An Alternative Play

Chinese big four take on Google’s Play store

In China, Android users have grown accustomed to downloading apps from a variety of different software stores, because Google’s Play store is banned in the country. In most markets Play provides a single location for Android users to download apps, but in China smartphone brands have their own app stores. For example, Huawei’s is called the AppGallery and Xiaomi has the Xiaomi Market.

The Chinese smartphone giants appear keen to overcome this fragmentation. According to a Reuters article, Huawei, Oppo, Vivo and Xiaomi are joining forces to create a new platform for developers to distribute apps to all of their stores simultaneously. The programme will also be open to developers in overseas locations.

The four companies have formed the Global Developer Service Alliance (GDSA). This platform aims to make it easier for developers of games, music, movies and other apps for Android smartphones to expand in markets around the world. We would not be surprised if other Chinese brands joined the initiative, particularly OnePlus and RealMe, which are part of the BBK Group that also controls Oppo and Vivo.

The four lead companies have grown rapidly and currently have a combined share of over 40% of the global smartphone market. The GDSA is likely to exploit the founders’ strengths in different regions: Xiaomi has a big presence in India, Vivo and Oppo are stronger in South-East Asia, and Huawei is well-placed in Europe. The platform will be hoping to lure developers by providing greater exposure than the already crowded Play store can offer, and it might give better monetary incentives to developers. Initially the new platform will cater to users from nine nations, including China, Russia, India, Malaysia and Indonesia.

At CCS Insight’s Predictions event in October 2019 we stated that the US administration’s decision to apply sanctions to Huawei could have unintended consequences, as it might encourage Chinese phone-makers to work together to find an alternative to Android and Google Play Services. Our prediction appears to be coming true.

Our prediction built on one made in October 2018 that a Chinese operating system would emerge as a response to tensions between the US and China. Although the sales of 200 million phones we suggested perhaps look a little ambitious for 2020, it should not be forgotten that Huawei is selling north of 40 million units each quarter in China alone. There is an opportunity for it to ramp up an alternative platform, such as HarmonyOS, relatively quickly in its home market.

We also suggested at our Predictions event that the Chinese government could exert pressure on companies wanting to offer products and services in China by mandating that they create apps for a Chinese platform as a price of doing business in the country. This would quickly make developers around the world familiar with the platform. We continue to believe this is a likely outcome and could be used to support the GDSA initiative.

The rumoured commitment by four of China’s biggest smartphone makers reflects the broader trade and geopolitical climate. China wants to control more of the supply chain, from semiconductor manufacturing and smartphones to the operating system and applications.

Although some may argue the GDSA was always likely to happen, we believe US sanctions against Huawei only succeeded in further sharpening China’s desire to reduce its reliance on the West. Together, Android and Google Play Services form a major stranglehold that the West has over China.

It should also be noted that China is pushing hard to boost its semiconductor industry. This addresses the other side of the same challenge and supports the Chinese government’s Made in China 2025 initiative.

We have no doubt that coordinating the GDSA and broader initiatives across multiple competitors will be extremely difficult. However, if it’s going to be successful anywhere, it’s China, where the government is often effective at ensuring that everyone moves in lockstep. That gives potentially huge scale to such initiatives. The GDSA should be taken seriously — it could be a big threat to Google.