Huawei has not had a good year ever since the US blacklisted the Chinese giant forcing some American companies to end ties with the company. Huawei has been clear that it is here to stay and that it will do all it can to support its devices already on the market and the ones it plans to release later this year. Huawei is not having a smooth ride even with its upbeat nature, the company expects its smartphone shipments to drop by up to 60% this year.
Huawei is expecting a drop in volumes between 40 million and 60 million by the end of this year according to Bloomberg. This is a huge number for the company and it is analysing the numbers internally to see how it will survive. People are not be willing to buy Huawei smartphones as some are worried they will not be getting updates from Google as they are available. This is not and should not be a big concern but it is and is something Huawei has to deal with until the US government decides to lift the ban.
“Huawei will lose access to Play Store and key Google apps like YouTube and Gmail. Users will have to sideload or look for alternative app stores,” Counterpoint analyst Tom Kang wrote in a report following the ban. “The impact on emerging markets will vary. However, Europe, Japan, and Latin America will be heavily affected.”
Confirmation
Huawei has sort of confirmed this as its founder Ren Zhengfei said international sales have sunk by 40% in the part month as its backlash with the US intensifies. He said that the company was going to slash production by $30 billion to address the drop in demand that it expects this year. “In the coming two years, the company will cut production by $30bn,” Mr Ren said at a panel discussion in Shenzhen.
Even with the drop in sales this year, Huawei is still expecting billion in sales. The company expects sales to remain flat at $100 billion in 2019 and 2020. Mr Ren added that Huawei will take a hit in 2020 but should bounce back in 2021. This is him being optimistic and it is hard to predict what will happen if the US does not do something about the ban.
Still Growing in China
Mr Ren also revealed that the company has seen smartphone sales drop sharply overseas but in China it is still seeing growth. This was expected as China is Huawei’s home country and I did not expect them to ditch it just because the US has blacklisted it.
Huawei has no plan to cut down on research and development despite its uncertain future. This is a smart move by the company as it has to be innovative in some way if it is to stay competitive. The company is even rumoured to be working on its own Mobile OS that will act as an alternative to Android. We should be seeing this alternative OS within the next 9 months or so if everything goes as planned.
Huawei is already inviting Android developers to publish their applications on its AppGallery since its phones will not come with Google Play Store pre-installed. This will be interesting to watch if it turns out well and I am excited to see Android face some real competition.