That was then, this is now. Mobile computing is now the growth business and, for those in emerging economies who previously never managed to get their hands on PC hardware, smartphones are their first computers. And what’s running on such handsets in Africa, the most untapped market of them all? Not Windows – which is why Microsoft has just launched a concerted campaign, called 4Afrika, to change that situation.

Windows Phones for Africa

The lynchpin of this scheme is the Huawei ’4Afrika with Windows Phone 8′ device. Microsoft has already released lower-end Windows Phones in African markets, such as the Nokia Lumia 620, but those are relatively expensive – in Nigeria, for example, that device is expected to cost around $250. The Huawei 4Afrika phone will cost $150.

It would be interesting to know how heavily Microsoft is subsidizing this phone, because the Huawei 4Afrika is a variant of the $300 Ascend W1, which targets the European market. The 4Afrika phone has a 480×800-pixel screen, a dual-core 1.2GHz Snapdragon processor, a 10mm-thick case and 4GB internal storage, along with front- and rear-facing cameras. Standby time – a big deal in markets where power can be unreliable or hard to come by – is rated at 420 hours.

According to a Microsoft blog post, the handset also comes preloaded with “custom apps created by African developers for African consumers”.

Not bad for the price, you may think. But look at the local prices for cheap smartphones – and by this I mean the likes of Nokia’s semi-smart Asha devices but also BlackBerry and Android phones – and you’ll see handsets priced around $80. That’s almost half the price of the Huawei 4Afrika.

According to Ian Fogg, senior principal analyst at IHS Screen Digest, that discrepancy could take the Huawei 4Afrika out of reach for many:

“This is a cheap smartphone for Windows Phone, but it’s still significantly more expensive than the entry-level Android smartphones in the market or the Nokia Asha devices, which Nokia are putting head-to-head with entry-level Android.”

However, Fogg pointed out that Microsoft’s tight reference platform for Windows Phone 8 meant the Huawei 4Afrika would give a much better experience than those cheaper Android phones, which may use cheaper and less powerful components.

Wider campaign

It’s also worth noting that 4Afrika is a scheme that goes beyond phones. Microsoft will also be working with authorities and ISPs in Kenya and elsewhere to deliver cheap wireless broadband using experimental white space technology and solar-powered base stations. The company will also launch an online hub in April for small businesses, giving them free services and, for some, free domain registration.

As Ali Faramaway, Microsoft’s VP for the Middle East and Africa, put it in a separate blog post:

“When we look at the world, many see China or the BRIC countries as the next big opportunity for growth. At Microsoft, we view the African continent as a game-changer in the global economy. We believe deeply in the potential of technology to change Africa, and we equally believe in the potential of Africa to change technology for the world.”

Whether or not Microsoft succeeds in ensuring that technology is Microsoft-based, is up for debate. But it’s certainly worth a shot and, if 4Afrika does really accelerate the rollout of connectivity on the continent, all the better.

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The new arrangement was announced on Thursday, along with confirmation of Russia’s Yandex becoming an openlab associate in the field of data processing. Huawei’s involvement is a bigger deal than that, as it puts the Chinese firm on a par with Intel, HP, Oracle and Siemens, all of which work particularly closely with CERN to see how their technologies can help with the Large Hadron Collider experiments.

In Huawei’s case, the company is contributing its self-healing UDS cloud storage system for use and validation. UDS is targeting the upcoming exascale (an exabyte is roughly a million terabytes) era with a mass object-based storage infrastructure that uses ARM’s energy-efficient processor architecture alongside cheap SATA disks. It also offers Amazon S3 API compatibility and claims eleven-nines (99.999999999 percent) reliability, so users theoretically don’t need to back up data stored in a UDS-toting cloud.

UDS provides a bit of insight into how openlab works. Huawei first delivered a 384-node version of UDS to CERN in early 2012, after which the researchers played around with it for three months. In September of that year, Huawei released UDS to the general enterprise market (in more normal eight-node configurations). The benefits for both sides of this partnership are clear: CERN has to push technological limits in order to handle the very big data generated by the LHC, and Huawei gets both valuable feedback from the researchers and a glowing report card to show off to the wider world.

As for the next steps in this partnership, CERN has now hired two computer scientists to work with Huawei on its implementation there, and more UDS storage systems will be deployed at the Swiss facility in the next few months.

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According to IDC, all of the top 5 smartphone vendors showed sales growth in last year’s final quarter: Combined, these companies sold 141.6 million of the total 219.4 smartphones sold in the last three months of 2012. Look at the chart, though, and you’ll note that Huawei grew its final quarter sales by 89.5 percent from the year-ago period. That’s impressive considering the company has essentially no foothold here in the U.S., where we’re practically addicted to our handsets.

In fact, Huawei leapfrogged past Sony and ZTE in the last quarter as compared to a year ago, jumping from the then-no. 5 smartphone seller to no. 3.

I’ve noted before that the smartphone market is one of momentum: It takes time to build it, but once a company has some, it can keep sales rising for quite a bit. Clearly, Apple and Samsung have had momentum for some time. Apple’s started in 2007 and has chugged along impressively. Samsung didn’t have such momentum at the time and watched its smartphone share dwindle away until it regained motion with the first Galaxy S phone in 2010. Building upon that with a full line of Galaxy devices that improve yearly has completely turned Samsung around from bottom-feeder to market leader.

That doesn’t suggest that Huawei will keep growing and surpass these two; after all, HTC and Motorola had momentum at one time which proved short-lived for both.

To be sure, Huawei has a long way to go before it’s considered a rival to either Apple or Samsung. However, being a China-based company — where there are still over a billion people without a smartphone — and a global leader in networking equipment, tells me that Apple and Samsung should be looking over their shoulders at Huawei to see if it keeps quietly catching up.

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Much of that is down to Samsung’s two Android flagships, the Galaxy S III and Note II. Samsung’s Mobile Communications division brought in revenues of 27.23 trillion won ($25.35 billion) during the quarter, which represents just under half of the overall company’s revenues in that period – remember that Samsung also makes everything from semiconductors to refrigerators.

Smartphone supremacy

“Samsung led gains with its full lineup of entry- to mid-level smartphones, expanded sales of tablet PCs and an increase in average selling price (ASP) from the previous quarter,” the firm said in its results statement. “The success was mainly brought on by strong sales of Galaxy S III and Galaxy Note II, which beat the popularity of their predecessors with record sales in record time.”

Samsung doesn’t break out actual mobile phone shipment volumes in its financial reports, but analyst house IDC estimates shipments of 63.7 million smartphones during the quarter. That’s up against Apple’s 47.8 million iPhone shipments during the same period. During the fourth quarter of 2011, Apple sold 37 million smartphones and Samsung sold 36.2 million. At the time the two companies were battling it out for the top spot, as Samsung had been ahead in the previous quarter, while people were waiting for the iPhone 4S.

Those days are over: the fourth quarter is what really counts, due to iPhone launch timing and the holiday season, and Samsung is now clearly way ahead of its U.S. rival in terms of shipments, with 29 percent market share to Apple’s 21.8 percent. There’s a big drop to the third-place company’s share – Huawei can boast 4.9 percent of the smartphone market right now, at least in terms of shipments. (Sony’s next, followed by ZTE, and Nokia is now jumbled into the “others” category.)

Obviously Apple is more profitable, having made $13.3 billion in profits during the quarter, which is roughly twice as much as Samsung did across its whole business. That said, Samsung’s average smartphone selling price is rising, as its big hitters are premium devices.

PC decline

Other elements of Samsung’s results also provide useful indicators for various tech sectors. One relates to the company’s DRAM business. It should come as no surprise that Samsung sees “weak” demand for its PC DRAM – the desktop PC business as a whole is in inexorable decline as the world goes mobile, and we saw further evidence just days ago when Intel pulled out of the motherboard business. Samsung’s mobile DRAM business is steady, and the company expects that and its server DRAM line will do well this year.

In a similar vein, Samsung’s notebook and monitor display panel business is also feeling the pain, while OLED panels for smartphones are keeping profits up.

And where’s the biggest growth in mobile? Emerging markets, of course – in fact, Samsung expects demand for smartphones in developed countries to “decelerate” during the first quarter of 2013, while more affordable smartphones and “a bigger appetite for tablet PCs” stimulate demand in emerging markets through the whole year.

With a company that has as diverse a portfolio as Samsung’s, results such as these really do provide a wide-angle snapshot of the times we live in. And, tech landscape aside, that also includes uncertainty: Samsung said it’s probably keeping capital expenditure steady for 2013 rather than increasing investment, but it will “respond to the market’s ebb and flow with a capex plan that is flexible in manner”.

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Huawei was on hand to show off it latest wares, including the 6.1-inch Ascend Mate. While the large screen looked fine with its 1280 x 720 resolution, I think that display is large enough for Huawei to push the envelope into higher resolution. That would also push this phone into offering a more tablet-like experience. The Mate uses Huawei’s own processor design and the company said this week that its next chip will have 8 cores.

Vizio is another company you might not think of when it comes to mobile devices. Yet at the CES, it was showing off both Android phones and tablets. The handsets are aimed at the Chinese market, so we may never see them here. Surprisingly, the larger model, a 5-incher, does have a 1920 x 1080 display.

It’s powered by a dual-core Qualcomm chip and runs Android 4.1. A smaller 4.7-inch handset at 720p resolution is also heading to Asia running on a chip from MediaTek. Both handsets support 42 Mbps HSPA+ on AT&T’s frequencies if you plan to import one.

As the CES was winding down, some Android developers were updating their applications. Dropbox is a prime example, offering an update to its Android app on Friday. The new version adds a public photo sharing functionality. After you get the update on your Android, you’ll see a new icon on the Photos tab to select photos.

These selected images are saved on Dropbox in a sharable folder which gets a unique link. That link can be emailed or posted to either Facebook or Twitter, making it super simple to share photos. I find it exceptionally handy because I have Dropbox set to auto-upload my camera photos from all of my devices when on a Wi-Fi network; they’re always in the cloud.

I’d be remiss if didn’t mention my favorite Android gadget from CES and it was one I didn’t expect: Nvidia’s Project Shield gaming device. Cramming Android on a Tegra 4, a 5-inch 1280 x 720 resolution display and wireless connectivity into what looks like a game console makes for an interesting form factor. The unit plays Android games, of course, but also titles from Steam or a PC on the same network.

My only concern about Shield is the price as Nvidia has said it won’t sell it below cost and try to make a profit on the content. My hope is that Shield costs no more than $200, but I suspect it will be at least $100 more when it comes to market.

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The device is a bit larger than the 5.5 Galaxy Note 2 that I use as my primary phone, but there’s clearly a market for large-screened smartphones. Samsung’s second-gen Galaxy Note is selling faster than the first iteration from last year, which ended up selling 5 million units within six months of its introduction. HTC, Motorola, LG and even Apple have designed phones with big displays over the past year as consumer appeal for such devices is on the rise.

Why the desire for smartphones that have screen sizes similar to small tablets? I pointed out a few reasons for this trend earlier this year, when I suggested that for some, tablets will actually replace smartphones.

Mobile media consumption is on the rise, with no signs of slowing down: Watching high-definition video on a larger, yet still portable, screen is more enjoyable. Voice calls could be a challenge on big devices, although hands-free, Bluetooth headsets and traditional wired headphones can help. And short of voice calls, there are few functions that are actually better on a smartphone than on a tablet.

Are you ready for a 6.1-inch smartphone? Maybe not, but Huawei is betting that some people are.

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According to a statement from the Chinese telecoms behemoth, the 30 employees it will be hiring at the center will be working on smartphone and tablet software development, “optimizing the user experience of existing operating systems such as Android and Windows Phone 8″.

“We believe the key to building our brand is to provide consumers with a reliable and differentiated user experience,” Huawei VP for Central, Eastern and Nordic Europe Kenneth Fredriksen said in a statement. “The open and innovative environment in Finland is an ideal place for Huawei to strengthen our global R&D capabilities for devices, creating opportunities for both Huawei and the Finnish telecommunications industry.”

Over the coming five years, that job tally should hit 100, through a total investment of €70m ($90m). It’s not quite the $2bn investment that Huawei announced for its UK operations back in September (hey, if the U.S. doesn’t want to play…) but it’s a hefty chunk of cash nonetheless.

Huawei certainly won’t have trouble finding experienced engineers in Helsinki. The decline of Nokia – as evidenced by the sale last week of the company’s Helsinki HQ – has seen hundreds shed over the past couple of years, and they can’t all go work for Jolla.

Symbolism

In the wider picture, this investment underscores the tremendous geographical shift taking place in the telecoms industry.

Europe was once the center of that industry, thanks to companies such as Alcatel, Ericsson and Nokia. Since the iPhone, however, the handset industry has moved to the U.S., Korea and Taiwan. Meanwhile, the infrastructure part of the game is being increasingly taken over by Huawei and ZTE.

The Chinese firms are, of course, also in the handset business. Indeed, their low-cost Android phones are making a serious dent in the low end of the market, a sector until recently dominated by Nokia. Nokia decided to forego Android in favour of Windows Phone, and now it’s very likely that former Nokia employees will find themselves working on ‘optimizing’ both Android and Windows Phone 8 over at Huawei’s new facility.

These things work the other way round too, though. Nokia also decided to ditch MeeGo when it partnered up with Microsoft, and now Jolla is pushing hard with the MeeGo-derived Sailfish OS in China.

When I was at the Slush conference in Helsinki last month, some speaker maintained that Finland and China were part of the same region. I thought the notion absurd – Finland and Russia, sure, but China was pushing it. Only half-jokingly, I can say I’m no longer so sure.

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Chinese telecom gear makers Huwaei and ZTE are about to get blacklisted by the U.S. Congress in a report to be published Monday. Reuters reports that the U.S. House of Representatives’ Permanent Select Committee on Intelligence will recommend U.S. companies don’t use wares from the two companies over fears that their gear constitutes a security threat.

Sunday night the Intelligence Committee’s chairman, Mike Rogers, told 60 Minutes that Americans should “find another vendor” if they care about their own IP, their privacy and U.S. national security, which means that not only could telecommunications companies and data center gear buyers find themselves sans Huawei and ZTE gear, but also those interested in cheap handsets. Huawei has launched handsets in the U.S. market with rural and pre-paid carriers.

A Huawei handset for T-Mobile.

The report allegedly implies that Huawei and ZTE install backdoors and other mechanisms that allow them to spy on the packets traversing networks containing their gear. The reports also implies that these companies’ close ties to the Chinese government mean that they would share information gleaned from their snooping with the Chinese government. Thus, buying gear from these companies is akin to letting the Chinese spy on your network traffic. This same logic was used a few years back to stop Huawei from buying 3Com, U.S. networking company later bought by HP.

Huawei’s Bill Plummer emailed me the following in response to the alleged contents of the Congressional report:

Huawei is a globally trusted and respected company doing business in 150 markets with over 500 operator customers – the quality and security of our product is world proven. This investigation and report are nothing more than a politics exercise that has ignored technical, commercial and cultural realities – it achieves nothing in terms of securing networks in a world in which every major vender develops, codes and builds globally, including in China. Huawei looks forward to leaving this political distraction behind us so that we can work with rational industry and government stakeholders to develop real solutions to what are real and industry-wide cyber challenges.

Not exactly 50 shades of grey, but enough to confuse things.

This is a tough issue. Both Huawei and ZTE deny having close ties to the Chinese government and that they install such software on their gear. Yet, the Chinese government has supported both companies in their history and has a history of spying on U.S. companies. For example, Google came out in 2010, and said it had detected Chinese hacking on its network. Earlier this year Nortel, a former telecommunications gear vendor, disclosed that hackers originating from China had broken into its network.

So both Huawei and ZTE have benefited from Chinese governments (in the form of economic development loans at least), and the Chinese government is widely believed to have been a dedicated hacker. But are Huawei and ZTE guilty by association? There is also a strong hint of economic protectionism here as well. Both companies are a solid threat to Cisco and Juniper, two U.S. companies that stand to lose if their products are undercut by low-cost Chinese switches and routers. Cisco’s CEO John Chambers is a very active Republican who is vocal on this issue.

Plus, both Cisco and Juniper (as well as many U.S. companies) frequently make some of their hardware and even write some of their code in China and other places that the U.S. might consider a threat. Domestic companies point out that they don’t let engineers writing code overseas have full access to the source code, and that the foreign-produced code is reviewed, but there is an element of hypocrisy here.

Disclosure is the solution, but no one wants that

It’s cheaper to build things in China, be it software or hardware. Plus, executives at U.S. companies tell me that they never buy used networking gear from any vendor because it can have unexplained Chinese software on it. The Chinese don’t necessarily need a company in its pocket to install networking spyware, when it can sell gear on eBay to unsuspecting corporate buyers.

A source in the networking industry tells me that the solution here may be to demand a full source code review from Huawei to prove that Huawei is spying and sending what it discovers back to the Chinese. However, this person also notes that Huawei would be well within its rights to point out that the U.S. guys should do the same with code that they have written in China.

The problem standing in the way of the truth here is twofold. Problem one is that evaluating networking technology and espionage through hacking is a highly specialized and esoteric skillset, and problem two is that China’s opacity and ties to hackers, as well as the lack of transparency by both companies, make it difficult for the average person to believe ZTE and Huawei’s denials over the government’s influence and involvement in their corporate activities. So, if the U.S. House says don’t buy Huawei and ZTE gear, that will hurt those companies in this market — one where Huawei employs 1,700 people (it has 140,000 worldwide) and hopes to list on the public stock market.

Perhaps more will be revealed later today after the full version of the report is released (a classified version with more information was also prepared). The bottom line here is that when it comes to hacking allegations, China and national security, there’s a lot of self-interest and accusations based on some esoteric and difficult-to-prove allegations that can color the results of this report. However, the conclusions will undoubtedly cause economic harm to Huawei and ZTE in the U.S.

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