Source | Bohu Finance (bohuFN)

For a long time, there have been two crowns in the mobile phone industry: one is the SoC chip, and the other is the operating system.

Many domestic mobile phone manufacturers have challenged the first one, such as Xiaomi's Penta chip, Huawei's Kirin chip, and OPPO's Zeku, which was disbanded last year. In contrast, building a new operating system is a choice that few manufacturers would make for two reasons. Firstly, of course, it's the investment issue. Despite years of calls for the localization of operating systems, most of them are essentially Linux shells.

Secondly, there's the ecosystem issue. In today's mobile internet era, it's not that there haven't been other systems challenging the status of iOS and Android. After acquiring Nokia's mobile phone business, Microsoft launched its own Windows Phone, but due to issues such as lack of market share, maturity of the software itself, and lack of popular apps, Microsoft's mobile dream ultimately ended in failure.

This is probably why, when announcing the "pure-blooded HarmonyOS" HarmonyOS NEXT, Yu Chengdong, Executive Director of Huawei, Chairman of Terminal BG, and Chairman of Intelligent Automobile Solutions BU, described it as "a day of great joy."

Yu Chengdong also made a crucial statement: "HarmonyOS has taken a decade to complete the journey that took European and American countries three decades." How should we interpret this statement? Can HarmonyOS eventually stand alongside Apple and Android in a three-way rivalry? What does it mean for Huawei?

These are the questions this article attempts to answer.

01 A Decade's Journey in Three Decades

The localization of operating systems has been a topic of discussion for a long time. Back in the 1990s, China began developing operating systems based on UNIX, resulting in operating systems like COSIX V1.0 and COSIX V2.0. By the first decade of the new millennium, domestic operating systems had largely established Linux as their kernel. Domestically, operating systems like Kylin and EulerOS emerged.

However, software must first be user-friendly, and secondly, it must have users. The former is the capability of the software itself, while the latter requires consideration of the influence at the hardware level. In the mobile internet era, the concept of "user-friendliness" has evolved to include a new element of ecosystem: applications are the nodes connecting the mobile internet, and only a rich application ecosystem can support a good user experience.

During the golden decade of the mobile internet, countless developers for Android and iOS have become the most important moat for these two operating systems. For a new operating system to succeed, it not only needs to be user-friendly but also requires a certain hardware scale, upon which application developers are willing to invest time and effort in making adaptations.

That's why almost all manufacturers choose not to build their own operating systems. And those who do, inevitably fail, including familiar names like Microsoft and Samsung. Even in the early days of HarmonyOS, Huawei had to use AOSP code to be compatible with Android, allowing users to enjoy the Android ecosystem. This is why HarmonyOS was initially ridiculed for being a shell.

Huawei had never intended to build its own operating system. In 2014, with the frequent mention of the Internet of Things, Huawei realized the necessity of creating a cross-device, seamlessly connected distributed platform, leading to the birth of LiteOS, the predecessor of HarmonyOS. Then, in 2019, a ban from across the ocean turned the backup plan into the main plan overnight, and HarmonyOS was officially launched, with its core code open-sourced at the launch event. By the end of 2019, Huawei launched the "Songhu Campaign" at its Songshan Lake campus, mobilizing over 2,000 people from research institutes worldwide and taking nine months to make HarmonyOS usable on mobile phones.

Now, HarmonyOS has truly removed traditional AOSP code and achieved full-stack in-house research and development from the inside out, becoming the first truly independent and controllable operating system in China. Yu Chengdong announced at the launch event that HarmonyOS now has over 110 million lines of code.

The latecomer advantage is also gradually emerging in HarmonyOS's development. It has its own advantages in security, openness, interconnectivity, AI, and other aspects. Taking the currently popular AI as an example, based on the end-cloud collaboration architecture, Huawei has rebuilt HarmonyOS's native AI-centric intelligence, achieving comprehensive intelligence from the kernel to system applications. Thanks to this, HarmonyOS can truly embed AI capabilities into the operating system.

Meanwhile, Huawei's experience of being sanctioned has given it a brand appeal that surpasses its peers. After returning to the mobile phone market, Huawei quickly regained its position in the high-end market. Its growth rates in the first and second quarters were 67% and 82%, respectively, and its market share increased from 26% to 30%. According to Huawei's official data, HarmonyOS now covers over 1 billion devices, making it the second-largest operating system in China.

To enrich its application ecosystem and encourage developers to invest more in application development, Huawei insists on investing over 6 billion yuan annually to support and incentivize HarmonyOS developers. Currently, the number of registered developers in the Huawei Developer Alliance has grown to 6.75 million.

Perhaps this is why Huawei chose to launch "pure-blooded HarmonyOS" at this time. With sufficient brand influence and a significant hardware market share, Huawei has the confidence to call on application developers to participate in HarmonyOS application development.

According to Bohu Finance's understanding, HarmonyOS NEXT has updated six versions in the past three months, receiving over one million feedback suggestions. Specifically, for popular apps, Utrip adapted core functions such as online check-in and seat selection, and electronic boarding passes within just one and a half months. Feishu completed the development of video conferencing functionality in just two and a half weeks, while Sina News completed AI reading, dark mode, and push notification development in one week.

Now, over 15,000 HarmonyOS native apps and services, including WeChat and Alipay, have been launched on HarmonyOS, giving Yu Chengdong the confidence to say that Huawei has completed a journey in a decade that took others three decades.

02 Where is HarmonyOS in the three-way rivalry?

According to Statcounter, as of September 2024, Google's Android and Microsoft's Windows still dominate the operating system market, with shares of 45% and 27%, respectively. However, as the trend of mobile usage continues to strengthen, iOS's share is on the rise, while Windows's is declining. This trend is obviously beneficial to Huawei.

Returning to the domestic mobile phone market, according to Counterpoint, HarmonyOS accounted for 17% of the market share by the first quarter of this year. According to Yang Haisong, former Vice President of Huawei Consumer Business AI and Smart Full-Scenario Business Department, a 16% market share is the "life-and-death line" for an operating system.

Although there is still a gap between HarmonyOS and its peers in the global market, it has already taken the most difficult first step. Considering Huawei's domestic market position, growth will continue: in addition to mobile phones, Huawei is also doing well in categories like watches, tablets, and smart screens. According to IDC data, Huawei ranked first in global wearable device shipments for two consecutive quarters in the first half of 2024. In the tablet market, Huawei has been the top player in China for three consecutive quarters, surpassing Apple.

According to the official announcement, this year's pure-blooded HarmonyOS will be commercially available on mobile phones and tablets, and will expand to smart screens, in-car devices, and other terminals next year. With the advent of the Internet of Everything era, HarmonyOS may have a significant synergistic effect with Huawei's consumer business.

However, to compete with its peers in a three-way rivalry, Huawei still has many problems to solve. The first and foremost is still the issue of scale.

On the one hand, Google and Apple have greater influence in overseas markets than in China, making it more difficult for HarmonyOS to expand overseas. Taking mobile phones as an example, at its peak, Huawei sold 240 million mobile phones annually, while this year's estimated sales are 60 million units. Without a sufficiently large market, it's difficult for Huawei to continuously attract developers to update and invest spontaneously, as Android and iOS have done. Therefore, the importance of both B-end and C-end markets is almost equal.

On the other hand, the difficulty in supplying high-end chips also restricts ecosystem development to a certain extent, especially for gaming applications. Currently, the number of apps on the Android platform's Google Play exceeds 2.5 million, while the total number of apps on the iOS platform's App Store exceeds 1.7 million. This requires peers to work together to develop, iterate, and optimize.

The emergence of HarmonyOS can better help Huawei connect its business and provide the imagination of the Internet of Everything, realizing the dream of "building a world of interconnected everything." However, the battle for operating systems is clearly a long-term struggle, and both Huawei and its partners must be prepared for a protracted fight.

References:

1. Laimi Research Institute: Viewing the Progress of Domestic Operating Systems from Huawei's HarmonyOS

2. Yuanchuan Technology Review: Can HarmonyOS Save Huawei?

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