Two years after launch, Huawei to roll out its Google Android rival to phones — with big challenges - CNBC

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GUANGZHOU, China — In mid-2019, Huawei launched its own operating system — HarmonyOS — in response to U.S. actions that cut it off from Google software.

It was the Chinese technology giant's most ambitious mobile software push, one it hoped would help its handset business to survive.

On Monday, Huawei announced that HarmonyOS would begin rolling out on its smartphones from April. Huawei phone users would be able to download it as an update.

A spokesperson confirmed to CNBC that users outside of China would also be able to download it. The company's new foldable Mate X2 device, launched on Monday, would be one of the first to get HarmonyOS with other handsets to follow.

In 2019, Huawei was put on a U.S. blacklist known as the Entity List which restricted American firms from exporting technology to the Chinese company. Google cut ties with Huawei as a result. That meant Huawei could not use licensed Google Android on its smartphones. That's not a big deal in China where Google apps such as Gmail are blocked. But in overseas markets, where Android is the most popular operating system, it was a big blow.

That move by the Trump administration combined with sanctions designed to cut Huawei off from critical chip supplies, has hurt the Chinese telecommunication firm's smartphone sales.

Huawei will need to find a source of chip supplies for its smartphones. But HarmonyOS is the other "critically important" part to ensure the survival of Huawei's smartphone business, according to Nicole Peng, analyst at Canalys.

Development of HarmonyOS

Huawei touts HarmonyOS as an operating system that can work across devices from smartphones to TVs. In September, it launched the second version of HarmonyOS and has been courting developers to make apps for the platform.

And with a view to international users, Huawei redesigned the interface for its app store known as the AppGallery and improved navigation functions.

A guest holds her phone showing a picture taken during Huawei's press conference unveiling its new HarmonyOS operating system in Dongguan, Guangdong province on August 9, 2019.

Fred Dufour | AFP| Getty Images

"Search integrated into the AppGallery will help a lot in terms of helping people discover apps," Peng said.

Also, Huawei will be pushing the update to existing users of its devices which should help drive use of the operating system overseas.

Currently, Huawei's AppGallery has over 530 million monthly active users.

Smartphone challenges ahead

Apps are critical to mobile operating systems. Apple's iOS and Google Android are the two most dominant operating systems because they have millions of developers making apps for their respective platforms.

Huawei has a suite of apps such as mapping and a browser under a banner called Huawei Mobile Services (HMS). HMS is similar to Google Mobile Services and offers developers kits that can be used to integrate things like location services into apps. HMS has 2.3 million registered developers globally.

And in China, it is able to bring on board popular apps.

However, in international markets, Huawei could face some challenges. For example, its app store is missing major names such Google apps, which are important to users abroad. Facebook meanwhile is available but not for direct download from AppGallery. Instead, users need to follow a link to Facebook's site to download the app, unlike other app stores from Apple and Google.

"If Huawei wants to be successful at selling phones overseas, then it needs the right applications, which are unlikely to arrive on HarmonyOS. So getting access to Google Mobile Services again is critical if it wants to build its international phone business," Bryan Ma, vice president of devices research at IDC, said via email.

With Google Android and iOS dominating outside China, Huawei will also have the steep task of convincing users to switch.

"In terms of challenges, it's still in areas ... (whether) the product will be able to be accepted by heavy users using, for example, Google apps and Google services," Canalys' Peng said.

Meanwhile, Huawei also potentially lacks the key supplies to make phones in the future due to the U.S. moving to cut it off from chips. Huawei's Mate X2 uses Huawei's proprietary Kirin 9000 processor. Richard Yu, the CEO of the consumer business, said the company has enough production capacity for the foldable phone even after warning last year supplies could run out.

That, along with the uncertainty of success with the operating system, is a big challenge Huawei faces.

"Huawei could continue to drive the local China market without such concerns (about HarmonyOS apps), but there is a much bigger issue in that it is struggling to get components in the first place," Ma said.

Clarification: This story has been updated to reflect the availability of Facebook on Huawei's AppGallery.

February 23, 2021 at 02:37PM
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Two years after launch, Huawei to roll out its Google Android rival to phones — with big challenges - CNBC

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