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It is now clear that the fall out of the the latest U.S. sanctions Huawei’s face will reshape the global smartphone industry in 2021, outperforming Google, Samsung and Apple, giving China more influence over the global technology sector than ever before. Simply put, the downside risks from America listing one of the world’s largest smartphone makers is now becoming increasingly unrealistic.
While tears are not being shed at Huawei’s Headquarters in Shenzhen for Donald Trump’s exit from the White House, there is still no reason for further hope. Huawei has been battling the blacklist for the better part of two years, and it’s unclear exactly what size and shape of the industry will survive.
Huawei is denying any cyber links to Beijing and still is not meaningful, public domain evidence of real backdoors in its 5G equipment, but e is it is reasonable to suggest that western countries that purchase critical telecommunications infrastructure from a private Chinese company pose a security risk. Unsurprisingly, therefore, Huawei’s 5G business has declined in major blacklisted export markets in America.
But more important for Huawei is the huge impact on its smartphone business. The facts are now known – Google’s loss in 2019 was bad enough, but last year the U.S. seized the pressure with cutting Huawei’s access to the chipsets needed to power its core devices.
While the latest unconfirmed rumors suggesting that he may have more stockpiles of those inner Kirin slits than previously thought, analysts say predict a steep enough fall in 2021 smartphone sales to take the company away from the top tier of manufacturers, exacerbated by the removal of their Honor brand and unavoidable saved by home sales in China due to shortage of chipsets.
There was no real threat in the U.S. campaigning for an international ban on the sale of Huawei (and ZTE) 5G equipment, whether it was a core network or just radio systems. The only thing that fell out was a limited competitive set and the ability of Nokia and Ericsson to step up, and others like Samsung and NEC to step in. Yes, the cost of ripping and replacing Huawei equipment is huge, and Huawei’s competitors inevitably fear a Chinese backlash, but it’s fair to assume that Huawei’s global 5G equipment leadership won’t go unnoticed. renewal.
The positioning of the smartphone, however, is a very different matter. The downside risk here for the U.S. is huge, and the fallout from Huawei’s crackdown is a major threat to western tech giants and America’s dominance of global mobile standards for software and services.
As I said back in June 2019, a month after Trump’s blacklist came into effect, forcing Huawei to go into a corner threatens “another… non-commodity-dependent ecosystem. U.S. hardware or software and in particular breaking Google’s monopoly. The economic impact for the US, if seized, would be strong. ” This is now in play. Huawei has quietly confirmed that its Harmony OS will be available to other smartphone makers, and has said it intends to beat Android and create the third global mobile ecosystem .
Huawei is now embarking on the development of monitoring and mapping, its own app store and development community, news distribution and information services. As I said before, all of this raises a very serious question about a Chinese entity controlling the provision of information to millions of people in the west. This threat of censorship and influence reported on top stories is one of the more rational arguments against TikTok. There is also the issue of data collection and analysis. Google is gaining incredible levels of worldwide visibility through the use of its Android software and services.
Huawei is keeping its options open for now. Maintaining its development path for new smartphones while driving the Openource ecosystem and seeking partners. Prior to the chipset ban, Huawei’s strategy seemed to be to replicate Apple’s approach, to take control of its hardware, software and services. “We are one of only two companies worldwide to be able to get this hardware and software solution for our own ecosystem,” Huawei’s head of consumer UK told me last year. “Only Huawei and Apple can do this – it’s our long-term strategy – we are committed to our investments, our ecosystem … This strategy will work.”
But the ban on chipset threatens to kill that strategy – unless there is a promise of in-house smartphones in the future, it will not work. Huawei’s ecosystem puts its smartphones at the center of a user’s IoT web. Reproduction of the Android Openource approach was the natural evolution, seeking other smartphone makers as a backup.
But ironically, neither Apple nor Samsung nor Google is the biggest threat to Huawei’s strategy, it is the other major Chinese smartphone players. And this brings us to the second Chinese threat to the global status quo of smartphones. Xiaomi, Oppo and Vivo have embarked on “new Huawei” strategies, trying to replicate the successful recipe by bringing high-end hardware at discounted prices into key markets. to beat Samsung and Apple.
Make no mistake, these well-funded Chinese brands have every chance of repeating Huawei’s trick. Xiaomi and Oppo have now acquired about 13% of global shipping, both could surpass Apple in 2021, Xiaomi may even run at Samsung if the forecasts are within his to believe. To make matters worse, Oppo is part of the Chinese conglomerate BBK, which counts the Vivo, RealMe and OnePlus brands in its stable. Bringing these brands together – while claiming to be independent of each other, BBK easily overtakes Samsung.
The Huawei recipe is Android enabled. None of the other Chinese smartphone makers have been hit by US-style Huawei sanctions, they maintain access to full-fat Android outside of China (where the software itself is banned ). Without that, the ability to ramp up market share would be greatly reduced. If Huawei can’t regain manufacturing capacity – despite the blacklisting that has made the market more competitive – and because it’s hard to see how it will change its domestic competitors from Android in overseas markets, it is hard to see how the play of the ecosystem will significantly affect the market share of Android.
And so, all eyes on Biden and the inevitable lobbying from the U.S. tech sector after January 20thth. The fact is that Huawei would not have been targeted by such real measures if it were not just for a smartphone player and consumer products. The irony is that it was these risk-free business areas that were driving growth and profit before the blacklist. If the U.S. can find some way to explain Huawei’s access to chipsets and U.S. tech between 5G and consumer, it’s clear that the best thing for U.S. technical leadership on mobile standards is to return Huawei to Android and reduce the damage from its other OS.
But then we have the politics. China’s more hawkish watchdogs in America await any sign of Biden softening on Huawei as a litmus test of broader views of Beijing. The danger is that this will be a political trap. The trick for the US will be to reap the benefits of 5G and embrace the non-threatening consumer devices, phones, laptops, tablets and wearables. All of this could see Huawei introduce a mini-Huaweis – a consumer business that is free to export at will, perhaps the same for clouds, cars and enterprise, then 5G business on restricted by a US owner.
Removing the cybersecurity concerns that prompted the U.S. to target Huawei, the launch of their new OS and the associated export plays from all of their major domestic competitors is part of a pre- a distributed strategy in Beijing to challenge American technology leadership, to build more independence. ecosystem in China and to challenge U.S. players around the world. The Chinese threat from the mobile ecosystem is now established very real and west they have to go against China’s long game. Huawei’s blacklist has changed the mobile landscape – the next trends in the west are crucial.
Rocks and hard places. Answers are not easy. If 2020 were a special year for Huawei and the fall from its battle with the US, it looks like 2021 could be even more of a roller-coaster ride.