Two years after the first warnings, it seems that Google may have a serious problem on its hands, as cracks in Android’s ecosystem open up. This is a real game-changer for millions of users around the world. Here’s what you need to know.
Android has a serious new problem.
The headlines this week (1, 2, 3, 4) warn of an impending nightmare for Google, with the most serious threat yet to its globally dominant Android ecosystem. Blacklisted Huawei is already heading down a non-Android path, with its own devices about to switch to its alternative OS. But might this be just the start of an Android exodus?
This was always the risk when Donald Trump singled out and clamped down on Huawei. It was never about short term sensationalist damage to a single brand, it was always about a long-term seismic shift for the industry. China’s leading phone makers considering a move to Huawei’s new OS would certainly qualify as seismic. America’s control of global mobile standards through Android and iOS would be in play.
If you want to understand why these early indicators are so serious for Google, just look at the numbers. For the first quarter this year, Samsung secured a 22% market share, with Apple on 15%. The rest of the top five are Chinese: Xiaomi, Oppo and Vivo, with 14%, 11% and 10% respectively. Add Huawei’s and RealMe’s ~4% each, and that’s 43% of the overall global market controlled by the five leading Chinese brands.
Global Smartphone Market, Q1 2021
More acutely, those four Chinese brands control 50% of the global Android market, and while they offer a cutdown version of the OS in China, where many of Google’s stock services and apps are banned, their exports are now surging as they each adopt some variant of Huawei’s staggeringly successful export strategy of the last decade.
The math tells you everything. The three leading Chinese OEMs enjoying annual growth of 62%, 60% and 48% respectively. Contrast that with Samsung’s 28%.
While Huawei’s staggering plummet has clearly made headlines in recent months, the growth of the other Chinese OEMs has already made up the difference. There has been no decline in China inc’s global market share and it’s out-pacing the market.
Global Smartphone Market Share, By Quarter
The export push started with Xiaomi, first to recognise and target the market share left vacant by Huawei’s demise. But, remember, that’s not a static pool of users—Huawei was growing at a furious pace pre-blacklist. There is a much bigger market for the Chinese recipe of premium hardware and features for less that has yet to be converted.
The market is essentially segmenting into Samsung, Apple and “China,” with the China sales split between Xiaomi and BBK’s Oppo, Vivo and RealMe. All except Huawei continue to use Android, but if you could switch the other four Chinese OEMs to HarmonyOS over time, then it would be much bigger than Android or iOS.
Over the last two years, Samsung’s market share has been flat while Apple’s fluctuated quarter to quarter. Meanwhile, the top Chinese OEMs have grown from a combined 31% in Q1 2018 to 43% last quarter. They are squeezing out “others” to fuel their growth, without needing serious market share from Samsung or Apple.
Xiaomi now says it has overtaken Apple in Europe, with just Samsung to catch. This was the rallying cry from Huawei before Trump’s escalating sanctions set to work.
The rumours and speculation coming from China suggests that these leading OEMs are now evaluating HarmonyOS. Reports also suggest Huawei will adapt HarmonyOS to operate on Qualcomm and MediaTek chipsets, expanding its reach.
Unintended consequences from the blacklist. Removing Huawei from the equation has given confidence to its domestic rivals to follow its lead—three wannabe Huawei’s with the balance sheets and domestic support needed to push hard and fast. Removing Google’s full-fat Android from Huawei has pushed the Chinese tech giant to develop and launch its own alternative global OS ecosystem to rival Android.
“Developing a good ecosystem is far harder than developing good technologies,” Huawei’s software boss told its Developer Conference in September, as the company confirmed that HarmonyOS would be available to other OEMs. “I hope developers and partners can unite with us in this historic moment. In this way a Chinese ecosystem can be long-lasting and thriving… Today we are taking the first step.”
HDC 2020
As I warned back in 2019, the most serious risk has always been that China’s tech giants will act in concert, with a push from the state perhaps, to adopt an alternative operating system and ecosystem, to offer a viable alternative to Apple’s iOS and Google’s Android, a viable alternative to U.S. controlled tech.
“The world is looking forward to a new open system,” Huawei chairman Guo Ping openly said last year. “And since Huawei helped Android to succeed, why not make our own system successful? It’s plausible to have two systems in a world. And Huawei will be able to survive and take the lead even in an extremely hostile environment.”
“The prize for Huawei if it can pull off this feat,” I had suggested a year earlier, “is huge. Make no mistake, it has every chance of carrying other Chinese manufacturers along with it. Huawei has said that the time is right for an alternative to traditional Android and iOS, and if Huawei can control that ‘third way’, then it can build its own ecosystem and infrastructure, it can license its software as well as sell its hardware.”
At that time, the U.S. hadn’t guillotined Huawei’s silicon supply-chain, and so Huawei remained a viable hardware supplier—it just needed an OS. Now it has lost so much ground on the hardware front, and its rivals have gained so much, that its software and developer ecosystem is its best bet to recapture its market-making position.
That situation has been exacerbated by Huawei’s falling sales at home. It’s impossible to overstate how serious an impact this will have on Huawei—its domestic sales shored up its balance sheet through the blacklist. But, according to Canalys, Huawei’s annualised sales in China for the first quarter were down 50%.
Timing is everything, and speculation is now intensifying. And remember, this is China. Don’t take a 12-month view. Take a 5-year view. Even a 10-year view.
This week, a new video has been posted on YouTube that appears to show Huawei’s HarmonyOS on a Xiaomi smartphone. Xiaomi told me it didn’t comment on “speculation.” Huawei also wouldn’t comment, but reminded me that “HarmonyOS is open to other smartphone OEMs.” Google was dismissive of the reports.
But the whispers have started, and the change is logical when you consider the geopolitical context as east battles west. While Europe might take some time to convert, markets such as India, South America, South-East Asia will be much easier. And markets adopting economy handsets easier still.
“OPPO, Xiaomi and Vivo may move over from Android to Huawei’s Harmony OS soon,” Mashable India reported, citing a blogger report that suggested “surprises” were imminent and that “the pattern of the Android era does not represent the future.”
As to whether we can take these reports seriously—bear in mind that attracting large, Chinese smartphone OEMs is exactly what Huawei envisaged when it made the decision to develop Harmony as an open-source OS. It was Huawei’s response to the sanctions on its own hardware business—how else to get its software to market?
Let’s be realistic. This isn’t a short-term threat. HarmonyOS isn’t a viable switch for most Android users in most key markets. Yet. But give it another few years, by which time those Chinese brands could have built an even larger share of the Android market, and this likely becomes a different proposition.
The real nightmare for Google is that this didn’t need to happen. Huawei was fully committed to Android before the blacklist, a threat to Samsung but not to Google. For a year or more after sanctions were imposed, Huawei’s leaders were quick to say they would head back to Android given the chance. But a lot of water has passed under the geopolitical bridge since then. And Huawei is a different business.
Whatever happens, it seems clear that the Android landscape is changing which will impact users and app developers worldwide. Huawei’s claim that it can carve out a third global mobile operating system appears more credible, and that will effect serous change on Android’s homogeny.
Last year, Huawei’s chairman warned that pushing its Android alternative would be “a protracted war that it is destined to win in the end… No matter how high the mountain is, dig an inch or less, persist and fight for a long time, we will definitely succeed.”
Whatever all that means in reality, it has now begun.