LONDON – Europe was one of Huawei's greatest success stories. Now it is at the forefront of the trade and technology war between China and the United States.
Google's attempt to cut Android support for phones from Chinese telecommunications giant Huawei will disrupt European users and underscore how much the continent relies on US and Chinese companies for gadgets, apps and Internet services.
From the very beginning, when Huawei sold devices to mobile operators, Huawei expanded extremely fast in Europe, conquering more than a quarter of the smartphone market. According to Canalys senior analyst Ben Stanton, Google's approach to Huawei's hopes in Europe is "potentially catastrophic."
European customers will be more affected than customers in the US or China. Huawei phones are largely unavailable in the United States, and Google's services have long been blocked by the government in China.
But they are bestsellers in countries like Greece, Portugal and Spain. These phones and the robust sale of telecommunications equipment have made the market for Europe, the Middle East and Africa the second largest for Huawei after China. It made up 28 percent of Huawei's revenue in 2018, compared to 7 percent in America.
The pressure has increased. Since ordering the administration, one company at a time has shut down business with the company, which is the second largest smartphone maker in the world after Samsung.
Google announced its withdrawal on Monday. The Commerce Department announced that it would grant companies a 90-day extension to find out how they can support existing mobile networks and handsets. However, Google planned to comply with the decision after the deadline .
Huawei will not recover quickly, analysts said.
"It is highly unlikely that it will have its own operating system at short notice," said Dario Talmesio, telecommunications analyst at Ovum, a research and consulting firm in London. "And that means people with existing Huawei devices are beginning to find that devices that depend on Android are getting worse because they can not do certain upgrades."
Customers who buy a cell phone are unlikely to buy a cell phone that is not bundled with Google, the latest version of Android, apps like Gmail, or the Play App Store. The drop in demand for Huawei phones could also affect European network operators, who "rely heavily on the quality of Chinese equipment at a relatively low cost" to get customers into the emerging, emerging hyper-fast networks, Talmesio said.
The bottom line is that Huawei could suffer from the loss of revenue from its higher priced, higher-end phones, said Steve Tsang, director of the China Institute at the School of Oriental and African Studies, London. The slowing prospects in Europe could prevent Huawei from expanding elsewhere.
"Being able to do it in Europe means it's much easier for Huawei to do it in the rest of the world," Tsang said. "Success in Europe is important to Huawei in terms of both revenue and future growth."
To be successful in Europe, Huawei has been making sustained efforts for almost two decades to work with network operators and governments to give the opportunity to test this equipment for security vulnerabilities. Huawei made first progress by offering cheap telephone networking equipment in countries such as the UK, Germany, France and Poland. The company became the world's largest provider of telecommunications equipment and prevailed against Nokia and Ericsson.
Huawei deepened its reach when it started selling mobile devices, initially as a cost-effective alternative to a Samsung Galaxy or an Apple iPhone and then with more prestigious models for its technology. Huawei offers network operators and retailers better financial conditions than competitors by enabling them to make money with each mobile phone sale. According to industry analysts, retailers had an incentive to showcase and promote Huawei phones.
According to Canalys, Huawei's strategy helped sell more than 42 million smartphones in Europe last year. "Huawei has been the darling of the European smartphone industry for three or four years," said Stanton of Canalys.
Huawei's growth shows how Europe's influence on technology has diminished.
European policymakers have tried to do so Strengthening the region's technology sector, which played a key role in the growth of the global tech industry: Finnish Nokia was once the world's largest mobile phone seller, and Skype-founded Skype helped pioneer Joint ability to make phone calls over the Internet. But Europe could not keep up with Silicon Valley or Shenzhen, where Huawei is headquartered.
For months Washington warns allies about security risks associated with Huawei The Trump administration has threatened its intelligence relations with Germany, Britain and other allies when Huawei tried to build its fifth generation 5G networks. Networks do not just promise one faster mobile service, but also better wireless connections for devices such as autonomous cars, security cameras and industrial equipment.
The Trump administration's ruling has moved the debate over Huawei beyond the more obscure devices needed for wireless manufacturing networks where consumers can buy mobile phones and use apps.
"We have no control over that," said Talmesio of Ovum. "We are in the middle of this trade war and become a kind of proxy war zone."
Google's decision surprised potential phone buyers in Europe and many hesitated. Security risks were not their concern. They wanted to know that their phones would work everywhere.
"Such applications as YouTube and Google Maps are essential," said George Kirmizidis, an official browsing a BASE mobile phone store in Brussels. "If I can not access it on my smartphone, why should I buy a smartphone at all?"
"As a customer, I would of course like to choose between different products, and now Huawei has no choice for me anymore," Kirmizidis, 44, added. "I have a limited choice of products, which is not fair, if we support capitalism."
Solongo Unurbat examined a Huawei phone in the Mall of Berlin, the price of which was more than $ 1,000, and the 34-year-old was not worried about the loss of Google functionality.
"For me, it's all about the camera," she said.
Keerthana Annamaneni reported from Brussels and Christopher F. Schuetze from Berlin.