News analysis
Huawei App Gallery
  • Last year Huawei started a big push in Europe to popularise its App Gallery, a substitute for the Google Play Store, Bloomberg reports.
  • App developers were promised access to the huge market in China – and network operators were promised a "significant" share of the money spent in the store.
  • Huawei's big Android scare this week will only see it accelerate efforts to go it alone, and that could mean cash in the pockets of Cell C, MTN, Telkom, and Vodacom.
  • For more stories, see www.businessinsider.co.za.

South Africa's big cellphone operators could end up making money – potentially, and over time, rather a lot of money – thanks in part to the chaos the United States unleashed this week when its trade restrictions cast doubt over whether Huawei will be able to continue using Google software and services.

If Huawei follows in South Africa an approach it has reportedly adopted in Europe, then MTN, Vodacom, Telkom, and Cell C could all be in line to share in the revenues generated when their customers buy apps or content on their Huawei smartphones.

The local networks have long sought to secure a portion of such software and in-app-purchase revenues, but have largely failed.

The two companies that have a stranglehold over software revenues, Google and Apple, have never had much incentive to share the spoils. Huawei, on the other hand, needs their help, and seems willing to spend money to secure it.

Huawei on Monday received a 90-day reprieve from the American restrictions that explicitly allows Google to maintain the relationship between the two companies. That means Huawei can keep using the full, commercial version of the Android operating system that currently runs its smartphones.

The rollback of the US restrictions also covers software and services such as the Google Play Store and the likes of Google Maps – but only for "existing Huawei handsets that were available to the public on or before May 16, 2019".

See also: Huawei just caught a break: The US government has temporarily loosened its restrictions

That means Huawei faces the prospect of yet again having Google suspend their relationship come mid-August, when the temporary reprieve expires.

It also leaves in doubt whether Huawei can now ship any new cellphones that rely on the Google ecosystem.

Instead of depending entirely on the administration of Donald Trump to allow it to keep doing business with US companies such as Google, Huawei is expected to accelerate the development of its own operating system, apparently called HongMeng, while also preparing to move to the open-source version of Android.

Either way, Huawei will not have access to the Google Play Store, which hosts the millions of apps available on Android and in 2018 saw an estimated $28.4 billion in global revenue, the equivalent of R360 billion.

See also: Some South African Huawei owners are hoping to get a refund. Good luck with that.

Huawei has apparently already been pushing hard on its in-house replacement to the Play Store, named App Gallery, with a focus on Europe.

In 2018, Bloomberg reported on Monday, Huawei tried to entice app developers to its store by offering them tools to easily port their software to it – and the chance to reach the vast Chinese consumer market. 

For European cellphone network operators the pitch was a "very significant" portion of the revenue App Gallery makes.

How exactly that revenue share would work is not clear. But if Huawei and operators follow the typical technology partnership blueprint, Huawei would track when customers of MTN or Vodacom spend money on App Gallery, then pass back a part of that money to the operator in question.

In return the network operators would ensure that App Gallery was pre-installed on Huawei phones they distribute, and promote its use among their users, perhaps through mechanisms that include making available free data for use via App Gallery.

See also: Vodacom quietly launched a mobile gaming platform – and would like you to pay R100 a month to play games you can get for free

Operators were this week unwilling to comment on Huawei except in broad and empty fashion.

Asked if it has discussed any incentives to push App Gallery with local operators, Huawei on Tuesday stressed the importance of mobile services and said App Gallery "is an important part of Huawei's strategy as it is not only a traditional application store".

"Huawei’s App Gallery will provide great opportunities for local companies and South African’s digital talent," the company told Business Insider South Africa.

Asked directly if it would share revenues with operators, the company said: "The Huawei App Gallery adopts a more business mode, for example sharing mode with the developers." (sic)

Huawei has been actively courting South Africa app developers for App Gallery, and it has talked up the importance of South Africa as one of its key markets.

Receive a single WhatsApp every morning with all our latest news: click here.

Also from Business Insider South Africa: