(Report produced by: Shenwan Hongyuan Research)
1. Harmony: An Operating System for All Things Connected
Harmony Technology Feature 1: One Development, Multi-Device Deployment
Multi-device development environment: HUAWEI DevEco Studio provides a one-stop development platform for all scenarios across multiple devices. Multi-device development capabilities: Multi-device UI adaptation, unified interaction events, device capability abstraction, helping developers reduce development and maintenance costs. Multi-device distribution mechanism: Multi-device applications only require one project, one HAP configuration supports multiple device modules, or one package can be released as multiple HAPs, which can be distributed according to device type as needed, and can also develop meta-services (with independent entry, no installation required).
Harmony Technology Feature 2: Divisible and Combinable, Free Flow
Divisible and combinable: Atomic development, development, deployment, and runtime APP packs can be freely combined, and application functions can change as needed. Free flow: Based on Huawei’s years of communication technology accumulation, an “invisible” bus is built between 1+8+N devices, across all scenarios. Devices can achieve virtualization, cross-device service invocation, multi-screen collaboration, file sharing, and other distributed services based on the soft bus.
Distributed Soft Bus: The Underlying Technology of the Internet of Everything
Distributed soft bus: The 1+8+N ecosystem (“1” refers to the mobile phone; “8” refers to car machines, speakers, headphones, watches, etc.) builds an “invisible” bus between devices across all scenarios, allowing for virtualization, cross-device service invocation, multi-screen collaboration, file sharing, and other distributed services based on the soft bus. Heterogeneous networking: Unified abstraction from the perspective of resources, forming a shared resource pool from all lanes of the super terminal, managed and scheduled by the soft bus.
2. HarmonyOS NEXT: Native Harmony Approaches
HarmonyOS 4.0 Upgrade: AI Development + Service Capability Enhancement
Unified ecosystem: Mainstream cross-platform development frameworks already have versions adapting to HarmonyOS, and applications developed based on these frameworks can be migrated to the HarmonyOS at a lower cost. Native intelligence: Provides development tools embedded with AI capabilities.
HarmonyOS NEXT: Native Harmony, Gradually Approaching
In August 2023, the HarmonyOS NEXT developer preview version was released at the Huawei HDC conference, supporting only HAP format, incompatible with Android.
The Return of Mobile Phones is a Prerequisite for HarmonyOS NEXT to be Closed Source
In September 2023, the new Huawei Mate 60 series was released, with continuous growth in shipments. At the 2023 Open Source Industry Ecosystem Conference, it was announced that the total number of HarmonyOS ecosystem devices has exceeded 700 million. Huawei’s own devices exceed 300 million. It is expected that by the end of this year to next year, the number of HarmonyOS ecosystem devices will gradually reach 800 million to 1 billion.
Pre-Market for HarmonyOS NEXT: Benefits for Outsourcing Companies
According to statistics from the national App technology testing platform, as of the end of March, the number of active Apps detected in the domestic market reached 2.61 million (including Android and Apple stores).
Post-Market for HarmonyOS NEXT: Increased Demand for Harmony Talent Training
The traditional IT skills training market is expected to exceed 60 billion RMB in 2022 (corresponding to 6-8 million trainees). HarmonyOS NEXT will continue to drive the demand for Harmony talent in the market. Huawei is building Harmony talent certification standards HCIA-HarmonyOS Application Developer and HCIA-HarmonyOS Device Developer, improving the talent training mechanism for Harmony.
HarmonyOS Car Machine: Driven by Harmony Intelligent Mobility, a Promising Future
Harmony Intelligent Mobility (HIMA, Harmony Intelligent Mobility Alliance) is the Harmony smart car technology ecosystem alliance, jointly developed by Huawei and partners for intelligent driving car machine systems. Current members include AITO and Zhijie, and models equipped with Harmony car machine systems include AITO M5/M7, Zhijie S7, and others such as Changan Aito 11, BAIC ARCFOX Alpha S HI version, and Geometry G6 are also equipped with Harmony car machine systems.
3. OpenHarmony: The Stars and the Sea for Smart Terminals
Three Types of Kernels Flexibly Configured, Empowering Thousands of Industries
OpenHarmony’s flexible kernel configuration can support the development of smart terminal devices across thousands of industries.
Current Status of Open Source Harmony: Singularity Approaches, Ecosystem Gradually Expands
As of December 2022, the number of member units in the Open Source Harmony project group has reached 29, with 51 units and over 5100 co-builders’ codes merged, co-building nearly 100 million lines of code. In the past year, the top five contributing member units are Huawei, Shenzhen Open Harmony, Softcom Power, Jiulian Open Harmony, and Open Harmony Zhigu.
Future of Open Source Harmony: Expected to Exceed 10 Billion in Industry Scale by 2026
The market size is conservatively estimated to reach 24 billion. IDC expects that by 2026, the number of IoT devices connected in China will reach 10.25 billion, with a market share of 16% being the lifeline for operating systems. It is conservatively estimated that Huawei’s Harmony (OpenHarmony + HarmonyOS) market share will reach 16% by 2026, which means that in the next two years, 1.6 billion IoT devices will be connected to the Harmony ecosystem. Under conservative, neutral, and optimistic scenarios, it is assumed that the middleware license/development board fee for a single connected device is 15, 40, or 60 RMB, respectively.
Changes: Open Source Harmony on PC, Aiming to Surpass Xinchuang
Xunlong has completed the preliminary adaptation of the OpenHarmony system to Arm architecture PC hardware on the development board Orange Pi equipped with Rockchip RK3566. In April 2023, Softcom Power completed the adaptation of OpenHarmony Release 3.2 with x86 chips, USB, network port, and other hardware interface drivers.
4. Investment Analysis
Harmony Investment Thinking: Observe Participation Depth and Changes
We believe that from an investment perspective, the depth of participation in Harmony business and the degree of change in Harmony business are the core indicators of assessment. Recent changes mainly come from the launch of HarmonyOS NEXT and OpenHarmony PC operating system, which are more relevant to Softcom Power and Chinasoft International.
Softcom Power: Surrounding Huawei, Moving Towards Productization
Softcom Power is a leading software and information technology service provider, with four main business segments: general technology services, digital technology services, consulting and solutions, and digital operation services. Among them, general technology services and digital technology services are the core businesses, with revenues of 9.275 billion and 7.222 billion RMB in 2022, accounting for 49% and 38%, respectively. Huawei is the largest customer of the company, with revenue from Huawei accounting for 42% in 2022.
Softcom Power: HarmonyOS + Open Source Harmony, High Cooperation Depth
Softcom Power’s Harmony business includes: 1) Commercialization of OpenHarmony system (subsidiary Honghu Wanlian); 2) Development and operation of HarmonyOS system (outsourcing business for Huawei Consumer BG). The commercialization of the OpenHarmony system includes: middleware business, IoT modules, testing and certification. The company is a partner in the HarmonyOS Connect ecosystem solution. Honghu Wanlian has received investment from Huawei Hubble.
Chinasoft International: Core Partner of Huawei
Chinasoft International is a large comprehensive software and information service provider, mainly providing “end-to-end” IT services to global customers. The company’s business is divided into two parts: foundational business and cloud intelligence business. The foundational business is Chinasoft International’s traditional business, mainly providing IT outsourcing and solution services to customers. The cloud intelligence business mainly includes full-stack cloud business and Liberation Number. Among them, the full-stack cloud business covers cloud products such as CloudEasy, APaaS, SaaS, and cloud management and consulting services.
Chinasoft International: A Harmony OS Meta Service Partner with Complete North-South Capability
Chinasoft International is the only company that has signed a contract with Huawei as an IT service company and has complete north-south capabilities as a Harmony OS meta service partner. In the To C field: provides Harmony OS meta service ecosystem services, including development launch, technical support, application operation promotion, and related technical solutions. In the To B field: based on “Kaihong OS + Super Device Management Platform,” provides one-stop service from full-scene solutions to end-to-end delivery for industries such as water conservancy, transportation, urban development, and education.
Runhe Software: Adhering to “2+N”, Deepening Finance, Expanding Electricity
Runhe Software focuses on three major business areas: “financial technology,” “intelligent IoT,” and “smart energy.” The financial technology business has stable revenue, while the intelligent IoT business is rapidly growing. The company’s intelligent IoT business has rapidly increased, with a CAGR of 35.3% from 2018 to 2022. Runhe Software adheres to the “2+N” strategy, deeply cultivating the finance and energy industries, empowering other industries such as smart cities, healthcare, industry, and education. It has the capability to provide full-stack IoT solutions and has developed 7 customized commercial distributions of the OpenHarmony operating system—HiHopeOS, and has independently launched dozens of development boards.
Fabien Information: A Professional IT Software Technology Service Provider
A leading nationwide IT software technology service and solution provider. Fabien Information has become a human resource outsourcing supplier for Huawei. According to the Shenzhen Stock Exchange’s interactive easy platform, the company won the bid for the Huawei R&D human resource outsourcing project in Zhejiang in September 2021 and has continued to deepen cooperation with Huawei, providing software technology services. Fabien Information’s FarData big data agile development platform has completed integration and certification with Huawei Cloud and Huawei Gauss DB, MRS, and has received certification for Huawei Cloud Kunpeng cloud services and other Xinchuang certifications.
Zhengtong Electronics: Open Source Harmony Class B Donor
The company joined OpenHarmony in September 2021, becoming a Class B donor, and released the financial service intelligent terminal ZT8669 equipped with the OpenHarmony 3.1 standard system in 2022. In April 2023, the company established the Harmony Research Institute. It has achieved certain technical breakthroughs in secure boot, multi-screen display, and other areas, and has released the IoT terminal operating system “SZZT SecOS” and the intelligent terminal operating system distribution “LightBeeOS” that meet financial-grade security standards.
ChuanZhi Education: Seizing Trends, Launching Harmony Vocational Education Courses
ChuanZhi Education is a leading high-tech enterprise engaged in non-degree, application-oriented computer information technology education and training in China. In November 2023, ChuanZhi became an executive council member of the national Harmony industry-education integration community. It provides four series of Harmony courses, a 365-day Harmony technology developer community, and Q&A services.
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(This article is for reference only and does not represent any investment advice from us. For related information, please refer to the original report.)