This Week in Mobile is a weekly podcast available on Apple iTunes or Google Play where I bring you up to speed on the top mobile news stories of the week:
On Monday, the U.S. government announced that it will ban the sale of American technologies to ZTE, China's second-largest telecommunications equipment maker (including 45 million Android smartphones) with $17 billion in annual sales last year, behind Huawei.
After the Federal Communications Commission decided to implicitly ban Huawei's telecom equipment in the U.S., Atherton Research wrote that the world's largest supplier of telecommunications gear (servers, routers, wireless, 4G...) will leave the U.S. market to focus its efforts and energy on Asia, Europe, Africa and Latin America.
App of the Week: Qwant Mobile (for iOS and Android) is a mobile Web browser that lets you search and browse the Web without being tracked.
Joining me this week to discuss these top mobile news stories is tech veteran Eric Leandri, the co-founder and CEO of search-engine Qwant.
One last thing before you go, you will find an edited transcript of This Week in Mobile below, and feel free to reach out with mobile news and products (devices, apps, accessories) or if you'd like to be a guest on the show. Enjoy!
Introduction: Today's show is brought to you by Qwant, the only search-engine designed from the ground up to protect the privacy of its users.
Jean Baptiste Su: Hello, everyone. And welcome back to another episode of This Week In Mobile. It is Saturday, April 21st, 2018. And I’m Jean Baptiste Su, a Principal Analyst at Atherton Research and your host. Joining me today to discuss the top mobile news stories of the past seven days is tech veteran Eric Leandri, CEO and co-founder of search-engine Qwant. Welcome back to the show Eric.
Eric Leandri: Hello, Jean Baptiste. How are you?
JBS: Good. Something surprising happened, some of our listeners told me that I don’t pronounce your name right that I should say Leandri and not Leandr. But that’s how you say it in Corsica, right?
EL: I think you know some Corsican people, absolutely.
JBS: So teach me, how should I pronounce it?
EL: It's very simple. In fact, we don't pronounce the last part of the name. So it's Leandr even if there is an "i" at the end.
JBS: Okay, all right. That’s for the record. Great. And for some of us who still don't know what Qwant is, can you give us a 30-second elevator pitch?
EL: Qwant is the privacy based search engine, we are all search engine and instead of our good friend Google we don’t track you so we just deliver results from the web and from the social web Twitter, for example, without tracking you. And if you compare us to DuckDuck, first of all, we have our own infrastructure so we deliver to you all our results directly and you have no risk to be tracked at all. And we are based in Europe and we create our index also. This is what we do.
JBS: Great. I'm sure this is music to the ears for most of us. I mean those who don't want the Facebook or the Google of the world to track us everywhere we go on the Internet. Anyway, let's move to the top mobile news of the past week and boy what a crazy week it was.
So first, the biggest news of the week, on Monday the US government banned the sale of American technology to ZTE. For those who don’t know, ZTE is a large Chinese tech company about $17B in sales last year. They make Android smartphones about $45M in a year and equipment for telecom companies all over the world like AT&T, T-Mobile, Virgin Mobile, et cetera. Essentially, the US government imposed the ban because ZTE sold products with U.S. technologies to countries like Iran or North Korea and didn’t comply with the settlement agreement they signed with the U.S. government. So basically, now, they’re done, finished. We wrote that they’re going to go bankrupt because all of their products use in one shape or another U.S. technologies, either it's from Intel, Qualcomm, Google, Micron, you name it. And now that ZTE is essentially dead, that's great news for companies like HTC, Nokia, Motorola, they all play in the low to mid-range part of the market, smartphone market. What’s your take on that, Eric?
EL: It's really complicated. They say they are down I will say that the Chinese government won't let them go down and bankrupt. For sure it's a huge problem for them and it’s a terrible problem for them and it proves that your president, last time when he didn't let go Qualcomm to Broadcom, has made something very smart in a way because when you go into a trade war you need to have some great assets to start with. So it's terrible for ZTE, but at the same time, it will incentivize even more the Chinese to try to create their own technologies. But in all cases, the access to the US market for ZTE in the smartphone business is the most important because most of their smartphone business is done in the U.S. and it's very difficult to access the US market if you don't have a Qualcomm chip inside. If you are looking at the European market and the Chinese market, ZTE can maybe try to create something without using U.S. technologies, but it's still going to be very difficult.
JBS: Right. But Eric, I mean, do you think that today is it still possible to make a smartphone without using any U.S. technology? If it's an Android smartphone, you need a license from Google and that's an American technology. I mean, even if they if they just want to sell it in Europe or China, how realistically possible could that be?
EL: Android is open source. But if the US wants to hold that, even in the open source world, then it will be very difficult to do anything there. But you can still buy for example KaiOS, and try to create everything yourself but even that it's quite impossible. So for sure, you would need Android and inside of Android, you will need the full Google Suite. Maybe Baidu can deliver a mobile operating system but the most important thing here is Qualcomm. Qualcomm in Europe last month have been fined 1 billion. So the fine was one billion for 997M.
EL: Yeah, euro. By the European Commission. Based on the fact that they have more than 90% market share between 2011 and 2016, 90% of the market and during that time they did some very aggressive things with Apple: They gave some cash back to Apple at the end of the year and if Apple wants to change the modem inside of the iPhone, then they have to give back some cash to Qualcomm so it was a complicated, and it was quite impossible for competitor to enter the mobile market and bid for some Apple business. What America's done fantastically well in years is several things, one of them is creating a fantastic technology and second, was to play very aggressively on the business side to guarantee that their position is quite impossible to take and overcome.
JBS: China has an initiative called Made in China 2025 and where they want to basically build most of the technology If not all the technologies themselves in China by 2025. But I mean, you talking about seven years from now. That's a long time in terms of technology.
EL: For sure China creates already a lot of their own technologies for their own internal market they could build most of the U.S. technologies themselves, already, today. But at the same time, they could also infringe on a lot of patents and intellectual property. So it would world for the internal market and some other small ones, but not if they want to sell their tech products to Europe or the U.S.
JBS: Eric, what do you think about maybe some of the opportunity for the other smartphone maker. I mean HTC is a dying smartphone maker now, Motorola is the same. Nokia seems to be on the comeback. What do you think the death of ZTE could bring to them in terms of opportunity?
EL: We are talking about a small opportunity because most of ZTE's smartphone business is in the U.S. They have 12% of the U.S. market selling mostly low-cost and mid-range smartphones. It's huge in volume but very low margins. And outside the U.S., in Europe or Asia, they're quite small.
JBS: Let's move to the to the to the other main news of the week. And that's about another huge Chinese tech company, Huawei. We wrote a report saying that Huawei is going to exit the U.S. market this year. Basically, they're persona non grata here in the U.S. The U.S. government implicitly banned the sale of their products because of privacy reasons. And the thing is, just like ZTE, Huawei makes smartphones, telecom equipment, but also Windows laptops, Android tablets. And we estimate that Huawei sells a couple billion dollars at the most a year in the U.S. and when you compare that to $92 billion, that's their revenue for 2017, that's really a drop in the bucket. But more interestingly, without the U.S., Huawei managed to still be number one in telco equipment and number three in smartphones. I mean, really, that's the proof that you can be a very successful company without even selling in the U.S.
EL: Yeah, sure. Okay. The European market is larger than the U.S. market and China's trade with the EU is also bigger than its U.S. trade. And then, there's the rest of Asia, the America and Africa. So, yes it's possible the be a global leader without doing business in the U.S. But what's more tricky is to build technology products without using American technologies. And there's always the risk that the U.S. government does to Huawei, I mean the tech ban, what it just did to ZTE. And in that case, it's also game over for Huawei.
JBS: Yeah, let's switch now to the app of the week. And this is going to be something familiar to you, I'm sure. So this week is Qwant mobile and it's been an app that I've been using on my Android phone and iPhone X. It's basically a browser but I'm interested in your take on this? I mean you've built it.
EL: Yes, Qwant Mobile is a browser for iOS and Android that finally brings privacy to the mobile world: By default, it doesn't track your searches or your navigation on the Internet. Of course, it uses our own search engine so that you can be sure it's not keeping your search data and sell it to advertisers or others. Our app is totally free of tracking and works also in inside China, which is not the case for Google for example.
JBS: But Qwant Mobile's browser technology is based on Firefox, right?
EL: Yeah, sure absolutely. But we modified it to make sure there are no data leaks in terms of privacy so no one can track you. And we just released Qwant Mobile Junior as well for kids. It's based on the same technology than Qwant Mobile except that we filter contents that we think are not appropriate for your kids (6-11). So with Qwant Junior, your kids can safely browse the Web and without being tracked like Google and YouTube have been caught doing a few days ago.
JBS: Ok, I'll ask my kids to try it. Well, that's it for This Week In Mobile. And thank you again Eric for coming.
EL: Thanks to you.