Trump’s attempt to stifle Huawei’s progress could backfire badly – and cause a headache for Google

It has been described as a kill switch for Huawei’s ambitions to supplant Samsung at the top of the smartphone charts (it’s currently in second place, with Apple running third).

Google’s suspension of business activities with the Chinese tech giant – which affects the transfer for hardware and software and the provision of key technical services – has dealt its thriving smartphone business a heavy blow.

The decision was taken to comply with America’s decision to put the firm on what’s known as the “Entity List”, meaning Google would need to obtain a license to sell products to it.

National security is the excuse, which has also regularly been cited in the debate over whether Huawei should be allowed to build parts of 5G networks in various parts of the world, including Britain.

But no one really believes that the next generation of Huawei smartphones running the YouTube app or Google Maps could somehow impact upon America’s national security in any meaningful way. This is simply the latest strike in Donald Trump’s trade war with China.

When America and Russia were in the midst of the Cold War they’d engage in proxy wars in other countries. The developing one between the Land of the Free and the Middle Kingdom has seen these battles moving towards corporate theatres. I suppose that’s progress of a sort.

Faced with a lot of worried customers, Huawei was keen to stress that its current customers will be fine. It will continue to provide security updates and after sales-services to existing products, which covers all those already sold and that are still in stock. Google apps will still work, and updates that are delivered by Google Play in the west will continue to be made.

The real problem for the company comes with the next generation of smartphones.

Android has an estimated 2 billion users globally and is far and away the market leader, having supplanted Symbian in 2011, a few years after its purchase by Google. Since then it has never looked back because it has never had to.

But if the decision is not reversed, Huawei will be left with a choice. It could use an open source version of Android, which would be devoid of the Google bells and whistles that have made the system so wildly popular.

This is what already happens with the phones Huawei sells in China, which do not come with Google’s various services. But it would mean the units it sells in other territories – which account for more than half the company’s sales – would come with a significant disadvantage when compared to Samsung’s.

Alternatively it could develop an operating system of its own. This “plan B” is already underway at a company that has been working hard at finding ways to reduce its reliance on American suppliers with a view to something like this happening.

It should be said that it is not as simple as simply switching its new phones over from one to the other, and it would obviously not be Huawei’s preferred option. It presents the company with a significant challenge and some analysts have speculated about whether Huawei will be able to pull it off.

But remember this is a smart, savvy company that has grown at a phenomenal pace through employing lots of smart savvy techies. Huawei went from selling 3 million units in 2010 to 200 million last year, good for a global market share of 14.6 per cent. It racked up $108.5bn in revenues in 2018, and employs 170,000 people worldwide.

If they can produce a viable alternative, an Asian Android that proves popular with users and software developers, then this latest volley aimed at China by the Americans could rebound on one of their corporate champions. Trade wars have a nasty habit of rebounding on their instigators like that and Huawei certainly won’t lack for motivation if this is the route it has to go down.

And ironically perhaps, the extra competition it would inject into a tech land dominated by monopolies or virtual monopolies would surely be of benefit to the consumer.