Huawei’s European Customers Are Put on Hold by U.S. Ban
Customers using Huawei smartphones are to be put on hold on the ban from U.S – ICT Catalogue confirms from NYTimes.
These European customers are unsure how Android phones are going to be working as Google and some other companies assess an order from Trump’s administration.
In Europe, London particularly, this place has been one of Huawei’s biggest success stories. Now it is on the front line of the trade and technology war existing among China and U.S.
The action by Google to cut off Android support to the smartphones produced by Huawei this week, the Chinese mobile telecom company will hobble their European users and highlights how deeply the Continent are relying on U.S and Chinese tech giants for gadgets, apps, internet services and networks.
Previously, selling equipment to wireless carriers, Huawei has expanded at an extraordinary rate in Europe, taking over more than a quarter of the mobile market. Google’s action is “potentially catastrophic” for Huawei’s hopes in Europe, said Ben Stanton, a senior analyst at Canalys, a research firm.
The Trump’s Administration Order
The Trump administration’s order this month barring American telecommunications businesses from using foreign-made equipment that could pose a threat to the nation’s security — exactly what Washington has accused Huawei of doing — is likely to have a knock-on effect on smartphone users’ experience. Google Maps and other apps, for example, will not be supported.
The European customers are going to hit harder than the ones in U.S or China. Huawei smartphones are largely unavailable in U.S and Google’s services specifically Android and Play Store have long been blocked in China by the government.
But they are best sellers in countries like Greece, Portugal and Spain. Those phones, plus robust sales of telecommunications equipment, have made the market covering Europe, the Middle East and Africa into Huawei’s second biggest after China. It accounted for 28 percent of Huawei’s revenue in 2018, compared with 7 percent from the Americas.
The pressure has mounted. Since the administration’s order, one company after another has moved to suspend business with the company, which is the world’s second-largest smartphone maker, after Samsung.
Google announced its pullback on Monday. The Commerce Department said it would grant a 90-day extension for companies to work out how to support existing cellular networks and handsets, but Google said it planned to abide by the ruling once the time expired.
Exactly Wednesday was when the two British carriers, that is EE and Vodafone, said they would not offer Huawei phones to some of the customers who wanted access to their new 5G services. Two of Japan’s largest mobile carriers also said they would delay the debut of a new smartphone by Huawei.
According to a tech analyst, he confirmed that Huawei will be unable to recover quickly and this is a statement from him.
“It would be extremely unlikely that they would use their own operating system here in the short term,” said Dario Talmesio, a telecommunications analyst at Ovum, a research and consultancy firm in London. “And that means people with existing Huawei devices will gradually see devices that are reliant on Android deteriorate because they are not able to perform certain upgrades.”
Customers that are shopping for phones are unlikely to purchase one that doesn’t come with Google’s latest version of Android, apps like Gmail or the Play app store. This will then cause the demand for Huawei phones to drop and could also hurt European carriers that are “very heavily relying on the quality, with fairly low cost, of Chinese gadgets” to get customers onto the new hyperfast networks that are on the horizon, Mr. Talmesio said.
Huawei’s bottom line could suffer from the loss of sales of its more expensive phones, with their high profit margins, said Steve Tsang, the director of the China Institute at the School of Oriental and African Studies in London. And the diminished prospects in Europe may hinder Huawei’s ability to expand elsewhere.
“Being able to make it in Europe means that it is a lot easier for Huawei to make it in the rest of the world,” Mr. Tsang said. “Success in Europe is significant for Huawei, both in terms of revenue and in terms of future growth.”
To succeed in Europe, Huawei made a sustained effort over nearly two decades to work with network operators and allow governments to test its equipment for security flaws. Huawei first made inroads by providing cheap gear to build phone networks in countries including Britain, Germany, France and Poland. The company became the world’s largest seller of telecom equipment, besting Nokia and Ericsson.
Huawei deepened its reach when it began selling mobile devices, first as low-cost alternatives to a Samsung Galaxy or an Apple iPhone and then with pricier models respected for their technology. Huawei gives carriers and retailers better financial terms than rivals by allowing them to make money from every handset sale. Industry analysts said retailers had an incentive to display and promote Huawei phones.
The strategy helped Huawei sell more than 42 million smartphones in Europe last year, according to Canalys. “Huawei has been the darling of the European smartphone industry for the last three or four years,” Mr. Stanton of Canalys said.
Huawei’s growth highlights how Europe’s influence in tech has faded.
European policymakers have been trying to nurture the region’s technology sector, which played an important role in the growth of the global tech industry. Finland’s Nokia was once the world’s largest seller of mobile phones, and Skype, founded by Scandinavians, helped pioneer the now-common ability to make calls over the internet. But Europe could not keep up with Silicon Valley or Shenzhen, where Huawei has its headquarters.
For months, Washington has been warning allies of security risks associated with Huawei, but several countries balked at its assessment. The Trump administration has threatened America’s intelligence-sharing relationship with Germany, Britain and other allies as Huawei sought to build their fifth-generation, or 5G, networks. The networks promise not only faster cellular service but also better wireless connections for “internet of things” devices like autonomous cars, security cameras and industrial equipment.
The Trump administration’s order moved the debate about Huawei beyond the more obscure equipment needed to make wireless networks to which handsets consumers can buy and apps they can use.
“It’s not in our control,” said Mr. Talmesio at Ovum. “We are stuck in the middle of this commercial war, and we are becoming very much a kind of proxy war territory.”
Google’s decision surprised potential phone buyers in Europe, and many were hesitating. Security risks were not their worry. They wanted to know that their phones would work anywhere.
“Such applications as YouTube and Google Maps, they are vital,” said George Kirmizidis, a civil servant browsing at a BASE mobile phone shop in Brussels. “If I cannot access those through my smartphone, what’s the point of buying a smartphone altogether?”
“As a customer, of course I would like to have the choice to choose between different products, and now Huawei is out of the market for me,” Mr. Kirmizidis, 44, added. “I have a limited choice of products, which is not fair if we support capitalism.”
Solongo Unurbat was examining a Huawei phone priced at more than $1,000 in the Mall of Berlin, and the 34-year-old was not concerned about the loss of Google functionality.
“For me, it’s all about the camera, ” she said.