Trump’s ban on Huawei might have seemed a drastic proclamation of the trade war with China, however certain incidents have been brewing for the past few years that lead to this ban. The history of the Huawei ban in the U.S. goes back to 2012 when U.S. companies were banned from using Huawei’s networking equipment. The primary reason behind this ban was speculation about the company’s relations with the Chinese government and whether its equipment might be used to spy on different companies and countries. This ban was solidified in May 2019, when a Presidential order placed Huawei in the ‘U.S. Entity list,’ and the company was banned from the U.S. communications network. We’ll be discussing the specifics of this ban and how it impacts consumers worldwide.
While discussing Huawei’s ban it’s important to remember that the company is the world’s second-largest phone manufacturer and No. 1 telecom supplier. July 2019 witnessed Huawei’s defeat of its nearest rival in gaining 17% of the global market according to Q2 2019’s earnings result. On August 23rd, the company reduced 100 jobs from its Australian operations, after it was banned from the 5G rollout. The company also estimated that the U.S. ban will cost a $10 billion loss to its phone division. The ban hasn’t just dented its U.S. operations, like India, the UK and other countries have halted the usage of Huawei tech.
The main issues Huawei faced in the aftermath of Trump’s ban was the removal of Google’s support for future Huawei phones, ARM-the UK based chip designer’s cessation of activities with the company, and the negative reaction by global networks and retailers. These actions were spurred by the possibility of the US Government’s retaliation against Huawei’s business partners. Apart from a short reprieve on May 20, granted by the U.S. Department of Commerce the U.S. is steadily trying to wean its corporations off Huawei’s networks and technologies. The U.S. is only allowing short-term partnerships with Huawei and despite some favorable statements from Trump, the situation is not looking good for the tech giant.
Ren Zhengfei-Huawei’s founder had expressed optimism regarding Huawei’s chances in the following words “We will certainly be able to continue serving our customers… Our mass production capacity is huge, and adding Huawei to the Entity List won’t have a huge impact on us. We are making progress in bidding worldwide.” The U.S. meanwhile stuck to its policy of allowing U.S. companies to trade with Huawei in the short-term. This was further cemented in August 2019, when a 90-day reprieve was allowed to Huawei’s supplier, but at the same time, the ban was extended to cover 46 of Huawei’s affiliates.
The U.S. Commerce Secretary-Wilbur Ross clarified the official stance to New York Times saying that “As we continue to urge consumers to transition away from Huawei’s products, we recognize that more time is necessary to prevent any disruption.” The launch of Huawei’s Mate 30 and Mate 30 Pro was seriously affected by the ban because of the inability to access Google’s support and services. Essential apps like Gmail, Google Maps, and especially Play Store were excluded and this threatened the UK launch while the U.S. appearance had already been scuttled. The only prominent launch was in Australia.
Huawei’s response to the exclusion from Android was spelled out by its spokesman Joe Kelly, “Huawei will continue to use the Android OS and ecosystem if the U.S. government allows us to do so, otherwise, we will continue to develop our own operating system and ecosystem.” Huawei’s new Harmony OS has not been used in the Huawei Mate 30 models and it has persisted with Android 10. Huawei users will not be able to access android updates and side loading is impossible leading to fears about future software support.
Impact on existing Huawei consumers
Huawei Pro-Mate 30 range is the first phone model adversely affected by Google’s withdrawal of services and support. The security patches will also face a time lag and Huawei phones can access them once they are available on Android open source. Unless the ban is overturned, this spells serious challenges for the Pro Mate 30 series and future models.
Google has clarified that pre-Mate 30 devices will be provided with the existing level of support, “We are complying with the order and reviewing the implications. For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices.” If you forked our cash for Huawei P30 Pro, then you can breathe a sigh of relief as Google’s support is still accessible.
Huawei has also confirmed that it will continue to find ways to support consumers saying “Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their opensource platform to develop an ecosystem that has benefited both users and the industry.
“Huawei will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphone and tablet products, covering those that have been sold and that are still in stock globally.”
Huawei Australia has clarified that pre-Mate 30 models will be supported by the company and that Huawei users shouldn’t be scared. The real challenge lies in answering the extent of continued support for Pre-Mate 30 models. Normally smartphone manufacturers provide security updates for 2-3 years after product launch. In the current scenario, Google’s restrictions might mean this support duration is reduced.
The future of Huawei phones
Huawei is currently using the Android Open Source Platform (AOSP) on its Mate 30 series. This is a free system that can be used as the basis for digital products. The delay in security updates as a consequence of access restricted to AOSP is further complicated by the need to develop a whole Play Store. This is necessary because Huawei can’t access Google Play Store and common apps like Gmail, Chrome, YouTube, etc. These are part of the Google business conglomerate and it has final authority to decide who can access them.
Unfortunately, this is a critical issue because apart from Apple’s ‘app store,’ every attempt to create a successful app store has failed. Huawei will have to collaborate with developers to create critical app versions for its own app store. Some of the popular apps already have Chinese versions like WeChat for Whatsapp. However, by and large, these apps are seldom accessed outside Chinese boundaries. Amazon’s Fire OS was designed on the foundations of AOSP, to control the digital landscape used by its Echo and Fire tablet devices.
A fully loaded application store is critical for the success of any mobile phone manufacturer. As far as mobile phone companies are concerned Blackberry, Nokia, and Microsoft all used alternatives to android but failed to mass market them. Blackberry’s OS was once the talk of the town but Apple and Android systems defeated it at the beginning of the smartphone wars. As a result, Blackberry started using android software in 2016 and marketed its premium product Priv using this software. At the same time, Nokia and Microsoft unsuccessfully attempted to rival Android-based phones with the Windows phone software. Despite their trying to lure app creators to its platform, Google PlayStore is still the most extensive smartphone library in the world.
Huawei hasn’t admitted defeat yet and the company has been working on a backup plan for the last seven years. The company’s premium smartphone titled Harmony OS is ready to be launched by 2019 end or start of 2020. The Honor TV is the first device entitled to use this software and the company plans to extend its operations to computers, tablets, mobile phones, cars, and other smart devices. The company is building hype around its alternative OS by stating, “We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally.
Huawei has further clarified that its priority is to continue working relationships with Google and Microsoft. Google’s Android system is crucial for smartphones and Microsoft’s Windows OS is running on its laptops. This sentiment is being steadfastly projected to suppliers, showing the intent to revive operations as soon as the ban is lifted. The company’s smartphone tech and other equipment, gathered before the ban can also be used in operations. The company is optimistic about creating and sustaining international partnerships but acknowledges that much of its development efforts could be limited to its own country.
The key to survival and maintaining any semblance of becoming the largest smartphone manufacturer in the world rests on the ability to develop a genuine app store. The company has committed $1 billion to the initiative and has sweetened the deal by offering the Chinese market to app developers. The concept is that developers would alter their existing apps to work on Huawei’s platform and avail a new customer base and financial incentives. Networks are also being incentivized to add the app portal to their phones. The real challenge is whether Huawei can sustain smartphone sales at a level that enables developers to maintain app support.
ARM’s future support
It’s intriguing to note that the Japanese chip manufacturer based in the UK has also denied working with Huawei in the short term. The primary reason is that the company’s designs benefit from U.S. based technology and that’s why it contravenes the trade restrictions. This action might have a more damaging consequence for Huawei, then the loss of Google services. Replacing ARM design in the chipsets of Huawei phones is almost impossible and not cost-effective. The company is feeling the pressure and stated that “We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions.
“We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world.”
Anticipating the impact of the U.S. ban, Huawei gained a permanent license over ARM technology a few months ago. The technology includes the latest Kirin 990 chipset and Huawei can use these designs in the immediate future. In case Intel ceases support for Huawei laptops, the company can use ARM-based chipsets for this purpose as well. However, this is not a clear solution as future developments by ARM are not accessible to Huawei and any leaps in chip-based will be seriously felt by the company.
How other smartphone manufacturers reacted?
The obvious response to the political undercurrents beneath the Huawei ban would have meant a quid pro quo ban on Apple operations by China. However, the Huawei CEO spoke against this possibility and China has much to lose from Apple’s departure from the country. At the same time, President Trump has tried to woo Apple to move its operations from China to the U.S. For now, Apple hasn’t felt the need to raise product prices since it has been exempted from the trade tariffs.
Apple and Huawei have maintained a competitive relationship and Apple was briefly relegated to the third-place rankings in smartphone manufacturing on June 30, 2019. The adverse circumstances faced by Huawei and a favorable position in the overall business scenario mean Apple is poised to regain the No. 2 ranking in the short term and benefit from Trump’s favors in bringing it to the U.S. At the moment if Apple plans to move some operations outside China, it would have to face cost increases in developing suppliers in Asia.
Meanwhile, Samsung has breathed a sigh of relief from cessation in Huawei’s attempt to become the largest smartphone manufacturer. However, the Korea-based manufacturer received an indirect signal of the impact of global politics on business operations. Samsung in the past attempted to develop the Tizen OS in a bid to break the shackles of the Google android based system and its leverage over Samsung OS in Galaxy smartphones. Tizen OS was used on some budget Samsung models and Galaxy smartphones. However, the success achieved by Samsung’s Galaxy series couldn’t be replicated in any manner. Despite this fact, Google was brought to the negotiation table to discuss more freedom for smartphone manufacturers.
Huawei and Samsung are locked in a battle to introduce the first foldable smartphone to global audiences. Samsung would have preferred waiting for the launch of Galaxy Fold but Huawei Mate X’s existence forced it to take quick actions. The bendable handset will soon become a widely accessible reality.
Huawei’s problems will also have a dampening effect on the smartphone industry as a whole. The technological developments achieved by the company spurred the growth of several companies and pushed the boundaries of consumer satisfaction. An example is the Huawei P series camera capability, which delivered high-quality resolutions that achieved an unprecedented level of camera quality in premium smartphones. The level of competition is expected to decline but Huawei’s investment in its Operating system can allow it to market the concept to mobile phone companies.
Which Huawei phone to opt for?
Currently, the Huawei smartphone market is divided into Huawei P30 and the Mate 30 series. The former was introduced before the ban and Huawei stubbornly maintained its price after the launch. The company is ready to roll out Android 10 service updates for P30 Pro and other Pre-Mate 30 devices. This provides a degree of comfort for existing Huawei users. The company is also serious about its European operations and despite the U.S. ban, it selected Madrid as the venue for its largest flagship store outside Chinese boundaries.
At the same time, the Mate 30 series is devoid of the Android operating system and Google support. This series is largely banking on the launch of Harmony OS, which is claimed by Huawei to be more efficient then android. The Mate 30 series boasts impressive specifications, but the software angle is still undecided.
U.S. companies like Google, Microsoft, and Qualcomm have essential stakes in the whole saga. Qualcomm is highly dependent on Huawei and will apply lobby practices to overturn the ban. Google meanwhile is against restrictions on access to the android system and is reviewing the situation. In case the company has to take the final decision of cutting of complete support to existing Huawei smartphones, the ramifications for the mobile phone industry will be long-term. Chinese phone manufacturers might never be able to establish credibility in U.S. and European markets.
Huawei did not become the foremost player in the communications industry by playing it safe. It has declared ambitions of becoming the numero uno smartphone manufacturer and has invested a considerable sum in developing its Harmony OS and new app store. One thing we can expect from Chinese companies is quick execution and that’s why the company is ready to launch its OS within six months of the U.S. ban. If things progress well, the company may re-emerge as a mobile tech giant, using its newly launched OS that rivals android OS. Huawei’s actions have highlighted its resilience throughout the saga and shown that the company is keen to adapt to the new reality.