Huawei's HarmonyOS drives the industry chain to soar

Author | Huang Yu

Editor | Zhou Zhiyu

Huawei's HarmonyOS is finally ready to compete with Apple's iOS and Google's Android.

After nearly a year of accelerated expansion, at the HarmonyOS Night event on the evening of October 22nd, Richard Yu, Executive Director and CEO of Huawei's Consumer Business Group, revealed that since the call to arms for HarmonyOS on September 25th last year, there have been over 15,000 HarmonyOS native apps and core services launched, a tenfold increase from four months ago.

With the background of a maturing HarmonyOS native app ecosystem, Huawei officially released the pure HarmonyOS system HarmonyOS 5 (HarmonyOS NEXT), the largest upgrade since the birth of HarmonyOS.

In just five years, Huawei has broken free from the long-term dominance of iOS and Google's Android in the mobile operating system market, ushering in the "pure HarmonyOS moment," where HarmonyOS native apps will experience explosive growth.

This not only boosts Huawei's terminal sales and market share, but also is expected to further increase the penetration and adaptability of the HarmonyOS ecosystem, benefiting related HarmonyOS ecosystem manufacturers and partners significantly.

In fact, even before the commercialization of HarmonyOS on a large scale, the concept of HarmonyOS had already been favored by the capital market. Fueled by the bullish trend in Chinese assets, the HarmonyOS concept sector has become a "hot cake," with related concept stocks experiencing significant gains.

Seizing the new opportunities of the AI and Internet of Everything era, Huawei bears the heavy responsibility of breaking the monopoly in the operating system industry. The HarmonyOS ecosystem is reshaping the new landscape of the global operating system market, opening up a new market opportunity based on a unified HarmonyOS native OS.

Realization

As Huawei's native HarmonyOS ecosystem matures step by step, the official commercial use of "pure HarmonyOS" is imminent. According to Huawei's plan announced to the public throughout the year, the official commercial use will take place in the fourth quarter of this year, with the Huawei Mate 70 series being the first to be equipped with HarmonyOS NEXT official version.

To accelerate this process, on October 8th, Huawei officially launched the public beta of HarmonyOS NEXT. The first batch of devices to be adapted include the Huawei Mate 60 series, Mate X5 series, and MatePad Pro 13.2 series.

At this event, alongside the official release of HarmonyOS NEXT, Huawei announced that on October 22nd, the pure HarmonyOS will begin public beta testing on three devices: Huawei Pura 70 series, Huawei Pocket 2 series, and Huawei MatePad Pro 11-inch 2024 model.

More devices such as Huawei Mate XT Master, nova flip, nova 13 series, and others will join the public beta in 2025.

Nevertheless, the ultimate success of Huawei completely severing ties with Android as scheduled remains uncertain.

An insider at Huawei told Wall Street News that whether the HarmonyOS on the Mate 70 series in the fourth quarter can truly achieve "pure Harmony" will depend on the ecosystem development. Otherwise, there is a possibility of a dual-framework HarmonyOS that is compatible with Android apps, which would better cater to the overseas market As we all know, in order to ensure that users have a large number of apps to use, the Hongmeng system, which was forced to "upgrade from spare tire" five years ago, designed a dual framework that can be compatible with Android applications, which also led to its being questioned for being "Android in disguise".

Five years later, Hongmeng has become the world's third largest mobile operating system. With the advent of the era of IoT and AI opportunities, and in response to the trend of localization, Huawei has fully launched the development of native Hongmeng applications, aiming to completely separate from Android.

Today, the system base of HarmonyOS NEXT is completely self-developed, removing the traditional Android AOSP code, bidding farewell to the Linux kernel, and only supporting applications of the Hongmeng kernel and Hongmeng system, which can only use installation packages in Hap format.

At the conference, Richard Yu stated that for a long time, operating systems have been mainly dominated by Europe and the United States. The Hongmeng operating system has achieved a comprehensive breakthrough, accomplishing in 10 years what European and American counterparts took more than 30 years to achieve, realizing the autonomy and controllability of terminal operating systems.

Why has Huawei become a disruptor in the mobile operating system market, creating a third completely independent ecosystem outside of iOS and Android? It should be noted that over the past decade, there have been challengers to Apple and Google, but they have all declined, such as Symbian and Windows Mobile.

Sun Xingyun, an analyst at Zhongtai Securities, pointed out that the law of the operating system industry is that there is a large initial investment, a long research and development cycle, difficulty in forming an ecosystem scale, and once a monopoly is formed, it is difficult to be overturned. One can only wait for the next wave of industry or follow Apple's example to break through. Developing an in-house operating system has two major challenges: technical independence and ecosystem reconstruction.

As a leading technology company, Huawei's "Pure Hongmeng" launched today achieves full-stack self-research from inside to outside, representing an operating system that originates from China and is self-controllable.

In terms of ecosystem, over the past year, 15,000 native Hongmeng applications and meta-services have been launched, including the highly anticipated WeChat, meeting the needs of 99.9% of users for common applications. All major verticals such as automotive, education, travel accommodation, financial management, business office, and shopping comparison have started developing native Hongmeng applications, covering 18 vertical fields.

The speed of this ecosystem development has far exceeded external expectations. As the ecosystem grows, Hongmeng grows, and in the next phase, Hongmeng aims to have 500,000 native apps.

Opportunities

While Hongmeng is making history, it has also sparked wave after wave of enthusiasm in the capital market.

Data from Choice shows that since September, the Hongmeng concept index (BK0953) has risen by over 50%, with many related concept stocks even doubling in price.

Behind the sharp rise of the Hongmeng concept sector is not only the recent series of economic stimulus policies in China, but also the huge market space hidden in the Hongmeng ecosystem.

According to data released by Huawei, as of now, Hongmeng holds the Top 2 position in the Chinese market, with over 1.1 billion lines of code, 6.75 million registered developers, and over 1 billion Hongmeng ecosystem devices.

Huawei's return to terminal sales is driving the ecosystem to rebuild, and Hongmeng has crossed the "life and death line". Counterpoint data shows that in the first quarter of 2024, Huawei's Hongmeng system's market share in the global market increased from 2% to 4% In the Chinese market, the share of HarmonyOS has increased to 17%, crossing the critical 16% threshold and surpassing iOS.

The commercialization of the Android ecosystem serves as a template for the future development of the HarmonyOS ecosystem. Huibo Intelligent Research points out that the Android system's business model consists of three parts: app store fees, advertising revenue from traffic diversion, and GMS revenue. Following the example of Android, Huawei's HarmonyOS is also expected to establish a business model involving software licensing, store commissions, and advertising fees.

Behind such a business model, the profit beneficiaries are not limited to just Huawei. The HarmonyOS ecosystem is a comprehensive ecosystem centered around the operating system, driving the development of the entire industry chain through the construction of a rich application ecosystem and industry solutions.

According to a research report from Dongxing Securities, HarmonyOS NEXT represents the largest upgrade and iteration of HarmonyOS since its inception. With the native HarmonyOS application ecosystem becoming more mature, the commercialization at scale is expected to drive a large number of application software vendors to adapt, migrate, and develop, benefiting the HarmonyOS industry chain.

An analyst from Huatai Securities stated that key partners related to HarmonyOS are expected to benefit from the commercial realization of the ecosystem's improvement, and in the future, they may enjoy profits through product sales, development, and operation.

An analyst from AVIC Securities believes that the native HarmonyOS system may usher in a new era of intelligent interconnection, reshaping the new landscape of the global operating system market. In the future, with the rapid popularization and rise of the native HarmonyOS system, related ecosystem solution partners are expected to embrace new development opportunities.

The HarmonyOS industry chain boasts a large team, including ecosystem product partners, ecosystem solution partners, and ecosystem channel partners. Key HarmonyOS partners such as Runhe Software, Chipsea Technologies, Pactera Technology, China Software International, Fabernovel, and Changshan Beiming are highly regarded by securities institutions.

The HarmonyOS ecosystem carries Huawei's ambition to transition from the mobile end to software and ecosystem, realizing the ambition of interconnecting all things. In the future, it will lead the HarmonyOS industry chain to fight a tough battle on the global stage against traditional tech giants