In 2019, Huawei was added to the US trade blacklist, or entity list, which restricts American companies, including Google, from exporting technology to certain foreign entities. In 2020, the US cut Huawei off from key chip supplies it needs for its smartphones.
According to unaudited financial results revealed by the company on April 28, its revenues fell 16.5% year-on-year to 152.2 billion yuan ($23.5 billion) in the three months ending March 31. The drop was mainly due to the pain in Huawei's consumer business, including smartphones and other devices.
Growing the revenue contributed by software and cloud computing to its overall financial performance has become a top priority. Since the beginning of this year, Huawei has accelerated the adjustment of its cloud business in anticipation of winning more enterprise-oriented contracts rather than government-oriented cooperation, financial media Caijing reported, citing people familiar with the company's cloud unit.
Although Huawei is having a tough time outside China, back home, where Google suite doesn't matter, it's thriving. The company has 46% of China's smartphone market, more than Vivo, Oppo, and Xiaomi combined, according to Counterpoint. With the considerable users, it is attractive for game creators to cooperate with Huawei, and it has also become a breakthrough point for the company to expand cloud services.
The company has recently reached strategic partnerships with CMGE, Yoozoo Games, and iDreamSky, providing cloud services to these game developers. Also, the cooperation will extend to various aspects, including Huawei Cloud cooperation, media cooperation, brand cooperation, Huawei Mobile Services (HMS) ecosystem cooperation, and the gameplay's improvement.
Prior to this, Huawei reached an agreement with China's second-largest game developer NetEase in 2019 to establish a cloud gaming lab running on a 5G network. The core tasks of the lab include adapting existing games to 5G networks and 5G mobile phones, researching 5G-based gaming experiences through gamers' perception analysis, as well as jointly conducting technical identification of games across different platforms, the duo said.
Last year, the company launched a co-innovation lab with Tencent, the world's biggest game company, to develop a cloud game platform. The collaboration will leverage the computing power of Huawei's self-developed Kunpen processor to build Tencent's cloud gaming platform GameMatrix.
The gaming market is constantly changing on the heel of each generation of new communication technology. With 5G ready to take the stage, cloud gaming, which helps reduce reliance on the physical hardware inside consumer devices, is projected to thrive. Meanwhile, cloud gaming's promise to deliver sophisticated games on low-cost devices has prompted Huawei to form partnerships with Chinese game developers.
As the leader of 5G technology, Huawei will enable cloud gaming to reach more users, promoting the popularization of high-quality games on the cloud. In addition, compared with Alibaba and Tencent, which have more market shares in the cloud sector, Huawei, which has not yet set foot in the game development business, is more likely to win the trust of small and medium-sized developers.
"With the strong support of 5G and cloud technologies, mobile phones, pads, tablets, computers, and even set-top boxes (STBs) can become game devices, adding new sources to flourish the cloud industry and presenting new business opportunities," Peng Honghua, chief marketing officer of Huawei's Wireless Network, said.
Chinese gaming companies turn to Huawei for cloud gaming solutions because the telecom giant possessed leading technology in cloud computing, the South China Morning Post said, citing TF Securities analyst Wen Hao.
"In terms of cloud gaming solutions, the industry primarily uses either Google's X86 architecture or Huawei's ARM architecture. So far, Huawei has established a leading position in cloud gaming architecture in China," Wen wrote in a report.
Huawei claims that its infrastructure as a service (IaaS) cloud business ranks second in China and fifth globally and is "the fastest-growing mainstream cloud provider."
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