Huawei rotating chair Eric Xu used his keynote at its annual analyst summit earlier last month not to highlight its R&D might or financial gains in 2023, as is tradition, but instead outlined its smartphone operating system ambitions.

The company is currently working to build the HarmonyOS app ecosystem in China and will then target other countries, the executive emphasised in the speech.

However, he explained launching HarmonyOS was not previously part of its plan, stating it was “something we have been forced into.”

Restrictions on foreign chips and software spurred the move, and fears of additional controls accelerated the programme. 

Canalys SVP of mobility Nicole Peng told Mobile World Live developing its own OS provides Huawei with greater control and independence from reliance on US technology, and aligns with its broader strategy of building an integrated ecosystem of devices and services.

Xu acknowledged its focus in the beginning was on adapting the OS, introduced in 2019 for IoT applications, for all sorts of devices, but for smartphone apps it historically worked within the Android ecosystem.

Huawei now claims more than 4,000 of the 5,000 most used apps in China are in the process of being ported over to HarmonyOS.

“We’re communicating with developers on the 1,000 or so apps that remain,” he said. “This is a massive undertaking, but we have broad support in the industry and from many app developers”.

The company is investing CNY7 billion ($966 million) to encourage developers to work on its platform.

Xu confirmed it has plans to launch the Mate 70 series later this year alongside a native HarmonyOS, which will completely split from Android, as Consumer Business Group (CBG) CEO Yu Chengdong first revealed in January.

Remarkable turnaround
The company’s fortunes have improved sharply since August 2023 when it launched the Mate 60 Pro with a China-made processor.

Before the release, the CBG was reeling from US trade sanctions introduced in 2019. Group revenue in 2022 declined 11.9 per cent to CNY214.5 billion, after tumbling 49.5 per cent to CNY243.4 billion the previous year.

Huawei dropped out of the top-five smartphone global vendor table in Q4 2020 after its share peaked at nearly 20 per cent in Q2 of that year, taking the top spot that quarter. Canalys put Huawei’s shipments at 188.5 million units in 2020, down 22 per cent year-on-year.

More painfully, in the domestic market it disappeared from the top-five as its share plummeted from 41 per cent in 2020 to 7.9 per cent in 2022, figures from Counterpoint Research showed.

But buoyant sales of the Mate 60 series in the second half of 2023 fuelled a 17.3 per cent year-on-year increase in CBG revenue to CNY251.5 billion. In the opening quarter, Huawei posted 69.7 per cent growth in handset sales in China, jumping to fourth place with a 15.5 per cent share. And that’s after offloading the Honor sub-brand in late 2020.

Domestic play
As a major tech player in the world’s second largest country (by population), Huawei has access to more than a billion people, who increasingly are rallying behind the company as a result of what they see as US bullying of a national champion. 

This is a huge advantage in establishing a third major operating system.

Peng explained in addition to attracting developers to create a viable app ecosystem to drive adoption, which the company is addressing, the key challenges are convincing users to switch from familiar platforms, ensuring compatibility with existing apps and services, and building brand recognition.

She said Huawei already has a strong brand position in China, robust R&D capabilities and successful experience running a large developer community for enterprise and consumer offerings. “These factors provide a solid foundation for building an OS independent of Android and iOS.”

Canalys Q1 2024 data showed Huawei smartphones equipped with HarmonyOS had a 17 per cent share of shipments in the mainland, with the figure forecast to exceed 20 per cent following the launch of the Pura 70 and Mate 70 series running the OS later this year.

She noted, however, sustaining growth beyond the 20 per cent will require Huawei to release compelling HarmonyOS devices across multiple price segments to attract a wider user base. 

Overseas ambitions
For more than a decade, the smartphone OS ecosystem has been dominated by two platforms: Android and iOS.

Huawei faces the same duopoly that felled both Research In Motion (RIM) and Microsoft’s OS ambitions.

The iconic Blackberry commanded a global market share of about 20 per cent in 2009, slipping below 2 per cent by 2013. Windows Phone (launched in 2010 as Windows Mobile) peaked in Q3 2013 with a 3.6 per cent market share, which declined to below 1 per cent three years later.

Samsung’s Tizen OS, an open source system based on Linux hosted by the Linux Foundation, saw limited success from the start and is only used in wearables. The list goes on: Palm’s WebOS and MeGo, a venture between Nokia and Intel.

Despite a number of challengers offering esoteric third options, all failed to take off after a few years. 

Peng cautioned gaining traction outside of China will pose a significant challenge due to factors such as limited device availability, lack of an established app ecosystem, competition from entrenched platforms and brand loyalty.

“A gradual expansion on a country-by-country basis, as mentioned by Xu, may be a more realistic approach initially,” the analyst added.

Huawei faces a huge uphill battle eking out share beyond its sizeable home market.

However, with a geopolitical shift towards the so-called “global south”, perhaps more consumers in these nations will start to look beyond the big-name brands for goods and services. That could put Huawei in a very different position.

It’s off to a decent start. Counterpoint estimated HarmonyOS’ global share at 4 per cent in Q4 (albeit with users only in China), which is higher than Windows Phone at its peak.

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.