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Apple’s continued travails in China made headlines this week, with Counterpoint reporting sales down 24% inside the first six weeks of the year. But that’s not the only interesting news this week—it’s the twist behind that tale which could be a more serious issue for Apple and its iPhone in the long term, and which spells a major shift in Google’s influence over 2/3 of world’s smartphones. Despite China’s Vivo now leading the pack, toppling Apple from the top spot, the real winner is Huawei, whose sales soared 64%, putting it into second spot ahead of Apple. Even those stats ignore that Honor—the Huawei spinoff prompted by US sanctions—is broadly on par with Apple. Add Huawei and Honor together, and you would return to the kind of dominance we saw pre-Trump. This Huawei resurgence is independent of the US tech that drove its smartphone growth last time. Huawei’s initial recipe was to broadly replicate iPhone/Samsung device performance at a lower price point, and then run Android and its apps and services ecosystem to level the user experience. The US ban first removed Android and then the chipsets making all this work. Now Huawei is back with a seemingly independent supply chain and a new OS and ecosystem that is about to fully free itself from the Android world from which it was spawned. Nothing happens by accident in China. The domestic independence learning lessons from 2019-2021 is well planned. And what happens next will be just as well programmed. I warned in 2019 that “the prize for Huawei over the next decade if it can build out a successful HarmonyOS ecosystem, is huge. Not only does this deliver independence, but it also puts Huawei in control of the ‘third way’, the first major shake-up of the smartphone ecosystem in more than a decade. All of which would be bad news for Washington and California.” Five years later, and here we are. The pace of Huawei’s independent resurgence has surprised analysts. The Chinese giant has announced plans to split from Android with HarmonyOS Next. And even Nvidia has said that Huawei’s chipsets now make it a serious competitor in the AI space. The crux of my warning five years ago was as much—if not more about China—than just Huawei. The irony was that Huawei—just as TikTok has been doing since—was putting all its efforts into escaping China’s gravitational pull to be as Western as it could, to compete on a par with the US giants. The risk for the cozy smartphone world dominated by Apple’s walled garden and Google’s Android ecosystem was always that a third way, born in the world’s largest smartphone market and corralling consumers, developers, and OEMs, would shake apart the duopoly. Again—here we are. The perhaps even more interesting news this week is that Shenzhen, the city at the heart of China’s high-tech industry—including Huawei, is stepping into the fray. As reported by the South China Morning Post, Shenzhen “plans to expedite the adoption of [Huawei’s] self-developed mobile operating system HarmonyOS, heating up the platform’s rivalry with Google’s Android and Apple’s iOS in the world’s largest smartphone market.” Not only does Shenzhen plan to “boost the number of its native apps built on HarmonyOS and push for their adoption across several major sectors,” the city’s 2024 Action Plan, published last weekend, mandates that “HarmonyOS-based apps will be adopted in sectors that include government services, education, healthcare, banking and finance, transport and welfare.” Back in 2019, I suggested that “if Huawei takes a broad view, playing licensor rather that product owner, then it will pull other device manufacturers into the mix—starting with its Chinese stablemates,” and a few months later that “if Huawei can coral Chinese (and maybe non-Chinese) smartphone makers to jump from Android to its own operating system and app store, it will be a massive achievement. It will also be a serious threat to Google’s lock on the Android market.” Visit OUR FORUM for more.