Huawei has received a series of huge blows this week that can put a stop to the company's global consumer technology ambitions. Initially it was Google who got Huawei & # 39; s Android license, then there was a ban from Intel and Qualcomm and finally the news that ARM had stopped all business with Huawei. Assuming the execution order that caused these problems is not withdrawn, Huawei will now have to make its own operating system and processor designs to build smartphones and laptops that will work in the future. Huawei seems to be ready and prepared to at least tackle the software side, but I think it is doomed to fail outside of China.
Huawei has called this a "Plan B" in recent months because the US is becoming more hostile to the company prior to current trade restrictions. This plan includes offering an alternative to both Android and Windows that is reportedly in development for years. Richard Yu, CEO of Huawei & # 39; s consumer company, told CNBC this week that the replacement operating system will be ready by the fourth quarter, with a version available outside of China by the second quarter of 2020.
Not much is known about Huawei & # 39; s Android and Windows alternative, but it seems to be based on the open source version of Android (AOSP) and will Huawei & # 39; s App Gallery store. This is Huawei & # 39; s alternative to Google & # 39; s Play Store and any manufacturer who does not license the Google version of Android must create their own app store or bundle one of a large number of fragmented options. Huawei already has experience with this, since the company's phones run a forked AOSP-based version of Android without the Play Store in China, and Huawei has bundled the app gallery on phones outside China since early 2018.
Outside of China, phones with alternatives to Android and even those with AOSP have not done well. Mozilla tried for years with its Firefox operating system before it gave up in 2015, Canonical pushed Ubuntu phones that were not going anywhere and Microsoft famously tried to make a third mobile operating system with Windows Phone. Even Samsung, once one major threat to the Google version of Android, the Tizen operating system for phones has almost completely given up and uses it to power the company's smartwatches and TVs.
All of these OS alternatives to the phone have failed for many different reasons, but the most important one is a common thread: competition with Google is very difficult. Google & # 39; s search market share is estimated at around 90 percent around the world, with competitors such as Bing, Yahoo, Baidu, and Yandex all forming one digit. This search for market share has helped Google create and manage a range of apps such as Chrome, Gmail, YouTube, Google Maps, Google Docs and many other popular web services.
If you create a phone that runs the open source version of Android, it will immediately have access to these important Google apps. As a manufacturer, you create a device without the apps that consumers demand in Europe, the US and elsewhere.
This is the challenge that Huawei now faces on the telephone side. The only companies that come close to creating a viable Android alternative outside of China are Microsoft or Amazon and Amazon's attempt is now limited to tablets. Microsoft made Windows Phone and was able to gain an impressive point in some European countries, but Android still dominated absolutely. Microsoft took the approach of licensing its more closed operating system to phone manufacturers for a fee per handset, while the "free" Android alternative came with its own royalty payments and many customization options for phone manufacturers and providers.
Microsoft tried to offer a phone operating system without the support of Google's apps and services. Windows Phone users were temporarily locked out of Google Maps, there was a bitter battle for a Windows Phone YouTube app and Google surprised Microsoft by closing Gmail's Exchange ActiveSync support for Windows Phone. Google also refused to develop Windows apps and undermined Microsoft's mobile efforts to compete with Android.
Amazon has seen some limited success with its own implementation of Android. The company has created its own Android app store for its Fire tablets and has succeeded in convincing some app makers to list their popular apps in the store. Facebook, Spotify, Netflix, Skype, HBO Now and others are all available, but the apps from Google are, predictably, nowhere to be found. Amazon's app store still lacks a large number of important apps. Even the available apps are not always updated with their most important Android alternatives at the same time. Fortunately, the screen size of the Fire tablet can use the browser to gain more access to Google services than the smaller display on phones. Amazon tried to compete with Android with its Fire Phone, but the company stopped it soon after poor sales.
Google also has one iron grip about the definition of an Android device, including the open-source version of Android that Huawei will use to compete. Most of the built-in alternatives to apps such as search, Gmail, camera, calendar, Chrome and even the keyboard are incredibly simple. Even a number of APIs such as location, gaming and in-app purchases are proprietary, and third-party app developers use these in their apps. That makes it harder for developers to then support two different versions of their Android app, not knowing whether Amazon, Huawei or anyone else has made replacements that are good enough.
In the past, Google has also contributed to Android's flow of fragmentation and open source forks by bundling its own apps with access to the Play Store and forcing companies to build phones or tablets that contain the Play Store. nothing but build phones and tablets with the Play Store.
Huawei's leverage & # 39; the world's second largest phone manufacturer influences the future of Android, but Samsung had the same five years ago and was forced back in line. Google was not impressed with Samsung's Android software implementations in 2014 and a series of meetings led the two companies to announce a broad cross-licensing agreement for patents and an agreement on what the future of Android would look like.
Huawei has been preparing for a similar time for years and now the trade war between the US and China has begun to complicate the company's relationship with Android. However, Huawei is aware of the challenges. The company was already building a Play Store alternative in the eye, and last year app makers reportedly started creating apps for their store with the offer to help them conquer China and a "very significant" share in the income from the app store. Bloomberg reports that Huawei even claimed that it would have 50 million European users of its app store by the end of 2018.
Huawei & # 39; s store plans and discussions come at a crucial time for Android in Europe. Google was finally able to face some competition after a European Commission trial imposed a fine on the company for infringements of Android antitrust laws. Regulators argue that Google has abused the dominance of the Android market by bundling its search engine and Chrome apps into Android, preventing phone manufacturers from making devices using forked Android versions and making payments to manufacturers and network operators to Bundle Google search app on handsets.
As a result, Google is starting to charge the makers of Android devices for the use of its apps in Europe. This could open the door to rival app stores, a more competitive landscape for Android and unavoidable fragmentation. The result is more likely that manufacturers will easily continue bundling Google & # 39; s apps and services, as this will allow them to avoid those costs. After all, there are still no popular alternatives to YouTube, Google Maps or Google Search, and consumers across Europe will refuse phones that do not have access to these apps. Phone manufacturers will probably also not like to manage different versions of Android for Europe, China, the US and elsewhere.
With regard to Windows, Microsoft has maintained its dominance in desktop computing for more than two decades with the same types of bundling tactics as Google. US regulators have made Microsoft famous for bundling Internet Explorer in Windows, and EU regulators also got involved a few years later. The EU eventually forced the company to include a browser vote with non-Microsoft browsers in an effort to improve competition.
Microsoft was also accused of illegally bundling the Windows Media Player with Windows, and the EU forced it to unbundle the app so that competitors could get a fair playing field. Microsoft has made a special version of Windows for Europe without the app, but hardly any manufacturers have delivered machines with this version.
There have been various forms of competition against the dominance of Windows, including Macs, Linux-based netbooks or even Google's Chrome OS. Only mobile operating systems have been able to shake Microsoft & # 39; s dominance of computing in general, but Windows is still widely used by companies around the world. Google's Chrome OS seems to be the most viable alternative to the masses, thanks to support from Google and popular web services.
Many companies still rely on Windows for app compatibility and to run apps and systems that are not only based on the Internet. This has prevented Microsoft from making progress with a number of its own ARM-based laptop efforts, simplified versions of Windows and even more limited versions.
Huawei & # 39; s Plan B operating system should compete with both Windows 10 and Chrome OS in a market managed by Lenovo, HP, Apple, Dell, Acer and others. These companies have much more experience with creating and sending PCs and already have trusted brand recognition. We have seen Android-powered laptops coming and disappearing over the years, and it seems that Huawei is taking a similar path. If building an Android alternative to phones seems challenging, the alternative to Huawei could be even more difficult in a market where it is less in control.
Huawei now faces many difficult decisions that are largely beyond its control. None of this software matters even if the company does not have the chips it needs. That is a difficult problem that Huawei has not shown that it can overcome. The ARM, Intel and Qualcomm situations are much more dangerous for Huawei, but even without them an attempt to compete with Google and Microsoft's dominant operating systems seems an insurmountable challenge for a company better known for its hardware outside of China than for software claims.