Trump's Huawei ban may leave the tech giant up a creek without a paddle for its next 2 major smartphones - Business Insider

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• Huawei can no longer use Google's Android operating system and services on its future smartphones now that it's been placed on the US Commerce Department's entity list.
• The move could make Huawei's smartphones dramatically less appealing as the company is on the verge of two important product launches: its next flagship and its first foldable phone.
• It could also threaten Huawei's ability to expand outside of China, potentially jeopardizing its position as a leader in the global smartphone market.
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Just last month, Huawei made headlines as the only major smartphone maker to see its volumes grow worldwide in a market that's been on the decline for six consecutive quarters. But now, only several weeks later, Huawei's spot at the top of the global smartphone market could be in question as the company is on the verge of two important product launches: its next-generation flagship phone and its first foldable phone.

That uncertainty stems from Google significantly scaling back its business with Huawei in a move that would prevent the Chinese tech giant from putting Google's software — including its Play app store and services — on its future handsets. As such, Huawei's upcoming smartphones will not be able to run on Android, or at least the version of Android consumers are familiar with. That's because Google can no longer transfer technology to the Chinese tech firm without obtaining government permission now that Huawei has been placed on the US Commerce Department's entity list.

Without Android, the biggest smartphone platform in the world that supports millions of applications, Huawei's smartphones could become dramatically less appealing. That calls into question whether Huawei's next-generation flagship smartphone, expected to be called the Mate 30 Pro, will see the same level of success as its Mate 20 predecessor, of which Huawei shipped 10 million units between its October announcement and March 2019.

"I've got to think we're going to see a hit on sales immediately," said Frank Gillett, a vice president and principal analyst at market research firm Forrester, when asked by Business Insider how long it will take to see the ramifications of Google's scaled-back relationship with Huawei. "Anyone buying a phone has to wonder for how long Google will allow software updates and operation, because it's not clear yet."

Read more: A smartphone company you've never heard of rose to fame by being the opposite of Apple and Samsung. Now it looks like that might be starting to change.

Losing Google's support likely won't matter much in China, Huawei's biggest market, where the search giant's services are banned. But it could have an impact on other areas of the world, particularly Europe, which is a key market for Huawei. The company said in its annual report that 28.4% of its business comes from the Europe, Middle East, and Africa region, where its smartphones accounted for 23.3% of the mobile device market as of the first quarter of 2019, according to market research firm Canalys.

Huawei doesn't appear to be very worried about the impact these restrictions could have on its revenue.

"It is expected that Huawei's growth may slow, but only slightly," Huawei founder and chief executive Ren Zhengfei said in a recent interview with Nikkei Asian Review. He added that the company's annual revenue growth could come in under its previous goal of 20%.

Huawei has been granted a reprieve that will allow it to maintain and provide updates to existing customers until August 19. But that probably won't help the company when it comes to its Mate 30 Pro launch, which is expected to arrive in the fall timeframe.

Huawei's Mate 20 Pro smartphoneAntonio Villas-Boas/Business Insider

Huawei's Mate 20 Pro launched last October to rave reviews, with CNET essentially calling it a cross between Samsung's Galaxy S9 and Apple's iPhone X and The Guardian writing that Huawei has "pulled off something special" with the phone. Before that, Huawei's Mate 10 Pro debuted in October 2017, suggesting that the Mate 30 Pro may not be released until after Google's suspension of Android goes into effect.

Huawei's Mate X, the company's first foldable phone that's expected to debut in mid-2019 after generating significant buzz at Mobile World Congress earlier this year, could also face an uncertain future even if it does launch before August 19. Given the fact that Google has been tailoring its operating system specifically for foldable smartphones, Android could be especially important for the Mate X.

For example, Google said at its recent developers conference that Android Q will be designed to accommodate different screen dimensions, and the company held a session for developers to educate them on how to design apps for foldable multi-display devices. Such efforts  are critical to make foldable phones like the Mate X and Samsung's Galaxy Fold successful, considering they require apps and software features that work smoothly across different screen sizes and form factors. That could give rival foldable phones that run on Google's software an important advantage over Huawei's.

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Huawei has said that it's working on its own operating system for phones to replace Android in preparation for a scenario like this in which it cannot work with Google on future hardware. But little is known about that software, leaving many lingering questions for potential customers such as whether it will be ready in time for the Mate 30 Pro and Mate X launches and how well it will support foldable form factors. Plus, convincing consumers outside of China to pay for an expensive phone like the Mate X, which will cost around $2,600, or the Mate 30 Pro without Google's expansive app store could present another challenge.

Huawei already has its own app store, and it's been in talks with European wireless carriers to expand the reach of its digital storefront, according to Bloomberg. Even so, it's unclear how many consumers actually use those apps. It's common for smartphone makers to preload devices with their own apps or app stores, but those devices typically include Google's Play Store as well.

To be clear, the Trump administration's decision to place Huawei on this trade blacklist doesn't mean certain doom for Huawei.  The US government similarly banned American companies from selling components to Chinese phone maker ZTE in May 2018, but eventually reached an agreement with the company that resulted in those sanctions being lifted. But at the very least, the episode could make consumers wary of purchasing electronics made in China, says Gillett.

"People are going to be more conscious of whether they're comfortable buying from a Chinese smartphone maker," he said. "If the key features of your phone get turned off, that's a scary prospect."

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https://www.businessinsider.com/trump-blacklist-huawei-could-jeopardize-mate-x-mate-30-release-2019-5

2019-05-22 15:39:21Z
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