Can Huawei’s HarmonyOS Next rival operating systems like iOS and Android?

(By Caixin journalists Zhang Erchi, Qin Min and Denise Jia)

Huawei Technologies may be close to succeeding where Microsoft, Samsung and Alibaba failed: fielding a formidable third mobile operating system to compete with Apple’s iOS and the open-source Android.

The Chinese tech giant’s HarmonyOS Next, unveiled in January as the newest version of its proprietary operating system, marked a significant departure from the previous Android-compatible versions. The move signalled Huawei’s determination to establish its own self-sufficient ecosystem of mobile applications like those built around iOS and Android.

By collaborating with app developers to create HarmonyOS-specific applications and fostering a new generation of programmers skilled in its platform, Huawei is positioning itself as an important player in the operating system landscape. The company has been collaborating with domestic universities since 2021 to train coders in its system.

The development could have an outsized effect in further spurring China’s tech industry. Huawei estimated that the creation of apps for HarmonyOS will generate at least three million jobs. There are currently just over 380,000 HarmonyOS-certified developers. Huawei pledged to train 100,000 developers a month through online videos and other means.

The momentum behind Harmony OS has been building over the past five years. In 2019, US sanctions barring Huawei from using Android created an existential crisis for the Shenzhen-based company.

“Huawei’s HarmonyOS is a forced move under sanctions,” a smartphone industry consultant told Caixin.

Development of HarmonyOS, known as “Hongmeng” in Chinese, started as early as 2015. It was originally intended for the Internet of Things, such as autonomous driving and industrial automation. But the sanctions forced Huawei to hit the accelerator and roll out an early version of HarmonyOS in just four months. Like Android, HarmonyOS is built on the Linux free open-source operating system.

Now Huawei is in position to achieve full autonomy in chips, operating systems and applications and to benefit from both product experience and commercialisation, the industry consultant said.

At the 22 February launch of Huawei’s new Pocket 2 folding smartphone, Consumer Business Group CEO Yu Chengdong unveiled ambitious plans for HarmonyOS. Slated for a major upgrade this fall, the system is expected to revolutionise Huawei devices, with a 30% boost in performance such as smoother operation and extended battery life, Yu said.

Yu outlined a strategy for severing links with Android. The transition will commence with the release of a beta version of the operating system for developers in the second quarter of 2024 and a version for consumers in the fourth quarter, Yu said. Insiders at Huawei said they expect the company’s new Mate smartphones to be released in the second half with the HarmonyOS Next installed.

Today, Huawei faces a completely different landscape in the smartphone market. The success of Huawei’s Mate 60 series, powered by a Chinese Kirin processor, built a solid base for launching the overhauled operating system. The Mate 60 series chalked up close to 1.5 million sales in its launch month, according to market researcher GfK.

In the first six weeks of 2024, Huawei’s smartphone sales in China surged 64% year-on-year. Its market share jumped to 16.5% and ranked second only to Vivo, data from market research firm Counterpoint Research show. The sales were mainly driven by the Mate 60 series, boosted by strong brand loyalty and the successful launch of HarmonyOS, Ivan Lam, a senior analyst at Counterpoint Research, told Caixin.

Before Huawei, other tech giants tried to build operating systems to rival Android and iOS. They included Microsoft’s Windows Phone in partnership with Nokia, Samsung’s Tizen developed with Intel, and Alibaba’s YunOS. They all foundered on the immense challenges and financial burdens involved in creating and sustaining a new operating system in a market dominated by established players.

Even for a tech giant like Alibaba, it is a huge cost to invest in a whole team to develop an operating system, said Zhang Jianfeng, former chief technology officer at Alibaba. The costs amount to a barrier to new entrants, he said. “This is not a technical problem, but an ecological problem,” Zhang said.

Huawei estimates the tipping point for success of HarmonyOS at 16% of the market. That’s the threshold for attracting developers to create applications specifically for its operating system.

The company hit that target in the fourth quarter of 2023, when 16% of the smartphones sold in China used HarmonyOS. Huawei is inching closer to Apple’s 20% of the China market. HarmonyOS worldwide has nearly 4% of the market, compared with Apple’s 23% and Android’s 74%, according to market research firm Counterpoint Research.

Gong Ti, president of the software department at Huawei’s Consumer Business Group, outlined a two-pronged strategy to bolster the competitive position of HarmonyOS. The initial focus is on incorporating more than 5,000 apps that account for 99% of the daily time consumers spend on smartphones. Achieving that milestone is crucial for HarmonyOS to gain traction and begin to establish a comprehensive software ecosystem, Gong said. Then Huawei needs to extend the operating system’s coverage to 500,000 apps to cater to a wide spectrum of consumer demands and preferences, Gong said.

Since September 2023, Huawei has been pushing major domestic companies to develop apps for HarmonyOS. By the end of 2023, companies including video platform Bilibili, digital payment app Alipay, and game developers NetEase and miHoYo announced agreements with Huawei to launch apps based on HarmonyOS Next.

At the HarmonyOS Next launch in January, Yu showcased a list of more than 200 companies that have participated in app development based on the operating system. They include iQiyi, China Merchants Bank, Ctrip and Zhihu, covering travel, finance, social media, productivity tools, entertainment and games.

Some app developers told Caixin that Huawei has a smartphone user base with medium to high incomes who are willing to pay more, a key reason for them to develop HarmonyOS apps.

App developers attending Huawei’s launch told Caixin they had been working on apps for HarmonyOS since the end of 2023 and that Huawei expects the first batch to be ready by the second quarter of 2024, the participants said.

Song Haobo, technology expert at navigation app Gaode Map, said his company launched a HarmonyOS project in October and completed a beta version in mid-January.

Lei Zhixing, head of the app technology department of Meituan, said the food delivery platform has deployed about 100 employees to come up with a beta version app.

Notably, some mega apps are still absent from the participant list, such as Tencent’s WeChat and ByteDance’s Douyin, the Chinese version of TikTok.

A person familiar with Tencent told Caixin that the company is in talks with Huawei about app development. Tencent’s QQ Music and QQ Reading apps are already on the list.

Several small app developers including some gaming apps told Caixin that they do not plan to venture into developing apps for HarmonyOS in the near future. An executive from a small gaming company cited constraints imposed by app stores, which take away half of the revenue generated from games. This business model has prompted small and medium-sized game developers to opt for distribution through popular social media and payment platforms such as WeChat, Douyin, Kuaishou and Alipay. These platforms allow users to engage with games directly, bypassing the need for downloads and registrations, a strategy that aligns with the developers’ need to reach their audience more cost-effectively, the executive said.

Huawei has been collaborating with domestic universities to train programmers by offering HarmonyOS courses. In February 2021, Wuhan University pioneered the integration of HarmonyOS mobile application development courses into its curriculum, making it the first in China to do so. In the first semester, 30 students from computer science, software engineering and information management majors took the course.

Huawei cemented a partnership with Shanghai Jiao Tong University in December 2020 through an agreement to co-train graduate students. This two-and-a-half-year programme enrolls 30 students annually. The inaugural cohort graduated in early 2024.

“The talent gap is very large, and the starting salary level of HarmonyOS developers is 30% to 50% higher than that of Android developers,” Ren Gelin, chairman of Huawei’s OpenHarmony Project Management Committee, told Caixin.

Xia Yubin, deputy dean of the School of Software at Shanghai Jiao Tong University, offers an optimistic view on the future of these HarmonyOS-trained graduates. Highlighting the scarcity of domestic operating system talent, he pointed out that their skills are not limited to operating system development but extend to roles in chip design and other tech domains.

The successful release of Huawei’s Mate 60 series, powered by an improved HarmonyOS, has significantly boosted student confidence in the trajectory of domestic tech innovations, Xia said. Many of his students bought Mate 60 smartphones as they are proud of their contributions to the phone’s software, the professor said.

This article was first published by Caixin Global as “In Depth: Huawei’s HarmonyOS Next Is Set to Rival iOS and Android”. Caixin Global is one of the most respected sources for macroeconomic, financial and business news and information about China.

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