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Microsoft Joins Google in Cutting Off Huawei

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Google cut off Huawei’s access to Android

Microsoft (MSFT) has removed Huawei laptops from its online store, according to CNN. The decision is viewed as a response to the Trump administration blacklisting Huawei on charges the company poses a national security risk. As a result, US companies are barred from selling software or components to Huawei. Google (GOOGL) responded to the restrictions by cutting off the Chinese company’s access to its Android operating system.

Microsoft could follow suit by cutting Huawei’s access to its Windows ecosystem. Nokia (NOK) and Ericsson (ERIC), which compete with Huawei for 5G telecom equipment contracts, are seen as potential beneficiaries of Huawei’s US troubles.

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The cost of cutting business ties with Huawei

Huawei, one of the world’s top smartphone companies, beat Apple to become the world’s second-largest smartphone company in the first quarter, according to IDC. It held 19% of the market in terms of unit sales. Samsung (SSNLF) held the largest share, with 23.1% of the global smartphone market, and Apple came third with 11.7%. Huawei smartphones run Android software. Given Huawei’s position as one of the world’s top smartphone companies, Google’s Android business could suffer due to Huawei being dropped as a customer.

Although Microsoft could lose Windows revenue after cutting ties with Huawei, the damage would likely be limited as Huawei is not a major player in the laptop market. In the March quarter, Microsoft’s Windows revenue rose year-over-year to $4.9 billion from $4.6 billion.

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