Huawei – Nowhere to run pt. IX

Beautiful form won’t fix software shortcomings.

• Huawei has Apple soundly beaten when it comes to form factor design but even these beautiful looking devices are going to struggle to see any volume without the Google ecosystem.
• The Huawei Mate 30 launches this week and the leaked photos show a beautiful device that is going to come in 4 variants.
• These will be the Mate 30 Pro, the Mate 30, the Mate 30 Lite and a Porsche Design version.
• In terms of looks, Huawei has got Apple and most of the rest of the industry beaten with an attractive circular triple camera set-up, virtually bezel-less displays and very small notches.
• If it was all about looks, I would say that this is one of the nicest looking devices that has launched this year, but these days, this is secondary compared to software.
• It is here where the Mate 30 family is going to have major problems as it will be competing with its Android brethren with two arms tied behind its back.
• This is because these devices are not going to have any of the Google software installed on them when they ship.
• This software is known as Google Mobile Services (GMS) and consists of both the Google ecosystem services (app store, search, maps, mail etc) as well as software that controls signalling, updates and so on.
• Without the Google Ecosystem installed on the phone, Huawei is going to have a very hard time convincing users to buy the device as they will be able to buy a competing device that is just as good and has everything they expect on it at the same price.
• Furthermore, because a lot of the control infrastructure software that Google creates will also not be present, 3^rd party apps may run much more inconsistently than they do on the phones of peers.
• This is why I am not convinced that simply downloading the Google apps to the device post-sale is going to fix this problem as the control software will still be absent.
• Consequently, I think Huawei will really struggle to sell any volume of these devices outside of China but at home, I suspect that it will sell well (Google is irrelevant in China).
• That being said, Huawei’s share at home is already up to 35% and I suspect that the Chinese market’s capacity to offset market share losses elsewhere will be far more limited in H2 2019.
• Hence, I expect Huawei’s share to continue falling hard overseas and to be no better than stable at home.
• Given that the Chinese market is also softening this year, this will mean that Huawei’s global market share starts to decline meaningfully.
• Until Huawei can once again source GMS software for its Android devices, its devices will really struggle to sell any volume overseas.
• As there is no deal in sight between the USA and China, by the time the restrictions are lifted, Huawei’s foreign smartphone business may have already evaporated.
• The outlook remains very bleak.