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The Mate 30 is a moment of truth for Huawei
We’ve known this day would come for a long time now. Over the past several months, however, it feels like it has arrived in slow motion. Seemingly legitimate concerns over security and sanction violations have been muddled by chest-puffing and braggadocio and large-headed leaders promising to do deals. Executives were arrested in Canada and the company was added to a trade blacklist, only to be given a temporary reprieve.
This morning, in spite of it all, Huawei unveiled its latest flagship. The Mate 30 Pro is a beast of a smartphone, as we’ve come to expect from the Chinese electronics powerhouse. It has a quartet of cameras aligned in a ring up top. On the flip side, a 6.53-inch flexible OLED hugs the corners of the handset, boasting an always-on functionality — the long-awaited new feature that served as the central selling point for Apple’s latest wearable.
From a 100-foot view, however, it seems inevitable that no one will remember the handset for its screen or cameras or beefy 4,500mAh. It’s what’s missing that’s the most notable. The Mate 30 and Mate 30 Pro don’t use full Android, but rather an open-source version of the operating system based on it. More importantly, they are missing Google’s fundamental apps like Gmail, Maps and Chrome, a central part of the Android experience. Worse yet, there’s no Google Play Store to download them.
The solutions for now are mostly stop-gap. There’s a Huawei-branded browser that lets you download apps through a Huawei-branded channel. There are 45,000 or so. Not bad, but nowhere near the 2.7 million you’ll find via Google Play. There will be better solutions to these, but they take a lot of time and money. Huawei’s got plenty of the latter, though the former has been the cause for some debate amongst those following the company.
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Smartphone sales declined again in Q2, surprising no one
Stop me if you’ve heard this one before. Smartphone sales are down. Again. After years of growth, the smartphone market’s recent slide has continued into the second quarter of 2019, per numbers from analyst group, Gartner.
At 1.7% year over year, it’s not a huge slice of the overall pie, but it does point to a continued problem for manufacturers, dropping from 374 million to 368 million. The biggest hit continues to be in the high end of the market, as higher prices coupled with longer refresh cycles and fewer compelling features continue to contribute to the decline.
Of the top five markets, only China and Brazil saw growth. At 0.5%, however, China’s slight bump wasn’t enough to turn things around. Interestingly, Gartner notes that some of China’s growth may be due to manufacturers looking to move old flagship stock to make way for 5G models. Additional 5G phones, coupled with more carrier coverage, could drive sales a bit as well in future quarters.
The number two market, India, saw a 2.3% drop y-o-y, as consumer upgrades from feature phones to smartphones began to slow. The firm anticipates that sales will continue to remain slow through the end of 2019.
Apple continued to see declines, though those have slowed compared to the hit it took in the first quarter. Samsung and Huawei, meanwhile, were rare bright spots. Samsung’s growth was led primarily by mid-range and entry-level handsets like its Galaxy A series, while the deferment of Huawei’s U.S. ban helped boost its sale a bit for the quarter.
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Huawei pushes back launch of 5G foldable, the Mate X
If you were desperately ripping days off of your calendar until you could get your hands on Huawei’s $2,600 5G foldable, the Mate X — which was originally slated to launch next month — it sounds like you’re going to have to wait a bit longer, per TechRadar which attended a press event at Huawei’s Shenzhen headquarters today.
It reports being told there is no possibility of a September launch. Instead Huawei is now aiming for November. But the company would only profess itself certain its first smartphone that folds out to a (square) tablet will launch before 2020. So it seems Mate X buyers may need to wait until circa Christmas to fondle this foldable.
It’s not clear exactly why the launch is being delayed. But — speculating wildly — we imagine it’s something to do with the fact that the screen, er, folds.
We’ve reached out to Huawei for official comment on the delay.
Huawei’s Mate X date slippage suggests Samsung will still be first to market with its (previously) delayed Galaxy Fold — which was itself delayed after a bunch of review units broke (because, well, did we tell you the screen folds?).
Last we heard, the Galaxy Fold is slated for a September release — Samsung seemingly confident it’s fixed the problem of how to make a foldable phone survive actual use.
Of course survival in the wild very much remains to be seen with any of these foldable. So expect TC’s in house hardware guru, Brian Heater, to put all of these expensively hinged touchscreens through their paces.
Returning to Huawei’s Mate X, potential buyers may not be entirely reassured to learn the company appeared to dangle rather more information about a planned sequel in front of reporters at the press event.
A sequel which may or may not have even more screens, as Huawei is apparently considering putting glass on the back. Yes, glass. (The gen-one Mate X will have a steel back.) Glass panels which it says could double as touchscreens. On the back. As well as the front. We have no idea if that means the price-tag will double too.
This theoretical quad (?) screen foldable follow-up to the still unreleased Mate X might even be released as soon as next year, according to TechRadar’s reportage. Or — again speculating wildly — it might never be released. Because, frankly, it sounds mental. But that’s the wacky world of foldables for ya.
There may be method in this madness too. Because, since smartphones turned into all-screen devices — making it almost impossible to tell one touch-sensitive slab from another — plucky Android device makers are trying to find a way to put more screen on the slab so you can see more.
If they can pull that off it might be great. However sticking a hinge right through the middle of a smartphone’s primary feature and function without that simultaneously causing problems is certainly a major engineering challenge.
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Huawei employees reportedly aided African governments in spying
A new report from The Wall Street Journal could be another damning piece of evidence for a company already under a good deal of international scrutiny. The paper is reporting that technicians working for Huawei helped members of government in Uganda and Zambia spy on political opponents.
The report cites unnamed senior surveillance officers. The paper adds that an investigation didn’t confirm a direct tie between the Chinese government or Huawei executives. It did, however, appear to confirm that employees for the tech giant played a part in intercepting communications.
The list includes encrypted messages, the use of apps like WhatsApp and Skype and tracking opponents using cellular data.
A representative for Zambia’s ruling party confirmed with the paper that Huawei technicians have helped in the fight against news sites with opposing stances in the country, stating, “Whenever we want to track down perpetrators of fake news, we ask Zicta, which is the lead agency. They work with Huawei to ensure that people don’t use our telecommunications space to spread fake news.”
Huawei has, naturally, denied any involvement, stating that it has “never been engaged in ‘hacking’ activities. Huawei rejects completely these unfounded and inaccurate allegations against our business operations. Our internal investigation shows clearly that Huawei and its employees have not been engaged in any of the activities alleged. We have neither the contracts, nor the capabilities, to do so.”
The company has, of course, been under international scrutiny in places like the U.S. and Europe over concerns that its telecommunications technologies could be used for spying on behalf of the Chinese government, allegations Huawei has strongly and often rebuffed.
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Huawei’s new OS isn’t an Android replacement… yet
If making an Android alternative was easy, we’d have a lot more of them. Huawei’s HarmonyOS won’t be replacing the mobile operating system for the company anytime soon, and Huawei has made it pretty clear that it would much rather go back to working with Google than go it alone.
Of course, that might not be an option.
The truth is that Huawei and Google were actually getting pretty chummy. They’d worked together plenty, and according to recent rumors, were getting ready to release a smart speaker in a partnership akin to what Google’s been doing with Lenovo in recent years. That was, of course, before Huawei was added to a U.S. “entity list” that ground those plans to a halt.
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HarmonyOS is Huawei’s Android alternative for smartphones and smart home devices
After months of conflicting statements from Huawei executives, the Chinese networking giant on Friday officially unveiled HarmonyOS, the much-anticipated microkernel-based distributed operating system that it has developed to power smartphones, laptops and smart home devices as the company attempts to reduce its reliance on American firms.
HarmonyOS will be made available later this year for deployment in smart screen products such as TV, smart watches and in-vehicle infotainment systems, said Richard Yu, CEO of the Huawei consumer division at the company’s developer conference. In the next three years, Huawei, the world’s second largest smartphone vendor, will look to bring HarmonyOS to more devices, including smartphones, he said.
Yu said, without offering any proof, that HarmonyOS is “more powerful and secure than Android.” He said HarmonyOS’ IPC performance is five times that of Google’s Fuchsia. The top executive also claimed that HarmonyOS’ microkernel has “one-thousandth the amount of code in the Linux kernel.”
“A modularized HarmonyOS can be nested to adapt flexibly to any device to create a seamless cross-device experience. Developed via the distributed capability kit, it builds the foundation of a shared developer ecosystem,” the company said in a statement, adding that it began to explore developing its own operating system “as early as 10 years ago.”
The company said it intends to continue to use Android moving forward, but HarmonyOS is officially its back-up plan if things go south. “We will prioritize Android for smartphones, but if we can’t use Android, we will be able to install HarmonyOS quickly,” Yu said.
Image: FRED DUFOUR / AFP / Getty Images
The availability of the mobile operating system, which is open source, will be limited to China for now, though the company has plans to bring it to international markets at a later stage, he said.
The company said it has worked on security and trustworthiness aspects of the operating system from the ground up. It said HarmonyOS uses formal verification methods to “reshape security.” Formal verification methods are an effective mathematical approach to validate system correctness from the source, while traditional verification methods, such as functional verification and attack simulation, “are confined to limited scenarios,” the company claimed.
The announcement today comes months after the U.S. government put Huawei and more than 60 affiliates in an entity list, restricting U.S. firms from maintaining a business relationship with the Chinese giant. The U.S. government has accused Huawei of stealing trade secrets, and said it poses a risk to national security. Huawei has denied these accusations and pursued legal means to fight back.
In the aftermath, Google, Intel and other U.S.-based companies that contribute much of the technology and solutions that go into a smartphone suspended their business with Huawei, thereby severely questioning the company’s future prospects.
The ongoing trade war between the U.S. and China has already started to impact Huawei’s bottom line. The company’s performance in the quarter that ended in June was weak, compared to several previous quarters.
What remains unclear is the kind of impact the U.S.’ accusations have had on the Chinese giant’s brand image worldwide. According to research firm Counterpoint, about half of all Huawei smartphones ship outside China.
Huawei was poised to become the world’s biggest vendor by shipment — something it would have achieved — “if not for the trade war,” Yu said.
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Africa’s top mobile phone seller Transsion to list in Chinese IPO
Chinese mobile-phone and device maker Transsion will list in an IPO on Shanghai’s STAR Market, Transsion confirmed to TechCrunch.
The company — which has a robust Africa sales network — could raise up to 3 billion yuan (or $426 million).
“The company’s listing-related work is running smoothly. The registration application and issuance process is still underway, with the specific timetable yet to be confirmed by the CSRC and Shanghai Stock Exchange,” a spokesperson for Transsion’s Office of the Secretary to the Chairman told TechCrunch via email.
Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application available on the Shanghai Stock Exchange’s website.
STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that also went live in July with some 25 companies going public.
Headquartered in Shenzhen — where African e-commerce unicorn Jumia also has a logistics supply-chain facility — Transsion is a top-seller of smartphones in Africa under its Tecno brand.
The company has a manufacturing facility in Ethiopia and recently expanded its presence in India.
Transsion plans to spend the bulk of its STAR Market raise (1.6 billion yuan or $227 million) on building more phone assembly hubs and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said.
Transsion recently announced a larger commitment to capturing market share in India, including building an industrial park in the country for manufacture of phones to Africa.
The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.
Listing on the STAR Market will put Transsion on the freshly minted exchange seen as an extension of Beijing’s ambition to become a hub for high-potential tech startups to raise public capital. Chinese regulators lowered profitability requirements for the exchange, which means pre-profit ventures can list.
Transsion’s IPO process comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.
Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.
Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.
On a recent research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.
In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.
Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.
Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.
This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya, and South Africa — thousands of ventures are building business models around mobile-based products and digital applications. 
If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.
Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular if the Shenzhen company moves strongly toward venture investing.
China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.
Transsion’s IPO move is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.
So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.
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Huawei’s in-house OS could show up on phones this year
Huawei has almost certainly been working on a software contingency plan for some time now, prepping for a worst-case scenario. When the U.S. announced that it was blacklisting the Chinese hardware giant earlier this year, those plans were likely accelerated.
One of the things that’s still unclear, however, is what role the company’s Hongmeng OS will fill. Recent reports have suggested that the operating system was built for IoT and other industrial applications. However, the software may also be forked specifically to run on low-end mobile devices.
State-run media outlet Global Times this morning issued a report based on sources suggesting that Hongmeng could appear on a low-end phone later this year. The OS is clearly far less robust than Android in its current state, but could wind up on a new device priced at 2,000 yuan (~$290). The report adds that Huawei is set to reveal the operating system in full later this week at its Developer Conference in Dongguan, China.
At present, Hongmeng doesn’t appear purpose-built to replace Google’s operating system, but Huawei is getting ready for the possibility of a future that completely cuts the company off from access to U.S.-built hardware and software. For the time being, at least, the company seems focused on continuing to use Android for its high-end flagships, while potentially building out Hongmeng on more entry-level devices.
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A closer look at China’s smartphone market
In February 2013, China surpassed the United States to become the world’s largest smartphone market. More than half a decade on, it still proves an elusive target for international sellers. A glance at reports from the past several quarters reveals the top spots dominated by homegrown names: Huawei, Vivo, Oppo, Xiaomi.
Combined, the big four made up roughly 84% of the nearly 100 million smartphones shipped last quarter, per new numbers from Canalys. Even international giants like Apple and Samsung have trouble cracking double-digit market share. Of the two, Apple has generally done better, with around 6% of the market — around six times Samsung’s share.
But Apple’s struggles have been very visible nonetheless, as the company has invested a good deal of its own future success into the China market. At the beginning of the year, the company took the rare action of lowering its guidance for Q1, citing China as the primary driver.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Tim Cook said in a letter to shareholders at the time. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
When it came time to report, things were disappointing, as expected. The company’s revenue in the area dropped nearly $5 billion, year over year. On the tail of two rough quarters, things picked up a bit for Apple in the country. This week, Tim Cook noted “great improvement” in Greater China.
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Smartphone sales expected to drop 2.5% globally this year
Smartphone sales have continued their global decline. New numbers from Gartner forecast a drop of 2.5% down to 1.5 billion. The biggest hits to the industry are Japan, Western Europe and North America, which saw drops of 6.5, 5.3 and 4.4%, respectively.
It’s all part of a continued trend we’ve highlighted several times before: slowed upgrade cycles, pricier phones, a bad economy. Even the world’s largest smartphone market, China, saw a drop for the year, as it battles its own economic headwinds.
The Huawei ban has also impacted some of the larger numbers, though Huawei itself has continued to grow, thanks to healthy continued adoption in its home market. The company, however, is still suffering from negative connotations abroad, while cutting off access to U.S.-based companies will likely halt things further.
The good news for manufacturers in all this is a rebound set for the second half of next year, driven by 5G. The first handsets have started to arrive this year, with others (including the iPhone) not expected until next. A lot’s going to have to happen for sales to reverse the downward trends — even temporarily. That’s going to take more handsets, wider 5G availability and lower prices, with many topping out well over $1,000 here in the States.
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