قالب وردپرس درنا توس
Home / Business / Find out how much money Google could lose by banning Huawei

Find out how much money Google could lose by banning Huawei



Google's decision to remove Chinese Huawei could cost as much as $ 425 million in lost annual revenue.

This is the estimate of stock research firm Nomura Instinet that cracked the numbers in response to news that Google will no longer license its Android smartphone software to Huawei.

Google does not have much choice in this matter. The Trump administration has blacklisted Huawei this month, making it nearly impossible for US companies to do business with the Chinese manufacturer of smartphones and telecommunications equipment.

This means that new Huawei devices in markets around the world will no longer be able to run the Android version with the latest security patches, access current Google services like Assistant, or download apps from the Google Play Store ,

Separating Huawei from the Google Play Store, where Google typically spends 30% of all transactions, will lose Google the most. Instinet estimates the general range of potentially lost Play Store sales for Google at $ 375- $ 425 million.

The biggest impact will be in Europe.

Instinet estimates that Huawei currently has around 500 million smartphone users worldwide.

Instinet

According to Instinet estimates, 52% of Huawei's owners are in China, where Google Play is not available. So Google would only make itself felt in markets such as Europe and Asia (excluding China), where it now benefits from selling apps.

According to estimates by Instinet, Google achieved worldwide sales of $ 7 billion in 2018. The share of this $ 7 billion, which comes from Huawei phones, should be according to Instinet's calculations at 388 million US dollars. The largest revenue driver is Europe, where Google generated $ 190 million from the sale of Play Stores on Huawei devices last year, Instinet estimates. According to the report, Huawei users in Asia (excluding China) contributed approximately $ 137 million to the Play Store revenue.

Huawei "Switcher" will make a difference

This blow would probably be tempered, they wrote, because some users will switch to another manufacturer's mobile phones to access a fully loaded Android experience. Huawei has announced to develop its own operating system to replace Android on its devices. However, experts are very skeptical that consumers will react positively to the change.

Shona Ghosh / Business Insider

"You can create another operating system … but what will consumers do for search, for maps, for YouTube?" Carolina Milanesi, Principal Analyst at Creative Strategies, recently told Business Insider in an interview. "All of these things have alternatives, but why should I do that? It's not as if Huawei phones were so amazing that I would forgo all the services I've been using for years."

Read more: Google has more control over Android than we realize, and companies like Huawei currently have no choice but to accept it.

Colin Sebastian, senior equity research analyst at Baird & Co., told Business Insider that he believes that "the most affected [Huawei] users" will seek to switch to devices from other companies.

"My general assumption is that most affected users would migrate to other Android devices because there are no truly viable alternatives to Android / Google apps (except Apple)," Sebastian said. "Of course there might be a transitional phase, but I guess it would be pretty quick."

Others, such as Wedbush Securities CEO Dan Ives, believe that Huawei will lose market share in countries like Europe, but that this will not be a doomsday scenario for the world's second-largest smartphone maker.

Regarding revenue losses for Google, Ives estimates that it will be $ 150 to $ 200 million a year. And for a company that generated over $ 130 billion in revenue in 2018, these upcoming losses are a "rounding error" for the technology giant and "ultimately, the bark could be a lot worse than the bite."

Do you work at Google? Do you have a tip? Contact this reporter via Signal or WhatsApp at (209) 730-3387 DM at @nickbastone .


Source link