Huawei Launches HarmonyOS 4 to Revive Smartphone Business and Challenge Apple

Huawei recently unveiled its latest mobile operating system, HarmonyOS 4, and an improved A.I assistant as part of its efforts to regain strength in the smartphone market. The Chinese telecoms company has been battling against U.S. sanctions since 2019, which have severely impacted its smartphone business globally. These sanctions have cut off Huawei from key technologies, including semiconductors and software, resulting in a decline in its market position.

One of the major consequences of the U.S. restrictions was the loss of access to Google’s Android operating system, which significantly affected Huawei’s smartphone business outside of China. In response, Huawei introduced its own operating system called HarmonyOS in 2019, with the aim of replacing Android. Since then, the company has been continuously developing new versions of HarmonyOS to regain market share in the smartphone industry.

The recent launch of HarmonyOS 4 demonstrates Huawei’s determination to revive its smartphone business. Yu Chengdong, CEO of Huawei’s consumer business and intelligent automotive solution business groups, stated during the Huawei Developer Conference 2023 that “Huawei’s flagship smartphones are making a comeback.”

While facing challenges in the global market, Huawei has focused on regaining market share in China, where it has achieved some success. In the second quarter of this year, Huawei’s market share in China increased to 13%, up from 7.3% in the same period in 2022. The company’s smartphone shipments also grew by 76% year-on-year.

Huawei has refined its strategy to target the premium segment of the smartphone market instead of competing across all sectors. Yu Chengdong mentioned that Huawei’s smartphones have secured the second spot in the high-end segment, indicating a strong comeback. According to IDC, Huawei’s market share in the high-end segment (phones priced over $600) in China rose to 18.4% in the second quarter, compared to 6.7% in the same period in 2022.

This high-end focus aligns with Chinese consumers’ willingness to pay more for smartphones. Huawei’s release of the Mate X3 foldable device and the flagship P60 has contributed to an increase in the company’s market share in the premium segment.

Despite the challenges posed by the U.S. sanctions, Huawei plans to re-enter the 5G smartphone market by the end of this year. The company aims to procure 5G chips domestically to overcome the limitations imposed by the sanctions. 5G technology offers faster internet speeds and is a key feature in most high-end smartphones.

Will Wong, a research analyst at IDC, stated, “Focusing on the premium segment makes sense for Huawei. It not only provides resilience in the Chinese market but also allows Huawei to leverage its premium brand name, which other Chinese vendors are still striving for. Furthermore, premium products have the potential to generate more revenue and profitability.”

Huawei’s high-end strategy is closely tied to its operating system, HarmonyOS. The company aims to create a unified software experience across various consumer electronics categories, similar to Apple’s approach. Huawei stated that HarmonyOS is designed for smartphones, wearables, TVs, and other devices.

Furthermore, Huawei introduced an improved version of its AI voice assistant, Celia. Celia has been trained with Huawei’s Pangu AI model to enhance productivity in daily life and work. The company highlighted that Celia has over 200 million monthly users and supports interactions through voice, texts, pictures, and documents. It can perform tasks such as writing summaries, translations, emails, and official documents.

In addition, Huawei announced that a new set of features will be available to invited users in late August.

Despite Huawei’s efforts to rejuvenate its smartphone business, its success is expected to be mostly limited to the Chinese market. According to IDC, China accounted for 89% of Huawei’s handset shipments in the second quarter. This is because Huawei’s phones still lack 5G capabilities and HarmonyOS does not support key apps, such as Google, that are widely used outside of China.

Will Wong commented, “Regaining ground overseas won’t be easy for Huawei. Many users have switched to other phone brands due to Huawei’s lack of key features. Even if Huawei addresses these pain points in the overseas market, it will take time to win back users.”