few months for Huawei to make a very difficult decision on whether to decide to try and launch an Android phone outside China. without the services of Google, or suspend the entire operation with the hope of a reversal of the decision. As painful as it would be for Huawei, my vote goes to the latter.