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A man uses a smartphone in front of a Huawei store in Beijing. (AP/Yonhap News)

Having lost its share of the smartphone market amid US government sanctions, China’s biggest communications equipment company Huawei has now launched its own smartphone operating system, HarmonyOS (Hongmeng) 2.0.

Coming at a time when China has been pursuing technology self-sufficiency as a strategy against US sanctions, Huawei’s choice is being seen as a bid to build its own ecosystem based on China’s population of 1.4 billion.

Local news outlets in China reported that Huawei, which released the HarmonyOS 2.0 system on June 2, donated the basic code for it to the Open Atom Foundation, which is affiliated with the Chinese Ministry of Industry and Information Technology.

With HarmonyOS 2.0 made available in open source format to a foundation whose partners include Alibaba and Tencent, this means that anyone can use it to develop applications. Some have referred to this as amounting to the OS becoming “nationalized.”

HarmonyOS was first released in August 2019 as a response to the suspension of Android update support for Huawei smartphones in May of that year due to US sanctions.

While market observers had been watching from the beginning to see when Huawei would come out with a smartphone loaded with HarmonyOS, it had only been used before on a limited range of products, including smart TVs.

Coming around two years later, the second version of HarmonyOS could be seen as an official “goodbye” to Android, as the scope is being expanded to mobile devices such as Huawei’s flagship smartphone, the Mate 40.

Huawei has been emphasizing the OS’ distinctions from Android and iOS — playing up, in particular, the fact that it is not just a smartphone OS, but an Internet of Things platform that can be linked to notebook computers, automobiles, and home appliances.

The plan is to form a “Harmony ecosystem” through partnerships not only with China’s leading home appliance company Midea and drone maker DJI, but also global watch brands like Tissot and Swatch.

The Bank of China, China Guangfa Bank, China CITIC Bank, and others also look to be joining in as they announce plans to launch services that can be used with HarmonyOS.

The response to HarmonyOS within China appears to share parallels with efforts there to pursue self-sufficiency in technology against US sanctions that have been referred to locally as “qia bozi” — a term meaning to “strangle an adversary.”

After parting ways with Android in 2019, Huawei smartphones reached a share of 20% of the global smartphone market (in terms of shipments) as of the second quarter of 2020 but has seen that plunge all the way to 4% in the first quarter of this year.

Huawei’s sales last year totaled US$137.74 billion, with US$11.2 billion in operating profits, for an operating profit rate of 8.1%. While sales were up by 3.8% from the year before, operating profits were down by 6.9%.

By region, sales decreased everywhere except China, including Europe, the Americas, and elsewhere in the Asia-Pacific region. The reason was a decline in sales of its flagship smartphone due to US government pressure. The trend is projected to continue during this year.

Huawei has been urging all companies in China to take part in building a “Harmony ecosystem.” But Chinese smartphone companies like Xiaomi, Oppo, and Vivo have so far stated that they plan to keep using the Android OS.

Within overseas markets, HarmonyOS is a late starter compared with Android, which has had an ecosystem in place for over a decade. In terms of device compatibility and app support, it is unlikely to be favored by overseas consumers.

Another factor here is the history of failures by Samsung Electronics and Microsoft when they tried to establish their own independent smartphone OSs.

According to figures by the market research organization StatCounter, Google and Apple between them had a more or less total monopoly on mobile OS market share as of last month — with a 72.7% share for Android and a 26.5% share for iOS.

Ultimately, the success of HarmonyOS will hinge on ecosystem expansions. Huawei is staking its future on building a Harmony ecosystem at the national level, even if that means handing over its monopoly rights on the technology.

What does the future look like for Huawei after its ambitious independent smartphone OS launch?

Many analysts are skeptical, suggesting that Harmony is unlikely to develop into an OS to rival the Android ecosystem even with China’s vast domestic market and population of 1.4 billion.

“Huawei developed its independent operating system [HarmonyOS] as a self-rescue strategy at a time when it can’t sell its 5G smartphone overseas, and it’s difficult to see its ecosystem as sustainable when it’s not even a tenth of Android’s scale,” said Koh Joon-sung, a senior research fellow at the Korea Institute for Industrial Economics and Trade.

“With a domestic market of 1.4 billion people, the company will be able to survive, but Huawei is unlikely to sustain the global brand standing that it had before the US sanctions against China,” he said.

By Sun Dam-eun, staff reporter

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