The Huawei-Google Trade Ban: What It Means for the Mobile App Industry
The US-China trade war, which has been ongoing for some time, just got taken up a serious notch for the smartphone industry. Last week, the Trump Administration added Huawei to its trade blacklist, banning US companies from doing business with the Chinese mobile manufacturing giant.
Crucially, the trade ban restricts Huawei from access to Google’s Android Systems, including its first-party apps and the Play Store.
Google has already pulled its Android operating system from future Huawei devices, although existing customers still have access to Google services, and will receive critical OS security updates thanks to a last-minute 90-day reprieve issued by the US government.
In the midst of the fray, the future of a Google-less Huawei is hard to imagine. With the help of StartApp’s global network data, we put together an accurate, current picture of Huawei’s market position. These insights show us the scope of the crisis, and what effect it may have on the wider industry.
Huawei: By the Numbers
According to data on the StartApp network, there are 220 million Huawei users worldwide. The top country for Huawei smartphones is Russia, with 15 million users, followed by Mexico, Germany, Italy and India, with 10 million users each.
Huawei is growing rapidly – in 2019, the company increased from 4% global market share to 6%, making it the second-fastest-growing mobile manufacturer during 2019. This reflects a wider trend in the smartphone device industry, which saw a massive 92% growth this year compared to 2018.
Huawei’s big. But how big?
According to StartApp user data, Huawei is the third-largest mobile device maker in the world, after Samsung and Apple. There is a strong move in the market towards Chinese mobile manufacturers, who together grew from 13% to 21% market share this year. And Huawei tops the list of Chinese mobile manufacturers, holding first place in terms of market share, with a little over 5%.
Due to security concerns, Huawei is not a popular mobile brand in the US. However, nearly 50% of Huawei smartphones are exported to Europe. StartApp’s data shows that Huawei gained 3 points in market share in Europe, achieving an impressive 12% of the European mobile user base in 2019. Italy has the largest market share of Huawei phones, at 18%, followed by Spain at just under 14%. Most growth is coming from these two countries, who together contributed 32% of all European user growth this year. However, Huawei is also thriving in Eastern Europe, with amazing market share of 24%, 22% and 20% respectively from Poland, Czech Republic and Hungary.
So, the question must be asked: Without access to Google services, what value can a Huawei phone offer to European consumers? Huawei’s numbers in Europe are huge, and the repercussions are already beginning: Vodafone and EE in the UK have dropped Huawei devices from their 5G rollout.
This is not the first time a Chinese smartphone company faced the trade wrath of the US government. Last year, the Trump administration banned sales of US-produced parts to ZTE, a Chinese mobile phone producer whose 2017 revenue topped $17 billion. The standoff was broken after intense negotiations, but the consequences were grave: $3 billion wiped from the company’s value.
This is reflected in StartApp’s data on global market share of Chinese mobile manufacturers since 2018: ZTE lost 1% market share, as opposed to Huawei, which gained 2%. Is Huawei set to suffer the same fate as ZTE?
Crisis or Opportunity? Huawei Promotes the App Gallery
Against this backdrop, Huawei is said to have been preparing behind the scenes for the eventuality of a blacklisting. Bloomberg reports that in 2018, Huawei began pitching to app makers to develop their software for a new Huawei-owned app store, the App Gallery. It’s a tough sell – the Play Store/App Store has so-far proven to be an unbreakable duopoly. For app developers, the idea of building new software for an unproven app marketplace, when European consumers are already well-ensconced in their Android universe, is not the most attractive proposition. But is there a flipside?
According to Gil Dudkiewicz, CEO and co-founder of StartApp, “At the end of the day, the Google/Huawei ban is a political decision, and it definitely marks an escalation in the China-US financial war. With a player the size of Huawei suffering such a big blow, it is difficult to see how this will all end. Particularly if other Chinese manufacturers, such as Xiaomi, One Plus and Lenovo get the same treatment. On the other hand, this may be an opportunity to see another OS come into the market, one that can join Google and Apple on stage and shake up the mobile ecosystem – perhaps for the better.”
For the US, China, Huawei, Google – and smartphone users around the world – the future is far from certain.