It seemed as though Huawei were building an unstoppable momentum when it came to the western phone market. Competing with their Asian rivals (Samsung and Sony) was tough, but their phones were becoming more common. However, security concerns have caused their share price to plummet from nearly 13 Chinese Yuan down to around 3.5.
The initial blow was dealt to Huawei in late January when concerns regarding how they operate arose. It’s believed their equipment could be used to spy on other countries for the Chinese government, forcing the USA to take action.
The blacklisting from the US government was already going to make it difficult for them. Huawei receives its microchips from the US, which it won’t now be able to do. The Chinese company say they will be fine without them, but there are major concerns.
The Google Blow
This has been followed by Google’s decision to withdraw its services from Huawei. This means that phone users won’t be able to get the latest versions of Android and won’t have access to all the incredible apps that Google provides.
They have tried to play it down but it’s a monumental blow. Their share price has suffered as a result, with it being around half the value it was this time last year, and it’s hard to see how it’s going to recover. Unless Huawei completely changes its security policy, such sanctions are never going to be lifted.
The Immediate Impact
The impact has already been felt in terms of that share price, but it will with sales too. Google is reviewing exactly what it will restrict, but this news will surely have an immediate negative impact on sales. Once that happens, the share price could fall even further.
It may not seem like it right now, but this is good news for mobile customers in the long-term. It shows that security is taken seriously, and it sends out the right message.
The future is uncertain for Huawei. They will develop their own operating system but it’s unlikely that users are going to break away from Android.