SMARTPHONES: Huawei Calls on US, Google on China with Nexus Tie-Up

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Bottom line: Huawei’s new Nexus tie-up with Google could help Huawei make significant inroads to the US, and could see Google enter the crowded Chinese smartphone market by year-end.

Huawei, Google link up through Nexus

Just days after the launch of the newest iPhone, fast-rising Chinese smartphone maker Huawei will make its own renewed push into Apple’s (Nasdaq: AAPL) home turf through a highly-anticipated tie-up with Internet titan Google (Nasdaq: GOOG). This particular tie-up will see Huawei make one of the newest phones in Google’s Nexus line, in a tie-up that has been written about quite a bit already but is set for a formal announcement later on Tuesday.

That announcement would come just days after the launch of the newest iPhone 6s models, which broke records by selling 13 million units over their first weekend. Apple was able to break that record in no small part due to contributions from China, the world’s biggest smartphone market, which was absent in the last iPhone global launch due to delays for technical reasons.

Google almost certainly has its own eye on that same massive China market with this new Huawei tie-up, meaning perhaps we could see a China launch announced for the newest Nexus models. I’ve written quite a few times about a Google return to China, most recently including Google’s efforts to launch a China version of its Google Play app store. (previous post). But perhaps this time will finally mark a breakthrough, especially since this launch comes the same week after Chinese President Xi Jinping wraps up his landmark first state visit to the US.

Leaks about the latest Nexus models have been trickling out for the last 3 months, with Huawei and South Korea’s LG (Seoul: 066570) widely tipped as Google’s latest manufacturing partners for the models. So it will be nice when Google finally ends the suspense and announces a formal launch schedule for the new Nexus 6P to be manufactured by Huawei at a media event set for later today. (English article; Chinese article)

Challenging Apple

Chinese media are focusing on the significance of the move for Huawei, which will win a very important strategic partner for the drive to globalize its popular smartphones. The company’s Huawei- and Honor-brand models have been gaining major traction over the past year, differentiating themselves from a big field of Chinese rivals by drawing on Huawei’s own rich experience as a telecoms equipment maker.

In the meantime, Google is also trying to find a place for itself in the smartphone market with its Nexus brand, which combines its market-leading Android operating system (OS) with manufacturing expertise of big partners like LG, Samsung (Seoul: 005930) and now Huawei. Google is trying to reposition Nexus as a more upscale brand from its previous status as a more mid-range name. This new Huawei partnership could help to do that, though I doubt the new Nexus models will pose a direct challenge to Apple anytime soon.

Meantime, the new alliance is holding out the tantalizing possibility that Google could announce a return to China in the near future. Such a return would follow the high-profile shuttering of Google’s China-based search service 5 years ago due to unhappiness with Beijing’s tough self-censorship policies. Since then Google has hinted numerous times that it would like to return to China in less sensitive product areas like smartphones, though no breakthroughs have come to date.

Earlier this year media reported that Google was negotiating to open a Chinese version of its Google Play store, which is a standard fixture on all Nexus phones and offers thousands of apps for use on Android. Accordingly, there’s a possibility that this new Nexus launch could include a concurrent announcement for plans to bring the brand to China. Such a move would draw on Huawei’s strong local distribution channels and good government connections, and could reflect improving relations between Washington and Beijing.

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