GOOGL Alphabet Inc

By Dan Strumpf 

DONGGUAN, China--Huawei Technologies Co. offered the first details about the operating system designed to replace Google's Android on its smartphones, as the Chinese technology giant races to develop backups to American technology following its U.S. blacklisting.

Huawei's new operating system, called HarmonyOS, is intended to run on all of Huawei's consumer gadgets, including its hugely popular smartphones, which run Android and have taken a sales hit overseas since its May blacklisting, said Richard Yu, the head of Huawei's consumer-device business.

Huawei prefers to continue using Android, the world's most popular smartphone operating system, on the company's smartphones, Mr. Yu said. But Huawei could switch its handsets to HarmonyOS "in just one or two days" if it had to.

The company faces a high bar in getting its operating system off the ground if it loses access to Android, and the stakes are high as smartphones make up a large chunk of the consumer-products revenue that comprises more than half of Huawei's sales.

Mr. Yu offered scant details about the interface and functionality of HarmonyOS.

Handset users are typically reluctant to change operating systems, and users have numerous Android-based alternatives to Huawei. In addition to persuading consumers to switch, Huawei must also encourage the development of a new ecosystem of smartphone apps and other software.

"We can start using HarmonyOS at any time," Mr. Yu said.

Mr. Yu announced the new operating system at an event at a giant basketball stadium on the edge of Dongguan, a southern Chinese factory town. The event, called the Huawei Developers Conference, was packed with journalists and software developers from across China and evoked similar annual developer gatherings hosted by tech giants like Apple Inc.

The launch comes as Huawei struggles to cope with the loss of significant amounts of U.S. technology after the Commerce Department added the Chinese company to its "entity list" in May. That blacklisting prevents companies from selling Huawei U.S.-sourced technology without a license, cutting the tech giant off from billions of dollars worth of American components and software.

Especially problematic for Huawei is the prospect of losing access to Android and other software from Alphabet Inc.'s Google, which has been crucial in making Huawei smartphones popular in Europe and many other Western markets.

The company also uses Microsoft Corp.'s Windows on its PCs.

Huawei was the world's No. 2 smartphone maker in the first half of the year, ahead of Apple and behind only Samsung Electronics Co. Shipments rose 24% to 118 million units in the first half, the company said. Mr. Yu said Huawei might have unseated Samsung in the second quarter if not for the "external environment."

Despite their popularity around the world, smartphones made by Huawei have a tiny market share in the U.S., where major carriers don't sell its phones. U.S. officials consider Huawei to be a security threat, which the company forcefully denies. Huawei is the world's largest maker of telecom gear, including equipment for the coming generation of superfast 5G networks.

Many analysts think Huawei's international gadget business is likely to suffer heavily without consistent access to Android and Google's suite of apps--though sales soared in China, where Google products are largely banned, during the second quarter amid the U.S. clampdown.

"HarmonyOS, if deployed right now for smartphones, could be an uphill battle for Huawei, as still lots of work needs to be done to bring it to iOS or Google Android level at global scale," said Neil Shah, research director at market-analysis firm Counterpoint Research. iOS is Apple's mobile operating system.

The Trump administration has been urging U.S. companies to apply for licenses to resume shipments to Huawei, after U.S. actions against the company dimmed the prospects for a trade deal between Washington and Beijing. The Commerce Department, however, has yet to announce whether any such licenses have been granted, and Mr. Yu said Huawei is awaiting updates.

On Wednesday, the White House moved to implement rules that ban U.S. agencies from buying from Huawei and several other Chinese tech companies.

Mr. Yu said HarmonyOS has been in development for two years, though Huawei Chief Executive Ren Zhengfei has said it wasn't originally intended to run on smartphones.

Mr. Yu said HarmonyOS would be open source, like Android, and that Huawei is encouraging software developers to help the company build an ecosystem of apps and other products.

"We want to build a global operating system so that it will not be used by Huawei alone," he said.

Write to Dan Strumpf at daniel.strumpf@wsj.com

(END) Dow Jones Newswires

August 09, 2019 06:50 ET (10:50 GMT)

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