Out of all the speculation about the fallout from Washington's Huawei blacklisting, this analyst comment offers perhaps the most spectacularly apt summation of what's in store for Huawei's smartphone business now that Google has suspended its Android developer license.
Here's the South China Morning Post:
"As far as overseas markets go, this move just turned Huawei’s upcoming phones into paperweights," said Bryan Ma, vice-president of client devices research at IDC Asia-Pacific. "The phones won’t be very useful any more without Google apps on them, and other apps will be unable to call on Google Play services."
Though Google has temporarily reversed this decision after the White House temporarily eased restrictions, that delay will only last 90 days. Though Huawei has already started building its own operating system, losing access to Android would make Huawei phones significantly less attractive to consumers.
This could be a huge boon for Samsung, the largest player in the global smartphone market, and even smaller Chinese firms like Xaomi stand to benefit, according to analysts. Huawei's shipments exploded 50% YoY during Q1, capping off a period of torrid growth for the company's smartphone business that saw it usurp the global No. 2 spot from Apple.
But it could soon surrender much of this advance. One student in Singapore said Google's decision to cut ties with Huawei made him think twice about buying a new Huawei phone.
He's decided to hold off on his purchase...for now, at least.
Some consumers are already shying away from Huawei because of future uncertainty. Germaine Wong, a postgraduate student in Singapore, recently considered purchasing a Huawei P30 smartphone to replace her current Samsung S7 Edge, but is now having second thoughts about using a Huawei device.
"I originally considered buying a Huawei P30 or P30+ for my next smartphone because the camera specifications are very good, and I’m already an Android user," Wong said. "But now I’m concerned about whether Huawei phones will be able to function optimally in the future, or if I will have the latest updates from Google."
For now, Wong has decided to hold off on her purchase and do more research before buying a smartphone. "After all, there are still other alternatives to Huawei, such as Samsung," she said.
If Huawei does deploy its own operating system, convincing consumers to adapt to it will be a daunting task, particularly in the 'Internet of Things' age when seamless integration is essential.
Huawei confirmed earlier in March that it had built its own operating system for smartphones and computers in case it could one day no longer rely on Android. But deploying and maintaining its own OS for its devices will be a "daunting task", said Tarun Pathak, associate director at Counterpoint Research, especially as the company looks to compete in the premium segment.
Moreover, the US restrictions on Huawei come at a bad time for the Chinese giant, just as its efforts to narrow the gap with Samsung were gaining momentum.
"The premium segment is growing fast, and seamless integration of hardware and software is now a must to drive consumer experience," said Pathak. "In the absence of an Android licence, Huawei will have its work cut out to build something that can live up to the Android experience."
But where Huawei might suffer, other Chinese smartphone firms are the best positioned to benefit.
In the medium term, smaller Chinese smartphone players who have been making a bigger overseas push, such as Xiaomi and Oppo, are also likely to benefit from any dip in demand for Huawei devices. Xiaomi, for example, was Europe’s No 4 smartphone maker by shipments in 2018, and already has a presence in markets like Spain, the UK, France and Italy.
"In the medium-term, brands like Xiaomi and Oppo that are entering Europe and really trying to capture market share, will benefit," said Francisco Jeronimo, associate vice-president for European devices at IDC. "This potentially can be an opportunity for these brands to grow."
Assuming Google reinstates the ban once the White House reimposes the new restrictions, the Silicon Valley tech giant probably won't be able to escape some blowback.
Xiaomi’s chief financial officer Chew Shou Zi said in an earnings call on Monday that it was "paying a lot of attention" to Google’s move to curtail business with Huawei, but said there was "no direct impact" on the company.
Analysts pointed out that the Google ban on Huawei will also have a negative impact on the US internet giant.
"Huawei is the second-largest Android player and a major client, so if they cannot sell anything to Huawei any more, Google will suffer from that," said Jeronimo.