Huawei’s phone business would be decimated without Google’s Android

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The news from Sunday night that Google would be complying with a US government edict and suspending business with Huawei is one of the most dramatic moments in Android’s history. Huawei, China’s most prolific smartphone vendor, had started 2019 with explosive double-digit growth and was on a path to eclipse Samsung as the world’s number one phone maker by the year’s end. Without Google’s Android support, however, that’s simply not going to happen — not in 2019 or 2020 or any other date in the future.

Whether this proves to be the most consequential moment in Android’s history has yet to be determined. This could all be just a short-lived scare tactic from a Trump administration trying to demonstrate to the Chinese government its willingness to take drastic measures. Or Huawei might be left on the US blacklist indefinitely, spawning a wide variety of potential scenarios, none of which bode well for the company’s future as a smartphone vendor.

As things stand, Huawei is losing its licensing agreement with Google for the provision of Google Play Services and access to the Google Play Store on new Huawei Android devices. Existing customers won’t be affected, though without Google resuming business with Huawei, they also won’t get any further Android OS updates. (Honor, Huawei’s wholly owned subsidiary, looks to be subject to the same fate). This is devastating to Huawei’s hopes of selling any smartphones outside of China.

Huawei still has the option to use the open-source variety of Android, but Google has been gradually whittling all of the attractive components away from the Android Open Source Project (AOSP). The genuine full-fat Android experience of today — featuring Google Maps, YouTube, and, most crucially, the full ecosystem of third-party Android apps — is dependent on Google’s licensing assent. Deprived of Google’s software, Huawei would be selling featherless chickens to smartphone buyers used to having Play Store access. In Europe, even the finest hardware wouldn’t convince consumers to buy a phone without an app ecosystem. Google wields enormous market power through its Play Store, significant enough for the European Commission to conduct an antitrust investigation.

In its native China, Huawei already operates without the Play Store, owing to Google’s absence from the market. But even there, Huawei would suffer from not having a close working relationship with Google. All of its fellow Chinese rivals would get earlier access to the next version of Android while Huawei would have to wait for the AOSP code to be made available to the public. The Chinese consumer is probably the least sensitive to operating system updates and upgrades, given how WeChat has evolved to be an OS and ecosystem atop Android, but Huawei would still be at a disadvantage in one of the world’s most competitive phone markets.

There’s no positive spin to this situation for Huawei. Trying to sell smartphones without Google’s cooperation in the modern age is a spectrum that goes from bad to disastrous. Windows Phone, Palm OS, MeeGo, Symbian, Bada (later Tizen), and BlackBerry OS are just a few of the mobile OS corpses that Android’s rise has produced. App-less operating systems simply do not stand a chance against the contemporary iOS-Android duopoly.

Putting a brave face on the situation, Huawei’s official response has been to underline its contributions to the global popularity of Android, reassure current Huawei and Honor phone owners that they’ll continue receiving security updates, and promise to “continue to build a safe and sustainable software ecosystem.” Notably, there’s no mention of Android in the closing of Huawei’s remarks.

Huawei has been aware of the possibility of hostile action from the US government for years, and its consumer division boss Richard Yu recently disclosed that it’s developed its own alternatives to Android and Windows. On the mobile front, that could be a fork of the AOSP flavor of Android or an entirely new operating system, built up from scratch. In both cases, Huawei would have a mighty struggle to convince any app developers to build apps for its separate platform. If Amazon, with all its clout and influence, couldn’t do it for the Amazon Appstore on Android, Huawei stands even less of a chance. Rational app developers are hardly going to flock to a new platform that’s born of adversity and thrust into a maelstrom of political conflict.

As to the Huawei Mate X foldable phone, the company would be well advised to hold off from releasing it until it has its full Android privileges restored. If it does.

The best-case outcome from the present situation, which might be considered most likely if it wasn’t for the volatility of the current US leadership, is that China and the US reach a new trade agreement that thaws relations and grants Huawei respite from these punitive sanctions. To have a healthy smartphone business, Huawei needs Google’s Android support. Google also benefits richly from Huawei’s breakneck pace of innovation, and let’s not forget that Apple’s iPhone business is literally built in China. Every sensible incentive pushes the US and China to collaborate. However, the US president seems intent on playing the greater madman.

So what happens if the US-China trade hostilities don’t improve? Huawei’s in-house operating system efforts would redouble, and, whether that OS is complete or not, we’re likely to see it distributed on the company’s next flagship. Selling Android phones in the old way isn’t an option without Google as a collaborator. The undesirable externality would be that a huge number of people across Europe and Asia, who might have rightly expected at least another Android OS version update, would find themselves with lesser devices than they paid for. Samsung would be among the few beneficiaries from this confrontation, having been losing market share to Huawei across global phone markets.

The world’s two leading economies are locking horns in an unprecedented manner, and Huawei finds itself in the middle of that clash. The company’s global reputation will suffer from this incident, no matter how quickly it’s resolved, as both consumer and commercial customers will be wary about buying into a company that might at any point be left without an OS upgrade plan. A resolution to the ongoing trade dispute between the US and China is now more urgent than ever. However, China is unlikely to react positively to the bullying tactics of the US. And that means Huawei’s phone business may be in limbo for a while yet.

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