The year 2020 is particularly difficult for Huawei's smartphone business.
On the one hand, Huawei's overseas smartphone sales were severely impacted by the fact that it was unable to carry Google's GMS on smartphones sold overseas under the trade ban signed by the US last year - even if Huawei had launched the HMS in time, it would have struggled to make up for the huge sales losses caused by the lack of GMS.
On the other hand, not long ago, the U.S. government upgraded the ban and began to suppress Huawei's semiconductor business and supply chain, the outside world also began to worry about the supply of Huawei's Kirin mobile phone processor chips, which inevitably worried about Huawei's mobile phone business in the second half.
Of course, in this case, Huawei can't sit back and wait.
Search App
Recently, Huawei launched a search app that has attracted a lot of attention.
The app actually launched back in early February of this year, when it was called Huawei Search, and had previously been in beta.
In May of this year, however, Huawei Search has been rebranded as Petal Search and is officially live on AppGallery, the app store in HMS.
In terms of functionality, in addition to the usual information search services such as weather forecasts, news, videos, images, music, financial information and more, Petal Search also has some new features such as the ability to directly download and access recommended apps.
Petal Search is more like a combination of Huawei Search and AppSearch.
Of course, the most important reason why Petal Search receives a lot of media attention is that it is a mobile search engine for overseas users and its direct competitor is the Google Search App.
This means that Huawei is becoming more and more distant from GMS through HMS and AppGallery's app eco-building, and the two form a competitive relationship.
Of course, this may not be what Huawei wants, but with the U.S. crackdown, it's not an option.
HMS's ambition
In fact, apart from Petal Search, Huawei HMS has achieved the replacement of GMS in several ways.
For example, Here WeGo, which previously went live in the AppGallery app store, can support navigation and location of over 1300 cities in over 100 countries, which is thought to be Huawei's replacement for Google Maps mapping service.
In addition, combining maps, GPS, gravity sensing, electronic compass, camera, etc., Huawei has launched the Huawei Cyberverse, which realizes 4 billion 3D information points per square kilometer, 1:1 restoration of the real world, high precision spatial meter, AI 3D object recognition, and light and shadow tracking, which can be seen as Huawei AR map.
A current update on Huawei Cyberverse: on May 22, Huawei Fellow Cyberverse Chief Engineer and Camera Chief Engineer Luo Wei announced that the Huawei Cyberverse trademark has been successfully registered.
Of course, HMS is also in full layout when it comes to payments, app stores, app stores, etc.
It's worth noting that at the Huawei Consumer Business Summit held not too long ago, the Huawei side announced the latest developments in the HMS ecosystem, in which it announced.
Huawei Terminal Cloud Services (HMS) has 650 million monthly lives worldwide, up 25 percent year-on-year;
More than 1.4 million registered developers worldwide (up to 1.5 million in May this year), up 115% year-on-year;
More than 60,000 applications have access to HMS Core, up 66.7 percent year-over-year.
In Huawei's ultimate ambition, Huawei wants to make its HMS a three-way tie with Apple's iOS and Google's GMS in the global mobile app ecosystem in the coming years.
Despite this, Huawei's mobile phone overseas business suffered heavy losses
Of course, it has to be admitted that the HMS is too weak compared to the GMS, which has been in existence for years.
In terms of number of apps, Google's GMS hosts millions of diverse apps worldwide, while the HMS is only 60,000, a very large difference.
Apps like Google Search, Chrome, Gmail, YouTube, and Google Drive are the most popular apps for the overseas user base in terms of monthly activity, and have reached over 1 billion monthly active users worldwide, with a huge appeal to the consumer base, but these apps are not available on HMS.
That is, the HMS is too weak compared to the GMS, and it is only able to act as a replacement in the absence of the GMS, but not enough to impress consumers.
One user named Turbofrog said:
I have a super cheap Honor 8 phone that I bought after my last phone didn't work anymore. But... for a new phone without Google Play, I don't have any interest in buying it - no matter how impressive and smooth its hardware is.
In fact, for foreigners, Google is virtually indispensable, arguably building the entire infrastructure of foreign Internet services - especially in the world of Android, where Google's grip can be said to have increased.
It's safe to say that almost every Android user abroad, I'm afraid, is inseparable from the Google Family Bucket.
In this case, Huawei's mobile business, which is missing GMS, will inevitably suffer.
In the first quarter of 2020, Huawei shipped 49 million smartphones in the global smartphone market, down 17.1 percent from the same period last year - still ranking second, but the decline is widely believed to be related to the lack of GMS, according to data from market research firm IDC.
Among them, according to market research agency Canalys, in Q1 2020, Huawei's shipments in the Western European smartphone market fell by as much as 40 percent, ranking third behind Samsung and Apple, while Xiaomi jumped 79 percent to fourth.
What is clear is that this decline is related to the absence of a GMS.
Will Huawei's next-generation Kirin SoC be affected?
For Huawei's mobile phone business, there is another concern besides the lack of GMS.
On May 15, 2020, the U.S. Department of Commerce issued an announcement to restrict Huawei from using U.S. technology software to design and produce semiconductors because Huawei "broke" the Entity List - a ban that also began to raise concerns that Huawei's Kirin SoC processors, which are manufactured on behalf of TSMC, could also be affected.
To be precise, it's the availability of the next-generation Huawei flagship SoC processor - the Kirin 1020.
However, according to KL GadgetGuy, while it is widely believed that TSMC will also be subject to the US ban, there is still a new report that suggests that the Kirin 1020 processor will still be ready for mass production within the specified time frame and that it will be used in the upcoming Huawei Mate 40 series.
The report says the new US government regulations will affect future orders, but not those already placed by Huawei.
There are also media reports that the U.S. has given a 120-day grace period despite the escalation of the ban, which means TSMC can still arrange to supply Huawei on time and on schedule, especially for 5nm and 7nm orders in 120 days.
In April, TSMC said it would maintain capital expenditures at $15 billion to $16 billion this year, of which about 80 percent would be spent on processes such as 7nm, 5nm and 3nm, while another 10 percent would be spent on advanced packaging and wide hoods and the rest on special process technologies.
In addition, TSMC also said it has no plans to lower its full-year capital expenditures at this time - proving sideways that TSMC is not currently using Huawei supply issues as a variable in its full-year budget.
Xinda Securities Electronics Industry Principal Analyst Fang Jing said:
It's not so pessimistic; in fact TSMC isn't completely banned, it can internally review and apply for permission from the U.S. government, and Huawei itself has made a lot of efforts, such as actively stocking up on core devices, with at least half a year's worth of inventory.
It's worth noting that in addition to its own processor, Huawei can also use SoC processors from Samsung and MediaTek - previously, in an interview, Zhao Ming, president of Huawei's Honor brand, said that it has maintained a stable relationship with MediaTek.
It can be seen that Huawei still has enough room for survival in the hardware segment involving smartphone processors, and its most significant shortcoming in the smartphone business is still HMS.
For Huawei, the biggest theme for 2020 is survival, and the smartphone business is no exception.
As it stands now, Huawei needs more time to grow despite its strong push for HMS. Of course, Huawei's HMS and AppGallery aren't making a name for themselves by getting rid of the Android ecosystem, but rather by starting a new one outside of Google's whole family bucket, so the app ecosystem problems Huawei phones face overseas aren't completely insoluble.
As for the chip issue, there's a lot of uncertainty, but Huawei still has quite a few cards to play.
In terms of Huawei's overall development, although the smartphone business is not the absolute core, it has lost a lot of blood for Huawei's operator business and core technology research and development, and the terminal level constitutes Huawei's future development support, and this is something Huawei must know all too well.
