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Monday, May 20th Huawei officially became blacklisted in the United States. As a result, several technology companies have been forced to stop providing goods and services to China's telecommunications giant.
a lot has been told and written about the consequences of this act for Huawei.
truth it's also very bad news for Google. In fact, the president of the United States has bombed the entire strategy of the giant Mountain View and has thrown the company in a very difficult strategic position.
For Google it was essential to have Huawei as an ally and partner.
First of all It is important to note that the only relevant product that Google has ever had is the sale of search and advertising on YouTube. To date, they account for about eighty percent of all sales and probably all profits generated.
The management of the alphabet understands that this is a vulnerable position and has been trying for several years to diversify the business. Google has long struggled to position itself as a cloud service provider and possibly hardware in the form of digital assistants or their own smartphones.
These are areas of intervention who still do not live up to the core business, whether in terms of turnover or performance, but that management sees as relevant drivers in the future.
Google Really follow the best practices in business innovation. They are building new areas of business while the core business still generates good cash flow. The problem for Google is that its core business is showing signs of exhaustion after nearly twenty years of daring growth.
Huawei store in Madrid.
"style =" width: 100%; "aria-decriteby =" figcaption # 24627719 "/> Huawei store in Madrid.
turnover figure continues to grow, but Facebook, competing for the same advertising revenue, is growing fifty percent faster. Amazon has recently started to become known as a digital advertising player.
Google also presents another vulnerability in its core business, namely the distribution model of the company. To ensure that leading mobile vendors offer Google searches as the first choice on their products, Google must pay them a lot of money. These are called traffic costs and are essential for Google. In the first quarter of this year, they were as important as the overall bottom line.
Have a good To negotiate the position and control the traffic costs, it is essential for Google that there are as many smartphone manufacturers as possible.
Ideally In addition, their market shares should be as equal as possible. In recent years, the triumvirate Samsung, Apple and Huawei have ensured this desired scenario.
asset has finished. It is unlikely that China's smallest mobile phone manufacturers will take the space left by Huawei. They are far too small and lack the financial resources that Huawei has had to spend for years to gain a relevant position in the market.
President Donald Trump
"style =" width: 100%; "aria-decriteby =" figcaption # 24628117 "/> President Donald Trump
Most likely Apple and Samsung will do everything in their power to conquer the market shares being opened. This is especially true for the premium segment, where customers have the greatest buying power and are therefore more attractive to advertisers.
Google in other words, we must be prepared to bear even higher long-term traffic costs.
This can have major consequences. The first and most obvious is that higher traffic costs will cause the end result to provide less satisfactory figures than those that shareholders are willing to tolerate.
L & # 39; other and the most serious consequence in the long run is that Google might be forced to slow down the pace of innovation. The data center for cloud services, own smartphones and the development of digital assistants require significant investments that drain the resources of the main business.
When these resources With less gain as growth slows and traffic costs increase, Google may have to reject many of these new initiatives. It is even possible that the development of exciting new technologies such as software for autonomous cars or artificial intelligence is suspended. Google may even have to prioritize the production and marketing of its own mobile phones.
The goal is If that's the case, get involved in the fight against Apple and Samsung, reducing traffic costs and protecting your core business. That's expensive.
Much has been said Trump's decision may affect how Huawei can be affected, but this action can also have serious consequences on Google's pace of innovation and delay the development of new and interesting technologies useful for years to come. come.
Or it becomes an opportunity for a new generation of intrepid start-ups?
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