The Huawei logo was seen at the IFA Consumer Technology Fair, amid an outbreak of coronavirus disease (COVID-19), in Berlin, Germany, on September 3, 2020.
Michele Tantussi AFP
GUANGZHOU, China – Huawei is stepping up efforts in software areas such as cloud computing and smart cars as U.S. sanctions harm its hardware business.
Last week, Arcfox, a brand of the BAIC Group, launched a car with Huawei’s vehicle technology. It contained a cockpit HarmonyOS, the operating system launched by Huawei in 2019, as well as autonomous driving options. Huawei will not produce cars, but will focus on the technology that drives them.
On Sunday, Huawei launched some new cloud computing products that appear to challenge China’s market leader, Alibaba.
Huawei said in a press release Sunday that it hopes the focus on the cloud will “eventually increase the share of our software and services business in our overall revenue mix.”
The turnaround in software comes after U.S. sanctions on Huawei caused a drop in smartphone sales. The Chinese giant is put on blacklist known as the Entity List in 2019 which limited his access to some American technology. And last year, Washington moved to cut Huawei out of key semiconductor material.
“Huawei is doubling down by focusing on the software / cloud and services company,” said Neil Shah, director of research at Counterpoint Research.
As a result of Washington’s sanctions, Shah said the Chinese company “is unable to procure critical semiconductor components and related technology” from the United States
“Huawei is becoming like Google through these efforts,” he said.
Google produces the Android mobile operating system used by most of the world’s smartphones. The technical giant is also working on it software in the car and there is the fast-growing cloud computing business.
Huawei also unveiled its HarmonyOS that can run on a variety of devices, from smartphones to TVs and cars.
“The business of smartphones faces challenges, they have another mobile platform that is the car they use HarmonyOS for. The car could be a great mobile platform for the application and use of HarmonyOS,” said Will Wong, head of research at IDC. u.
In its search for areas such as vehicles and the cloud, Huawei will seek to challenge some of China’s largest technology companies. Alibaba is the market leader in China for cloud computing. And in the vehicle space, a multitude of companies are fighting for a piece of pie from established players like Baidu do new entrants like Xiaomi.
Behind Huawei’s suppression of software is an attempt to isolate itself from potential geopolitics and any further American actions. Although Washington has successfully hindered Huawei’s access to chips, it could pose a greater challenge to harm the software business.
“They’ll be more protected when we talk about U.S. geopolitics,” IDC’s Wong said.
He noted that the chipsets needed for vehicles also require a less advanced manufacturing process than smartphones.