CELLPHONES: Google Nexus Deal Gives Face for Huawei, China

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Bottom line: A steady series of leaked photos of a smartphone co-produced by Google and Huawei is designed to give face to Beijing, and could pave the way for a China entry for Google’s Nexus phones and app store by year end.

China wins face in Google-Huawei tie-up

Barely a day has gone by recently without a leaked photo appearing on the Internet of a new smartphone being developed in a landmark tie-up between Chinese up-and-comer Huawei and Google’s (Nasdaq: GOOG) Nexus brand. A cynic like me would speculate that the growing volume of noise looks rather deliberate, and that both sides are intentionally trying to drum up buzz for a new Nexus model that will become the brand’s first to be made by a Chinese manufacturer.

Huawei

Huawei’s motivations for leaking the information are obvious: this particular tie-up will bring it the validation it craves for its young smartphone business, giving its products the stamp of approval from one of the world’s leading technology names. But Google’s motivations are a bit more subtle. Certainly it’s natural to hype up this kind of new product before the launch. But in this case Google is almost certainly aware of the “face” that China will receive from such a move. That could help to soothe its tense relations with Beijing as it eyes a return to a market it can’t afford to ignore.

Rumors on this particular tie-up first emerged in June, saying Huawei would design and manufacture one of the next models in Google’s Nexus line. (previous post) Google has produced all of its Nexus models to date in partnership with other manufacturers, including Korea’s LG Electronics (Seoul: 066570) and Taiwan’s HTC (Taipei: 2498). But this particular tie-up would mark Google’s first collaboration with a Chinese partner.

The latest rumors have been saying all along that Huawei will produce a larger new Nexus model, while older partner LG will produce a smaller one that will be released simultaneously around October. But what’s new is the growing appearance of leaked photos for these 2 new models, especially ones of the Huawei model that prominently feature the Huawei and Nexus names side-by-side on the back of an alleged new smartphones. (English article)

Of course it’s possible that these photos aren’t authentic, and it’s also possible that the same one or two photos are being recycled again and again on all of these websites, most of which are small and quite gossipy. This kind of thing often happens in the run-up to release of Apple’s (Nasdaq: AAPL) newest iPhones, and Apple usually just ignores all the buzz like Google and Huawei are doing now.

More Momentum for Huawei

But in the case of Nexus and Huawei, both sides have reason to want to create as much buzz as possible for their newest product before the actual launch. Huawei is just one of many Chinese companies to enter smartphone manufacturing over the last 5 years, fueling a boom that has made China into the world’s largest market.

But that market has also become very crowded and competitive and lacked clear leaders until Huawei suddenly started gaining momentum earlier this year due to its better quality and designs. Thus a new partnership with Google would add to Huawei’s recent momentum, and could help the company to overtake stumbling domestic rival Xiaomi to become China’s best selling global smartphone brand.

For its part, Google is seriously regretting its 2010 decision to torch its relationship with Beijing, which occurred after it withdrew its search engine from China due to a high-profile spat over censorship. Most of Google’s products are currently blocked or barred from China, even though its free Android operating system has become the preferred OS for almost all of China’s homegrown smartphone makers.

Around the same time the first Nexus-Huawei rumors emerged in June, separate rumors also emerged that Google was in talks to open a Chinese version of its app store, Google Play, by the end of the year. (previous post) This decision to co-produce the phones with Huawei is almost certain to catch the attention of government leaders in Beijing, and will bring a new level of global respect to Chinese manufacturers. That could ultimately sway Beijing to bury the hatchet with Google, which could pave the way for entry by the new Nexus and accompanying Google Play Store into China by the end of this year.

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