VCG via Getty Images
“We are one of only two companies worldwide that can have this hardware and software solution for their own ecosystem,” Anson Zhang tells me. “Only Huawei and Apple can do this – it’s our long-term strategy.” The man who runs Huawei’s UK consumer business – perhaps the most media-critical brand outside of China – is Bullish. “Although there are a lot of challenges and rumors and pressures,” he says, “we are committed to our investments, our ecosystem … This strategy will work.”
Hidden behind the headlines is a basic truth with Huawei – they play a long game. No shareholders, as such. A large and spacious domestic market that is not currently running at will. The welcome embrace of a state sponsor that – even if there is no property or control, which is forcefully denied, is certainly the softest landing post in the world from the world blacklist.
Until last year, Huawei competed with Samsung for Google Android users worldwide. But Trump’s sanctions cut Google’s Chinese giant drive. And now, with a view to the global market, Huawei wants to cut a third way, an alternative to both iOS en fol fat Android. But in doing so, the company finds a lot, many closer to Apple’s model than to Google’s. Huawei’s plan to defeat Google, bringing Android users outside of China to its own OS, is argumentative be just like Apple.
While Huawei is still talking about working with Google again, it will be more likely as more time passes. With the latest pressure from the US, Huawei now has to urgently work on its new strategy, to ensure that its non-Chinese smartphone business does not decline. The news this week that the expiration of temporary exemptions from the US blacklist could jeopardize Android updates – even for Huawei phones shipped with Google – will only make matters worse.
The premise for this discussion is consumers in the UK, and through enlargement Europe. How should they feel about the market in the light of negative header to negative header. Europe is Huawei’s primary battlefield against Washington. Decisions by the continent’s major markets about Huawei’s involvement in 5G networks have been in flux for more than a year. Meanwhile, on the consumer front, this is where Huawei has felt the heaviest pain by selling new smartphones flat, absent Google.
“There are a lot of challenges from last year to this year,” Zhang says. “The US ban, UK 5G, a lot of questions and rumors and uncertainty. This can send customers questions – what is the future of my Huawei device when I buy it? But we are still committed to UK and European consumer markets, despite the 5G decision. We will continuously work on our strategy and deliver our products. And any user who has a Huawei device or is ready to buy one will not be affected. They will get updates, but more – we are building our long-term strategy, our own ecosystem. “
The time for this discussion is important. A few days earlier, Richard Yu – Huawei’s global consumer boss – had admitted that the company’s custom Kirin chips were faster. Maybe enough to meet the demand for the tough Mate 40 – but maybe not even that. No third-party production after September 15th. Starting that year, it’s about new supply routes, replacing the critically acclaimed chips across the board.
“Obviously, this gives us a challenge, an impact,” Zhang says. “We have been renewing the Kirin chipset for over 10 years. Of nothing … But now we are ready to work with any supplier … Qualcomm for example, next year to deliver new smartphones, new tablets, new PCs. Kirin is just one thing in the ecosystem, it’s not everything … We do not think so [this] will have implications for the overall ecosystem strategy. ”
Here it is again – the “ecosystem.” On the surface, it is not new. Huawei’s journey to its own OS – HongMeng, Harmony, HMS, themed variations – had IoT at heart, not smartphones. The original plan was to extend Google’s full-blown Android OS, not replace it. But times have changed. There is a sudden urgency to make this strategy work now. And if you dig into the details, what serious risks – there is now a fatal flaw in the strategy that was never expected when it was drawn up
“What is our strategy for consumers,” says Zhang, “in the next five to ten years, the most exciting tech is to upgrade the consumer experience with 5G and AI.” There are two facets to this for Huawei, part of its “seamless AI life” theme. First, that all the devices you use should work smoothly with each other, connected via Huawei’s HMS. At home, a video you want to play is best viewed on your smart TV, in the office it’s your PC, on the pendulum it’s your phone.
At the moment this can all be done with a few simple taps. Huawei wants all that automated – that’s the second part. The system knows that you are at home, where you are, how you want to interact, you do not have to do anything, just lie back and enjoy. “With our own ecosystem, in the future we will work smartly with all your devices, based on our own platform, HMS.”
HMS is not enough in itself, it is of course the small business of the global app ecosystem, and ensures that millions of developers worldwide participate. “The company has committed to investing $ 3 billion to support developers worldwide,” says Zhang. “And progress after the first six months is positive. At the end of last year, we identified the top 3,000 essential apps worldwide. The most used. At the end of July, 80% of these were in our AppGallery. That way, every user can find 80% of the top apps. ”
Clearly, most of the headlines have focused on replacing the hyperscale apps that were affected by the US ban. Huawei has launched their new PetalSearch app to make it so easy. None of this replaces the core Google Apps and underlying services, though, and the many solutions suggested online have all fallen short of consumer grade. This is the fix Huawei needs to find.
“We now have 1.6 million developers working with thousands of Huawei engineers to improve the HSE experience.” Since Zhang. “We have our own services as an alternative to Google. Many users have used GMS for many years. Now we have steps to launch new services – Huawei Music and Huawei Video, for example, we work together with the three largest music companies in the US. You will not be surprised to see Huawei Maps in the coming months. That is our answer. We will provide our own solutions. ”
For Huawei, it’s not enough to match GMS – it needs to go further. “We recently announced HMS 5.0,” says Zhang, “what the new upgrade is … This is a very important milestone for us … This is the first time we have completed GMS functionality, but more than that we have launched new features to support developers, we will continue to work on it, we will not compromise. ”
Zhang then talks through last year’s company ‘1 + 8 + N’ strategy. The “1” is the smartphone, the heart of the ecosystem, “the most important device – the most widely used by any consumer,” explains Zhang. “Around this are” 8 “segments, connected by HMS, which all have the same OS. This includes PCs, tablets, TVs, wearables. Then there is the” N “, any IoT device can access “Huawei’s ecosystem through HiLink … This has been in China for a few years now. And now we’ll start in overseas markets.”
Huawei
Zhang tells me how important it was to see Huawei advance Samsung to global smartphone sales. “We have reached number one – it’s really exciting for us and shows how our business is going.” Huawei’s sales statistics were driven by stunning growth in China, rather than anywhere else, and there are echoes of this as Zhang continues to chat about the company’s prospects in the PC market.
“We started PCs in 2017 in China,” he says. “We want to put it differently for traditional players. We want to make PCs more desirable and fashionable. If there is no added value, there is no reason to buy Huawei over Lenovo or HP. ”
Unsurprisingly, it went well. In China. “We have been the number two market for PCs in two years – in China, the most competitive PC market. We are also number one in the premium segment… Even above apple… A great performance. This has given us confidence to take the PC business worldwide … People are willing to spend more money to get more value. “
And that fatal flaw – it’s pretty obvious. If Huawei builds its entire strategy around the smartphone – consumers who buy their smartphones will buy their PCs and tablets and TVs and wearables – what will happen if that smartphone sales dries up? Doesn’t that risk the whole ecosystem strategy? In China, it works brilliantly – no Google, no problem. But, now that is not otherwise the case. Huawei has not yet succeeded in convincing non-Chinese consumers to switch en masse to HMS. It’s all that matters.
“You’re right,” Zhang tells me. “This is point number one for HMS. It’s communicating to users, how we gain trust, what’s HMS, what’s the difference. But HMS is not entirely new. HMS or GMS, it’s all based on Android, the user experience does not change too much … The most important thing is that apps work, that’s the most important point … We tried to get the apps on board in the AppGallery. ”
We rate Huawei more Apple than Google. Zhang explains that control of hardware en software means “open more than GMS – for example camera features, where we have leading functionality, we have opened hardware keys, more apps and services, more added value … We have the advantage that our ecosystem is not built out of nothing. We “We have 600 million end users worldwide on this ecosystem. We have an enormous investment in R&D – more than 10% of turnover for 10 years.”
Zhang insists it is a piece of five to ten years old. This is not about the short term. This is not specifically about beating Google as mirroring Apple, he says. “Our own ecosystem is not about controlling everything. But to deliver user experience through our devices, we need our own ecosystem, not to control the supply chain … We do not want to close the ecosystem, all suppliers and manufacturers can access HMS. ”
Huawei’s strategy precedes the US blacklist, but its implementation is fully captured by the realities of existing outside the Google bubble, and has to compete overseas with Samsung, with Apple, with domestic Chinese competitors – Xiaomi, Oppo, Vivo. HMS may have once been a clean extension of its very bold Android experience outside of China, but now it has to fend for itself.
“We would love to work with Google,” Zhang tells me. We did not say we should deal with HMS … But now we are have to focus on HMS… The original idea was to continue with Google, even today we are open to working with them. But there is the politics. In the future, HMS might work with GMS … But let’s put it this way. There are only two major players with ecosystems – Apple and Google. It will not be a problem to have a third. In each sector, three top players are ridiculous. ”
Possibly true. But others have tried and failed. There, the global mobile operating system landscape has not been shaken for ten years. This may be Huawei’s best bet, but it’s a dangerous move and until the company secures a sea change in adopting HMS as an alternative to GMS outside of China, it will be its biggest challenge.
.
