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Summary

Huawei has released its latest flagship smartphone, the P40, while the company battles its most challenging period to date. Aside from the COVID-19 outbreak, Huawei is also still subject to a US import ban, meaning it cannot use Google Mobile Services on its smartphones. This is forcing it to push its own Huawei Mobile Services instead.

Lack of Google apps will cripple sales outside of China

Huawei could not be facing a worse climate in which to launch its new flagship smartphone. Smartphone sales were slowing globally already before the shock of the COVID-19 outbreak, which is impacting the supply chain, manufacturing, and consumer demand. On top of this, the lack of familiar and popular Google Apps makes the phone a very difficult sell outside of China.

While Huawei has made a commendable effort to replicate much of the functionality of Google’s apps, its smartphones will still be lacking the breadth and depth of third-party apps that come with Google Play. This will likely be a stronger factor in the premium flagship segment where consumers will not only be tech savvy and have a larger collection of favorite apps but will also have the cash to be able to buy alternatives. Huawei’s Google-less phones may have more success at lower price points where they will be targeted at a less tech savvy audience.

The good news for Huawei is that China already appears to be returning to normality after the outbreak. The domestic Chinese market accounts for most of Huawei’s sales, and Huawei will be even more reliant on it while it struggles with a non-Google platform elsewhere.

Supply chain problems arising from the virus outbreak also work in Huawei’s favor as its competitors may not be able to adequately scale up to replace Huawei’s sales volume, particularly in Europe. This may allow Huawei to retain some market share, but this is likely to be more in the mid to low end of the market.

Appendix

Further reading

Mobile Handset Forecast report: 2019–24, CES004-000138 (March 2020)

“Huawei moves forward without Google in Harmony OS debut,” CES004-000102 (August 2019)

Author

Daniel Gleeson, Principal Analyst, Consumer Technology

[email protected]

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