Huawei, one of the largest tech companies in the world is getting banned and black-listed by the US government. On May 16th, Huawei was added to the US commerce department entities list which is restricted from doing business with any US company without the government explicit approval.
Huawei is a massive tech company and the fastest growing in the world, in fact, Huawei is the second largest, by market share, phone manufacturer company right after Samsung and above Apple.
With the trade war between US and China getting escalated and more intense from both sides, and over a history of security concerns over the potential of US companies buying Huawei networking equipment and possibly getting spied on by the Chinese government, US government agencies risen ban from buying Huawei phones.
The biggest headline and one of the first companies to comply with the US government executive order, of adding Huawei to a blacklist of companies that are restricted from doing any business with any US companies, was Google.
Google complied by stopping all business with Huawei and withdrawn their license to use Android. This is definitely one of the worse nightmares for Huawei who was the fastest growing phone manufacturer in the world.
What does this mean for the past and present of the Huawei phones?
The US commerce granted 90 days license for mobile phone companies to send updates and for broadband companies to work with Huawei to keep their existing networks online and protect their users. This exemption allows Google as well to send software updates to Huawei phones which use its Android OS till August 19.
On the other hand, if things stay the way they are, these phones will most certainly stop getting software updates even if you are outside of the US, if you are using Huawei phones, all google services will stop eventually and will not get the latest version of Android.
What can Huawei do? Can they make their own feature phone without Google services and other US manufacturers?
Let’s run through the numbers and spending Huawei pay to manufacture their current mobile phones. Out of the $70 billion Huawei spent buying components in 2018, $11 billion went to US firms including, Qualcomm and Intel. With this budget going to US companies, and the number of parts they outsource, it still doesn’t seem impossible to switch getting these components from different suppliers than the US ones. This, however, is very challenging, time consuming and will cost way more than the deals they have now.
In theory, Huawei, may be able to replace all the hardware manufacturer and maintain producing their physical phones. The big question now, will they be able to replace their phone software? How will they make their phones without Google? Without the Android License and google play store?
It seems Huawei was preparing themselves for something like this for a little while now. They realised their reliance on google and google services as a bad thing, so they have been building their OS and AppStore behind the scene to replace google. This back up OS supports Android apps and Huawei is working on their own AppStore to accommodate their own OS.
The problem is, this is a great deal of a challenge to the tech company to get their customers adjusted to a totally new operating system than the one they are used to, never mind an AppStore which we all know it’s not that easy to build. Amazon, the largest company in the world has come up with an AppStore that took time, efforts and money and it’s nowhere near google play store.
Even if Huawei were able to build an amazing AppStore, if they cannot do business with US companies, you cannot expect to be able to negotiate your way in getting the American Apps, such as Facebook, Snapchat, WhatsApp, Instagram …etc.
Huawei, has proven its entitlement to be one of the leading tech companies in the world, but will they be able to recover from this situation and reverse this executive order back?
If so, will their consumer still trust buying their products again amid other competitors the likes of Samsung and Apple?
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