VCG via Getty Images
“We are one of only two companies globally that can have this hardware and software solution for our own ecosystem,” Anson Zhang tells me. “Only Huawei and Apple can do this—it’s our long-term strategy.” The man leading Huawei’s U.K. consumer business—arguably its most media-critical market outside China, is bullish. “Although there are lots of challenges and rumours and pressure,” he says, “we are committed to our investments, our ecosystem… This strategy will work.”
Hidden behind the headlines there’s a basal truth with Huawei—they’re playing a long game. No shareholders, as such. A vast and generous domestic market that’s not about to turn against them anytime soon. The welcome embrace of a state sponsor that—whether or not there’s any ownership or control, which is vigorously denied—has certainly been the world’s softest landing post America’s blacklist.
Until last year, Huawei was competing with Samsung for Google Android users worldwide. But Trump’s sanctions cut the Chinese giant adrift from Google. And now, eyeing the global market, Huawei wants to carve a third-way, an alternative to both iOS and full-fat Android. But in doing so, the company finds itself much, much closer to Apple’s model than to Google’s. Huawei’s plan to beat Google, to bring Android users outside China to its own OS, is arguably be just like Apple.
While Huawei still talks about working again with Google, it’s becoming more unlikely as more time passes. With the latest pressure from the U.S., Huawei now urgently needs to make its new strategy work, to ensure its non-Chinese smartphone business doesn’t terminally decline. The news this week, that the expiration of temporary U.S. blacklist exemptions may put Android updates at risk—even for Huawei phones that shipped with Google, will just make matters worse.
The premise for this discussion is consumers in the U.K., and by extension Europe. How should they feel about the brand in light of negative headline after negative headline. Europe is Huawei’s primary battleground against Washington. Decisions by the continent’s key markets on Huawei’s involvement in 5G networks have been in flux for over a year. Meanwhile, on the consumer front, this is where Huawei has felt the acutest pain from new smartphones sales falling flat, absent Google.
“There are lots of challenges from last year to this year,” Zhang says. “The U.S. ban, U.K. 5G, lots of questions and rumours and uncertainty. This might drive consumer questions—what’s the future of my Huawei device if I purchase it? But we are still committed to U.K. and European markets in consumer, regardless of the 5G decision. We will continuously work our strategy and deliver our products. And any user that has a Huawei device or is willing to purchase one won’t be impacted. They will get updates, but more—we are building our long-term strategy, our own ecosystem.”
The timing for this discussion is significant. A few days earlier, Richard Yu—Huawei’s global consumer boss—had admitted that the company’s custom Kirin chips were fast running out. Maybe enough to satisfy demand for the imminent Mate 40—but maybe not even that. No third-party production after September 15. From then on, it’s all about new supply routes, replacing the critical custom chips across the range.
“Obviously this gives us a challenge, an impact,” Zhang says. “We innovated the Kirin chipset for more than 10 years. From nothing... But now we are willing to work with any provider... Qualcomm for example, to deliver new smartphones, new tablets, new PCs next year. Kirin is just one thing in the ecosystem, it’s not everything… We don’t think [this] will impact the overall ecosystem strategy.”
Here it is again—the “ecosystem.” On the surface, it’s not new. Huawei’s foray into its own OS—HongMeng, Harmony, HMS, variations on a theme—had IoT at its heart, not smartphones. The original plan was to extend Google’s full-fat Android OS, not to replace it. But times have changed. There’s a sudden urgency to make this strategy work now. And if you dig into the detail, some serious risks—there’s now a fatal flaw in the strategy that was never anticipated when it was drawn up
“What is our strategy for consumer,” Zhang says, “in the next five to ten years, the most exciting tech is to upgrade the consumer experience using 5G and AI.” There are two facets to this for Huawei, part of their “seamless AI life” theme. First, that all the devices you use should work seamlessly with one another, connected over 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 commute it’s your phone.
Right now, all this can be done with a few simple taps. Huawei wants all that automated—that’s the second part. The system knows you’re at home, where you are, how you like to interact, you don’t need to do anything, just sit back and enjoy. “With our own ecosystem, in the future we will make all your devices work with each other smartly, based on our own platform, HMS.”
HMS is not enough on its own, of course, there’s the small matter of the global app ecosystem, ensuring that millions of developers worldwide play along. “The company committed to invest $3 billion to support developers globally,” Zhang says. “And progress after the first six months is positive. At the end of last year, we identified the top 3,000 essential apps globally. The most used. By the end of July, 80% of these were in our AppGallery. So any user can find 80% of the top apps.”
Clearly, most of the headlines have focused on the replacement of the hyper-scale apps hit by the U.S. ban. Huawei has launched its new PetalSearch app to make this as simple as it can. None of this replaces the core Google apps and underlying services, though, and the multitude of workarounds that have been 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 enhance the HMS experience.” Zhang says. “We have 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 cooperate with the three biggest music companies in the U.S. You will not be surprised if you 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,” Zhang says, “which is the new upgrade... This is quite an important milestone for us… This is first time we have fulfilled GMS functionality, but more than that, we have launched new functions to support developers, we will continually work on that, we will not compromise.”
Zhang then talks through the company’s “1+8+N” strategy from last year. The “1” is the smartphone, the heart of the ecosystem, “the most important device—the most used by any consumer,” Zhang explains. “Around this are “8” segments, connected by HMS, all running the same OS. This includes PCs, tablets, TVs, wearables. Then there is the “N,” any IoT device can access Huawei’s ecosystem thru HiLink… This has been in China for a couple of years. And now we will start to run it in overseas markets.”
Huawei
Zhang tells me how important it was to see Huawei surpass Samsung for global smartphone sales. “We have reached number one—it’s really exciting for us and shows how our business is going.” Huawei’s sales stats were driven by stunning growth in China, rather than anywhere else, and there are echoes of this when Zhang goes on to talk up the company’s prospects in the PC market.
“We started PCs in 2017 in China, he says. “We want to position it differently to traditional players. We want to make PCs more desirable and fashionable. If there’s no added value, there’s no reason to buy Huawei over Lenovo or HP.”
Unsurprisingly, this has gone well. In China. “We are already number two market share for PCs inside two years—in China, the most competitive PC market. We are also number one in the premium segment… Even above apple… An amazing achievement. This has given us confidence to take the PC business global… People are willing to spend more money to get more value.”
And so that fatal flaw—it’s fairly obvious. If Huawei builds its entire strategy around the smartphone—consumers who buy its smartphones will buy its PCs and tablets and TVs and wearables—then what happens if those smartphone sales dry up? Doesn’t that risk the whole ecosystem strategy? In China it’s working brilliantly—no Google, no problem. But, right now, that’s not the case elsewhere. Huawei hasn’t yet managed to persuade non-Chinese consumers to switch to HMS en masse. It’s all that matters.
“You’re right,” Zhang tells me. “This is point number one for HMS. It’s communicating to users, how do we win trust, what is HMS, what difference is it. But HMS is not totally new. HMS or GMS, it’s all based on Android, the user experience won’t change too much… The major thing is making apps work, that’s the key point… We have been trying too get the apps onboard into the AppGallery.”
We discuss Huawei being more Apple than Google. Zhang explains that control of hardware and software means opening up “more than GMS—for example camera functions, where we have leading functionality, we have opened hardware keys, more apps and services, more added value... We have the advantage that our ecosystem was not built from nothing. We have 600 million end users globally on this ecosystem. We have a huge investment in R&D—more than 10% of revenues for 10 years.”
Zhang stresses that it’s a five to ten year play. This isn’t about the short-term. This is not specifically about beating Google or mirroring Apple, he says. “Our own ecosystem is not to control everything. But to provide user experience through our devices, we need our own ecosystem, not to control the supply chain... We don’t want the ecosystem closed, any suppliers and manufacturers can access HMS.”
Huawei’s strategy predates the U.S. blacklist, but its execution has been totally recut by the realities of existing outside Google’s bubble, needing to compete overseas with Samsung, with Apple, with domestic Chinese competitors—Xiaomi, Oppo, Vivo. HMS may once have been a neat extension of its full-fat Android experience outside China, but now it needs to fend for itself.
“We would have liked to go with Google,” Zhang tells me. We didn’t say we must go with HMS… But now we have to focus on HMS… The original idea was to continue with Google, even today we’re open to working with them. But there’s the politics. In the future, maybe HMS can work with GMS... But let’s put it this way. There are only two big players with ecosystems—Apple and Google. It will not be a problem to have a third one. In any industry, three top players is reasonable.”
Possibly true. But others have tried and failed. There hasn’t been a shake-up of the global mobile operating system landscape for a decade. This may be Huawei’s best bet, but it’s a daring move and, until the company secures a sea change in adoption of HMS as an alternative to GMS outside China, it will be its greatest challenge yet.
The Link LonkAugust 15, 2020 at 06:00PM
https://ift.tt/348oj7P
Goodbye Google—Huawei Now Urgently Turns To Apple Instead - Forbes
https://ift.tt/3eIwkCL
Huawei
No comments:
Post a Comment