While Apple’s sales figures in China in early 2024 made headlines, there is a much more serious risk that was also quietly displayed this week. And this is a real challenge for Google and Apple and may fundamentally replace the smartphone market in the coming years. .
Apple’s continued struggles in China made headlines this week, with Counterpoint reporting that sales fell 24% in the first six weeks of the year. But that’s not the only interesting news this week: It’s the twist in this story that may be a bigger challenge for Apple and its iPhone in the long run, and that marks a fundamental shift in Google’s influence over 2/3 of the world’s smartphones.
Although China’s Vivo now leads the pack, dethroning Apple from first position, the real winner is Huawei, whose sales have increased by 64%, putting it in second position ahead of Apple. Even those statistics forget the fact that Honor – Huawei’s spin-off caused by US sanctions – is broadly on par with Apple. If we add Huawei and Honor together, we return to the type of dominance we experienced before Trump.
This resurgence of Huawei is independent of the American generation that drove the expansion of its smartphones last time. Huawei’s initial recipe was to largely mirror the functionality of iPhone/Samsung devices at a lower price point, and then run Android and its ecosystem of apps and installations for user experience. The U. S. ban eliminated Android first, then the chipsets that made it all work.
Today, Huawei is back with a probable independent origin chain, a new operating system and a new ecosystem prepared to separate itself from the Android world from which it emerged. Nothing happens by chance in China. The lessons learned from national independence for the 2019-2021 era are well planned. And the rest will be just as well planned.
I warned in 2019 that “the praise for Huawei over the next decade if it manages to build a successful HarmonyOS ecosystem is enormous. Not only does this ensure secure independence, but it also gives Huawei the “third way,” the first major upheaval. in the smartphone ecosystem in more than a decade. All of this would be bad news for Washington and California. “
Five years later and here we are. The speed of Huawei’s independent resurgence has the analysts. The Chinese giant has announced its goal of separating from Android with HarmonyOS Next. And even Nvidia said that Huawei’s chipsets now make it a serious competitor in AI speed.
Five years ago, most of my wariness about China was as much, if not more, than about Huawei. The irony is that Huawei – as TikTok has done since then – will put all its efforts into escaping China’s gravitational pull and adapting as Western as possible, in order to compete with the American giants.
The threat to the comfortable smartphone world governed through Apple’s walled lawn and Google’s Android ecosystem has been just a third way, born in the world’s largest smartphone market and bringing together consumers, developers and manufacturers. of devices to break the duopoly. Once again, here we are.
Perhaps even more compelling news this week is that Shenzhen, the city at the center of China’s high-tech industry, along with Huawei, is entering the fray.
As reported by the South China Morning Post, Shenzhen “plans to boost the adoption of the HarmonyOS cellular operating system, developed through Huawei, boosting Google’s Android-powered platform and Apple’s iOS in the world’s largest smartphone market. “
Shenzhen does not plan to “increase the number of its local applications built on HarmonyOS and announce its adoption in several primary industries,” however, the city’s action plan for 2024, published last weekend, states that “applications based on HarmonyOS will be followed across industries. ” “that come with government services, education, healthcare, banking and finance, transportation and welfare. “
In 2019, I warned that “if Huawei takes a broad view, playing the role of licensor rather than product owner, then it will bring other device brands into the mix, starting with its Chinese counterparts,” and a few months later, “if Huawei can do it. If Chinese (and perhaps non-Chinese) smartphone makers move from Android to their own operating formula and app store, it will also pose a serious risk to Google’s lock in the Android market. .
This pilot mission will be an attractive test to see how independently China can operate. Take Apple out of the equation, and since Samsung is nowhere to be found, the OEM market is completely domestic. Add the choice ecoformula and the operational formula and you have this third form.
For now, this is just an internal challenge in China, which has hit Apple hard given its exposure to that market. This doesn’t have much short-term implications beyond that. But in China, this is starting to look much more realistic now than in 2019/20, when Huawei was in the background and HarmonyOS was perceived as a desperate measure to survive.
It’s easy to see how Shenzhen’s initiative could spread to more of China: the country needs nothing more than to break American dominance over the smartphone industry and advertise its own solutions. Just take a look at their technique for purchasing telecommunication network equipment. -How would the Chinese croupiers play? It is a much more complicated question.
But here’s the next potential twist in this ongoing saga: AI. Google is doing everything imaginable for its installations and mobile apps. Samsung, the world’s largest maker of Android devices, has placed Galaxy AI at the center of its strategy. And Apple has announced that this fall’s iOS 18 will be all about AI.
AI in devices requires expensive hardware. And this will benefit Chinese OEMs, whose strategy has been to have more devices for less money. This is how Huawei built its overseas expansion before the sanctions, and this is how Xiaomi is doing the same thing today. Forget North America and Western Europe, instead take a look at the rest of Asia, Eastern Europe, and Africa, and learn about the appeal of a cheap AI device in those markets driven through an end-to-end Chinese ecosystem.
AI may simply be the leveller China wants for its next wave of foreign growth. And again, the news that little by little was building all the pieces around a theme. Huawei’s ecosystem includes hardware, chipsets, devices, an operating system, and the AI that underpins it all. Chinese OEMs are scrambling to adapt foreign advances in generative AI to devices. Everything comes together.
At this point, much of this is speculation, but at least for the Chinese market, it’s predictable. We are precisely where I advised us to be. China discovers a third-way smartphone ecosystem and then looks for ways to advertise its expansion into its vast domestic market and beyond.
The U. S. giant has had heavy exposure to China, which has been behind recent sales headlines and has put pressure on its stock value and long-term sales forecasts. The challenge is rarely very big with the iPhone 15 or iPhone 16. It’s much greater than that.
Huawei is back with all that implies: bad news for Washington and California. Could it be that the US elections in November will be a rematch, a complete return to the battles of the past, and if so, what cards are left to play?that were presented last time. We’ll have to wait and see. . .
A community. Many voices. Create a free account to share your thoughts.
Our network aims to connect others through open and thoughtful conversations. We need our readers to share their perspectives and exchange concepts and facts in one space.
To do so, please comply with the posting regulations in our site’s terms of use. We summarize some of those key regulations below. In short, civilians.
Your message will be rejected if we realize that it seems to contain:
User accounts will be blocked if we become aware or if users are concerned about:
So, how can you be a user?
Thanks for reading our community guidelines. Please read the full list of posting rules found in our site’s Terms of Service.