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Huawei challenges Samsung with latest foldable smartphone

$2,700 Mate Xs lacks Google support as US-China tensions linger

Huawei unveiled its first foldable smartphone at the 2019 Mobile World Congress, but this year's event was canceled due to fears over the coronavirus.   © Reuters

TAIPEI -- Huawei Technologies unveiled the next generation of its foldable smartphone, the Mate Xs, in an online event on Monday, just days after global leader Samsung Electronics introduced its latest foldable handset, the Galaxy Z Flip.

Huawei had intended to introduce its new foldable phone at the Mobile World Congress, but the event was canceled due to fears over the coronavirus, so it instead showed off the new handset in a video prerecorded in Barcelona.

Huawei, the world's biggest telecom equipment maker and No. 2 smartphone company, has been locked in a heated battle with Samsung over foldable smartphones since February 2019. The two companies are betting on foldable technology, which some describe as the biggest innovation in smartphone design since Apple introduced its flagship iPhone in 2007, to prove their technological prowess and revive the stagnating smartphone market.

But the Mate Xs, like the premium Mate 30 series -- introduced last year as Huawei's answer to the iPhone 11 range -- comes without Google Mobile Service, which means users cannot access such popular services as Google Play, YouTube, Gmail and Google Maps, which are indispensable for many users outside China.

Instead, the Chinese company built its own Huawei Mobile Service, which is accessible via the Huawei AppGallery, the company's version of Google Play and App Store. Huawei Mobile Service, like its Google counterpart, allows users to download all kinds of apps to their phones, but it will take time for the ecosystem to grow and mature.

The new Mate Xs, running on Huawei's self-developed 5G integrated chip platform, inherits the design of last year's model, folding outward to become an 8-inch tablet. Closed, it is a dual-screen smartphone with a main screen measuring 6.6 inches.

The phone is priced at 2,499 euros ($2,704), which is 9% more expensive than last year's 2,299 euros, Huawei Consumer Business Group CEO Richard Yu said in the online event. It will be available starting next month, and in a surprising departure from last year, it will be launched in the global market instead of only in China.

"Last year was a tough year for Huawei, but we still managed to grow," Yu said in the prerecorded event. "We have shipped more than 10 million 5G smartphones as of last month, and we will continue to focus on 5G smartphones."

Samsung, on the other hand, has maintained its inward-folding design, but changed the direction of the fold from horizontal to vertical and reduced its size. Instead of unfolding into a tablet-sized device, it now becomes a conventional 6.7-inch smartphone when opened. Samsung also lowered the price to $1,380, compared with the Galaxy Fold's price tag of $1,980.

"Samsung has significantly lowered the price of its second foldable smartphone, and we think the strategy should boost sales," veteran tech analyst Eric Chiou with research company WitsView told the Nikkei Asian Review. "From our supply chain checks, it looks to ship some 3 million to 3.5 million units this year, a big jump from last year's shipment of its first generation of foldable smartphones of some 500,000 to 600,000 units."

Joey Yen, a tech analyst at research company IDC, highlighted what she sees as a difference in strategy between Samsung and Huawei.

"Huawei's ambition in foldable smartphones is to be the technology leader and lead the market trend, while Samsung aims not only to sell its own foldable device but also to demonstrate what a foldable smartphone could do for other smartphone companies, creating business opportunities for its component suppliers that are mostly owned by Samsung itself," Yen told Nikkei.

Addressing three key issues -- creases on the screen, price and technical challenges related to mass production -- will determine whether foldable smartphones go mainstream, she added.

Huawei and Samsung generated waves of news coverage when they introduced their revolutionary foldable smartphones last year, but both companies delayed the launches of their devices until autumn, as they needed more time for testing and production. Huawei was also hit by the U.S. ban that blocked it from using Google Mobile Service apps, so its last foldable smartphone was available only in the Chinese market.

Huawei has aimed for years to unseat the South Korean company as the world's No. 1 smartphone maker and leader in technology. Yu said previously that the company would have taken Samsung's crown in 2019 if not for Washington's relentless crackdown, which included adding Huawei to the so-called Entity List in May.

The Chinese company was the world's second-largest smartphone company by shipments in 2019, securing a 17.6% market share with more than 240 million units shipped, while Samsung led the industry with 21.6%. Apple trailed with a 13.9% share, according to data from IDC.

Huawei continues to brace for huge uncertainties in 2020. The Chinese company is battling a slowdown in demand and smartphone production bottlenecks due to the deadly coronavirus outbreak at home, while the U.S. is reportedly considering further curbs on its use of American technology. Samsung Electronics also felt the pain as the coronavirus outbreak has reached South Korea. The company was forced to temporarily shut one of its smartphone factories making high-end phones after an employee was infected by the virus.

In addition to its latest foldable smartphone, Huawei on Monday also introduced a wide range of devices running on the company's 5G connectivity technology, including a new tablet -- the MatePad Pro 5G -- 5G-enabled Wi-Fi routers and new MateBook laptops that run on U.S.-based Intel and Advanced Micro Devices processors as well as Microsoft's Windows operating system.

"The deadly coronavirus is the biggest uncertainty for the smartphone industry this year. It drags the Chinese market the most, and when China sneezes, the world catches a cold," IDC's Yen said. "This is especially bad news for Huawei, as the company has been relying on the home market after being blacklisted by Washington last year."

IDC this week trimmed its forecast for 2020 global smartphone shipments from 1.4 billion units to 1.33 billion due to the coronavirus outbreak. The revised forecast represents a decline of 2.3% from last year's 1.37 billion units, a sharp reversal from the previous estimate of 1.5% growth.

The International Monetary Fund on Saturday cut its economic growth forecast for China this year to 5.6% from its previous estimate of 6% in January, marking the lowest level of growth since 1990.

Additional reporting by Nikkei staff writer Kim Jaewon in Seoul.

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