Pаrt I, Cаse Anаlysis, is wоrth 46 pоints. Tо review earlier instructions, you must read this case carefully to understand the strategic choices Huawei faced after being de-platformed from Google’s (Android) Application Management System (GMS)/Google Play. Strategy planners at Huawei understood that being de-platformed could cripple sales of the P40 outside of China unless Huawei provided a robust and attractive application gallery. While sales of the P40 thrived in China, where Huawei has its proprietary application gallery (GMS/Google Play is not supported in China), the story outside China is another challenge altogether. For Huawei to succeed in mobile phone sales outside of China, the adoption of the application gallery has two fundamental challenges: Developer support (one side of the multi-sided platform). Huawei needs to persuade developers to adapt their applications to be sold and supported through Huawei’s App Gallery platform. User adoption and acceptance of App Gallery (another side of the multi-sided platform). Huawei needs to entice users by offering a sufficient number of user applications (especially Key apps, the most popular applications users want) to remove barriers to purchasing the P40 for business and personal use. Instructions for your Case Analysis Response To successfully address the challenges of this case, you should develop a response, selecting two of the following multi-part questions labeled Questions One-Four below. For each of the two multi-part questions you select to address, provide your response in the form of a succinct essay arguing for your perspective. Be sure that you follow the principles of essay development (thesis, main topics, conclusion). Question One The smartphone ecosystem is described as a "two-sided market." Using specific evidence from the Huawei case, explain: What are the two sides of this market, and how does each side's participation depend on the other's? Why does this structure create a "double-bind" for Huawei following the US ban? What would Huawei need to do and invest in to break out of this double bind? Question Two Huawei faces several broad strategic options in response to the US ban: (a) exit the mobile phone business, (b) retrench to China and adjacent markets, or (c) invest aggressively to establish HMS/App Gallery as a third global standard. Given these options: Evaluate each option using a platform economics framework from the available information provided. Recommend one option, stating clearly what assumptions your recommendation depends on. Assess whether the sale of the Honor brand was consistent or inconsistent with your recommended strategy. Question Three Using the data provided in the case, calculate the number of Huawei users required for the RATP app (Paris public transit) to break even, to justify adapting to the HMS/App Gallery. Then consider the following: At Huawei's 2019 European market share of ~20%, does adaptation make economic sense for RATP? Please show your reasoning. At what Huawei market share would adaptation become economically viable for RATP? What does this calculation imply about the types of apps that will, and will not, adapt to HMS, and what does that mean for the average European P40 user's experience? Question Four Between 2010 and 2021, the smartphone OS market consolidated from five competitors to two. Microsoft (Windows) and BlackBerry both failed to maintain viable ecosystems despite significant resources and established brands. Evaluate the following. Using the concept of indirect network effects, explain why this consolidation occurred. Identify two structural differences between Huawei's situation in 2021 and Microsoft's situation in 2013 that could make Huawei's challenge either easier or harder. Based on your analysis, assess the probability that HMS/App Gallery can emerge as a viable third global standard. What single factor would most change your assessment? Reminders for completion Remember to enter your response only within the Carmen dialog window (you may not develop your response in another application and copy and paste it). Contained within each short essay response, you must include your analysis, recommendations, and support for those recommendations.
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