Huawei’s Misguided Foray into Operating Systems

Huawei has been hugely successful as a smartphone vendor over the last five years, moving from seventh place to third in the global vendor rankings and pulling away from the other vendors in the process. It was interesting then to see Huawei reported as pursuing its own mobile operating system as an alternative to Android. It certainly wouldn’t be the first major Android vendor to go down this road but it would also be unlikely to fare any better than the others who’ve tried, for several reasons. As such, this move seems misguided at best.

Huawei does very well in smartphone sales

Huawei’s growth over the last five years in smartphone sales has been remarkable, rising from just three million sales a quarter five years ago to between 25 and 35 million sales per quarter and around 115 million in total over the past year. It took third place behind Samsung and Apple just under a year ago and hasn’t relinquished that spot since, as vendors such as Xiaomi and Lenovo go through a tough period and Huawei goes from strength to strength. Having started in its home market of China, Huawei now sells a variety of phones in different parts of the world, including some really solid premium Android devices as well as cheaper phones for emerging markets.

The temptation to branch out is strong

Having built that business off the back of Android, Huawei is now apparently considering branching out and creating its own mobile operating system. This is a well-trodden path – as the largest smartphone vendor in the world, Samsung has experimented with both Bada and Tizen as alternative operating systems to the Android OS through which it achieved its dominance. Why branch out in this way? Well, to be so heavily dependent on a single third party, which has unilateral power to change the terms of which it licenses its software, is always a high risk endeavor. It’s also tempting for companies which have achieved such high market share to believe their customers are now loyal to them and their hardware and not to the operating system they run. Branching out means taking control of one’s destiny, reducing risk, and increasing differentiation and potentially, margins.

History is littered with the bones of failed mobile operating systems

However, if the last few years have taught us anything, it’s that alternative mobile operating systems are doomed to fail in a world now dominated by Android and iOS. Microsoft has spent several years painfully learning this lesson, with their massive investment in Windows Phone, only to see it falter and fade into irrelevance. I’ve already mentioned Samsung’s Bada and Tizen operating systems, neither of which came to anything. BlackBerry, another erstwhile leader in the smartphone market, has utterly failed to restore its fortunes in hardware with its own OS and even its fallback strategy of using Android hasn’t changed things. Then there are other examples like Firefox OS, mobile versions of Ubuntu, and many others, none of which have succeeded. The chart below shows the share of smartphone sales in Q1 2016 by operating system, according to analyst firm Gartner – as you can see, all the alternatives to the big two combined account for 1% or of the total.

Mobile OS share Q1 2016 Gartner

Apps are the reason

At the end of the day, the reason for this failure of alternative mobile operating systems to make a dent is that it’s impossible for them to capture meaningful mindshare with developers and therefore, these new operating systems are always woefully inadequate when it comes to their selection of third-party apps. Developers have now committed to supporting one or both of the two major operating systems and, in a smaller number of cases, to Windows Phone and that’s it. Committing to a new OS when it has no users is a luxury few can afford and as part of a classic vicious circle, no users will commit to a platform with no apps. Even operating systems that piggyback off existing app stores have largely failed to gain traction – see both BlackBerry and Amazon’s use of the Android system for a proprietary app store.

Bluffing only works if your bluff is believable

It’s worth noting Huawei hasn’t commented officially on these plans but has said it remains committed to Android as long as it remains “open”. In other words, these reports seem likely to be part of an effort by Huawei to ensure Android remains open and may not actually be real. The problem with that strategy is, in order for a bluff to work, it has to be believable. Given everything we’ve just reviewed, launching a successful alternative mobile operating system in 2016 just doesn’t pass the sniff test. So this gambit isn’t likely to be successful as a way to put pressure on Google either. Most likely, a few months from now, all this will have blown over and Huawei will have moved on. But it’s still a useful cautionary tale about the challenges facing large smartphone vendors heavily dependent on Android – that dependence isn’t going to lessen any time soon.

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Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

2 thoughts on “Huawei’s Misguided Foray into Operating Systems”

  1. I agree that a new operating system will not work short term, but mid,long-term could be a different story. That is, I doubt the new OS will gain adoption on smartphones, but it could on wearables or the next big thing to come along.

    Tizen, for example is doing quite well relative to Android Wear. Samsung Gear, according to estimates, is selling more than any other Android Wear OEM.

    The realistic target for R&D on a new OS would be to form the basis for a victory in the next platform wars. Huawei’s strategy, in my opinion, should be viewed from this angle.

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