Apple and Huawei are a tale of two Tech Islands
Huawei’s smartphone shipments in China soared 31% in the second quarter, according to research published Tuesday by Canalys. iPhones in China? Not so much.
The U.S. black-listed China’s Huawei but Huawei just keeps on moving. The trade war hasn’t stopped Huawei yet, and it’s a globally mature company, it could have been impacted had this occurred 5 or 10 years ago.
But let’s get real, Huawei captures 38% of the ultra-competitive Chinese smartphone market. China is all that matters. Apple’s shipments declined 14%, while shipments from Chinese competitors Oppo, Vivo and Xiaomi also tumbled.
The winners of the cold tech wars, circa 2030–50 are mostly going to be huge companies coming out of China. That’s my prediction for the state of things post-2030, and I’m being pretty optimistic about American companies who are like the last firewall of American capitalism against Asia’s dominance in the latter half of the 21st century.
Huawei is the First New Dragon
Huawei made 221.6 billion yuan ($32.2 billion) in revenue in the April-June quarter, a 23 percent increase over the previous quarter despite the escalation of the US-China trade war cutting off its business with American companies. Net profit margin was 8.7 percent on 401.3 billion yuan ($58.3 billion) of revenue for the first six months of 2019 (Verge).
Does Trump even understand the scale of Huawei? This is a more important company for this century than Apple. Apple that in spite of shaky iPhone sales in China have surged beyond the $1 Trillion market cap (Business Insider) levels with a great day on Wall Street today.
Apple’s Pivot to a Services Company is On Point
Can anyone say Apple-as-a-Service company? AppleCare, Music, and cloud services set fresh sales highs, while the App Store posted a third-quarter revenue record.
Apple vs. Huawei is a funny comparison though. Considering Huawei is like a Cisco as well. Even Google collaborated with Huawei likely giving them a valuable advantage in the process. That’s right, Google worked with a state-backed Technology competitor to America’s national interests. What were they thinking? Google likes to play the fence.
Huawei Technologies said its revenue expanded by 23.2 percent year-on-year in the first half of 2019, as the world’s largest telecommunications equipment vendor battles the effects of being added to a US trade blacklist earlier this year (SCMP). How do you deal with sanctions and still post a 23% YOY figure? This means Huawei has essentially an unlimited budget.
Huawei managed to boost sales despite the effects of being included on the US Commerce Department’s Entity List, which prevents the company from buying American-made technology. Huawei has such immense global penetration it doesn’t even need America. I’d like to see what could happen to Apple if it was blacklisted in China.
Huawei is Killing It
Huawei sold 118 million smartphones in the first half of the year — 59 million in each quarter — representing a 24 percent year-on-year increase, though the growth was accounted for in the first quarter. Who knows, maybe the 2nd quarter was drastically different for Huawei (though I doubt it).
The way Samsung is going, Huawei will catch it with global smartphone sales sooner than later. Trade war talks are making Chinese consumers more favorable to Huawei products.
We’re now learning that China’s Huawei and Google were working together on a new Huawei-branded smart speaker right before President Donald Trump restricted Huawei’s access to U.S. tech suppliers, say people familiar with the situation.
America’s Tech Dynasty on Red Alert
You can’t regulate Facebook, Google has gone rogue, and Huawei remains impossible to subdue. Welcome to the new world, America.
Meanwhile, on Wall Street, Chinese stocks are grossly undervalued while they have ceilings to scale entirely different from North American companies. Who do you think will have the last laugh in this story?
Yesterday we reported Honor 9X (Huawei) sold in 100,000 units in the first two minutes and today the Huawei sub-brand came out with new information, revealing it managed to ship over 300,000 units in the first day of the sale. Okay then.
Huawei 1, Apple 0.
Canalys said Huawei’s smartphone shipments in China soared 31% year-on-year, even as the overall market slowed. Apple’s shipments declined 14% in the second quarter, while shipments from Chinese competitors Oppo, Vivo and Xiaomi also tumbled.
The Chinese tech firm now has the highest market share of any vendor in the country in eight years. Well, no kidding!
The Chinese State can be a catalyst and pick the winners in the global market. This isn’t by accident.
Before the U.S. president’s action, which was in response to national security concerns, Huawei’s plan was to unveil the new smart speaker at the IFA tech trade show in Berlin this September. Google actively helped Huawei develop it.
U.S. officials argue Huawei’s technology could pose a national security risk by opening a backdoor for Chinese spying. With Google so interested in China, one wonders what kind of a security risk spies at these companies represent. Silicon Valley is likely infiltrated to the max, and to assume anything different is just silly.
Apple lost the 5G battle, while Huawei is going to be one of its big winners. Apple needs to pivot to things like Services and the AppleWatch, while Huawei has an R&D pipeline that would make Apple jealous, starving for real innovation as it is.
Huawei’s smartphone business outside China has now recovered to 80 per cent of the sales level before it was added to the US Entity List on May 16. How resilient is this company? It’s a Black Dragon of China.
All Rights Reserved for Michael K. Spencer