HarmonyOS: Huawei’s Rising Star to Challenge the Android-iOS Duopoly?

In response to U.S. sanctions in August 2019, Huawei introduced HarmonyOS, a self-developed alternative to Android. HarmonyOS is based on a real-time microkernel design, originating from LiteOS, and uses a kernel abstraction layer to adapt to various devices, from low-powered wearables to smartphones and tablets. OpenHarmony, the open-source version donated to the OpenAtom Foundation, supports devices with memory as low as 128 Kilobytes (KB) and as high as 128 Megabytes (MB). It operates independently of the Android Open Source Project (AOSP), ensuring compatibility with HarmonyOS NEXT, an iteration of HarmonyOS developed by Huawei to support only HarmonyOS native apps. Initially targeting Internet of Things (IoT) devices, HarmonyOS has evolved into a full-featured platform for Huawei’s smartphones, tablets, wearables, smart TVs, and home appliances. By January 2024, HarmonyOS had achieved over 800 million active installations across diverse devices, according to Richard Yu Chengdong, Chief Executive Officer (CEO) of Huawei's consumer business group.

Huawei's HarmonyOS ecosystem is set for significant growth. During the Huawei Analyst Summit (HAS) 2024, Deputy Chairman Eric Xu emphasized the priority of expanding the HarmonyOS native app ecosystem by porting 5,000 apps over to HarmonyOS. Xu noted that 99% of Huawei smartphone users in China spend their time using these apps. Currently, more than 4,000 apps have been ported, with efforts underway to add the remaining 1,000 apps. Xu highlighted that achieving this goal will establish HarmonyOS as a viable third mobile Operating System (OS), alongside iOS and Android. Xu also highlighted the critical importance of the HarmonyOS ecosystem to Huawei's future and that Huawei will commit substantial investments over the next 5 years.

Huawei's HarmonyOS represents a bold move to challenge the long-standing duopoly of Android and iOS. With its ambitious plans and growing ecosystem, HarmonyOS could potentially have a significant impact on the mobile OS landscape, particularly in China.

• China’s Strategic Play with HarmonyOS: The Shenzhen municipal government unveiled the “Shenzhen Action Plan for Supporting the Development of Native HarmonyOS Open Source Applications in 2024” in March 2024. This initiative aims to ensure that Shenzhen companies produce 10% of all HarmonyOS apps in China by the end of 2024. The plan includes establishing at least two specialized industrial parks to foster the development of HarmonyOS apps across various sectors, and targets over 1,000 local software companies to gain HarmonyOS development qualifications. The plan also encourages qualifying businesses to expand their outsourcing services for creating HarmonyOS applications. Additionally, the plan aims to achieve widespread adoption of HarmonyOS applications across key industries in Shenzhen, targeting devices such as tablets, IoT devices, and Personal Computers (PCs). The action plan demonstrates Shenzhen's commitment to cultivating a robust HarmonyOS developer ecosystem and driving widespread adoption within its key sectors. This initiative aligns closely with China's broader strategy to reduce reliance on foreign technologies and promote domestic alternatives like HarmonyOS.
• China Tech Titans Back HarmonyOS: The Chinese tech giants have been rallying behind HarmonyOS. Alibaba is developing HarmonyOS-native apps for 11 use cases, and delivery leader Meituan has already launched its first version.  Shanghai-based social platform Xiaohongshu (also known as Red or Little Red Book), with over 200 million Monthly Active Users (MAU), has also released a beta HarmonyOS app. Additionally, Baidu's mapping service will offer a development kit in March 2024, Shanghai-based streaming site Bilibil has announced that it will be developing a native app for HarmonyOS, while JD.com, the largest retailer in China, has committed to building a HarmonyOS Next app. This surge of strong support underscores HarmonyOS' expanding influence within China.
• Potential Market Impact in China: While HarmonyOS may not (as yet) pose an immediate significant challenge to Apple and Google outside of China, it could gain substantial traction in the Chinese market. Within China, HarmonyOS has already been predicted to surpass Apple’s iOS as the second-largest mobile OS in 2024, driven by the concerted efforts of the Chinese government providing robust policy support, and the domestic tech giants actively building an app ecosystem.

As of 2024, Android holds a commanding lead in the global mobile OS market, with approximately 70% of the market share. iOS trails behind with a still significant 28.5% share.  The total number of mobile OS users worldwide is estimated to be around 5 billion.

The rise of Huawei's HarmonyOS as a major mobile OS, particularly within the Chinese market, could present significant opportunities for market participants in the HarmonyOS ecosystem. Given the strong backing of the Chinese government and the major domestic tech companies, positioning oneself as an early adopter in the rapidly expanding HarmonyOS ecosystem could offer significant commercial opportunities. ABI Research has two recommendations for the different stakeholders looking to capitalize on the HarmonyOS growth trajectory.

• App developers could stand to gain significantly from the burgeoning HarmonyOS ecosystem. Huawei's focus on porting the top 5,000 Chinese apps, coupled with an ambitious goal for 1 million native apps, presents a significant market opportunity. Early app adopters who quickly port their popular apps to HarmonyOS could gain first mover advantage, benefiting from Huawei's large user base, a US$ 1 billion (CNY 7 billion) investment in app innovation by Huawei, and favorable government policies. By acting decisively, app developers could secure a position in this emerging ecosystem and capitalize on its rapid growth.
• For IoT devices and smart home manufacturers, the HarmonyOS ecosystem could present significant commercial opportunities. For one, manufacturers could enhance market competitiveness by ensuring device compatibility with HarmonyOS and tap into a growing user base with a preference for device interconnectivity. Additionally, HarmonyOS’ emphasis on cross-device functionality and a unified ecosystem could also present opportunities for developing innovative smart home and IoT solutions. Furthermore, the wealth of data generated from the interconnected HarmonyOS devices will also offer significant commercial opportunities for services in data analysis, targeted advertising, user experience optimization, and further integration with Huawei’s Artificial Intelligence (AI) technologies. Device manufacturers could also leverage the data  generated from the interconnected HarmonyOS devices, which include information related to user behavior, preferences, interactions with the devices, and much more, to gain insights into consumer behavior and preferences, and tailor their products and services accordingly.

Overall, with the strong policy push from China, the support of domestic tech giants, and Huawei's strategic investments, being an early mover in developing apps and exploring business opportunities in the IoT and smart home market aligned with the emerging HarmonyOS ecosystem could present significant commercial opportunities.