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Apple’s continued travails in China made headlines this week, with Counterpoint reporting sales down 24% inside the first six weeks of the year. But that’s not the only interesting news this week—it’s the twist behind that tale which could be a more serious issue for Apple and its iPhone in the long term, and which spells a major shift in Google’s influence over 2/3 of world’s smartphones. Despite China’s Vivo now leading the pack, toppling Apple from the top spot, the real winner is Huawei, whose sales soared 64%, putting it into second spot ahead of Apple. Even those stats ignore that Honor—the Huawei spinoff prompted by US sanctions—is broadly on par with Apple. Add Huawei and Honor together, and you would return to the kind of dominance we saw pre-Trump. This Huawei resurgence is independent of the US tech that drove its smartphone growth last time. Huawei’s initial recipe was to broadly replicate iPhone/Samsung device performance at a lower price point, and then run Android and its apps and services ecosystem to level the user experience. The US ban first removed Android and then the chipsets making all this work. Now Huawei is back with a seemingly independent supply chain and a new OS and ecosystem that is about to fully free itself from the Android world from which it was spawned. Nothing happens by accident in China. The domestic independence learning lessons from 2019-2021 is well planned. And what happens next will be just as well programmed. I warned in 2019 that “the prize for Huawei over the next decade if it can build out a successful HarmonyOS ecosystem, is huge. Not only does this deliver independence, but it also puts Huawei in control of the ‘third way’, the first major shake-up of the smartphone ecosystem in more than a decade. All of which would be bad news for Washington and California.” Five years later, and here we are. The pace of Huawei’s independent resurgence has surprised analysts. The Chinese giant has announced plans to split from Android with HarmonyOS Next. And even Nvidia has said that Huawei’s chipsets now make it a serious competitor in the AI space. The crux of my warning five years ago was as much—if not more about China—than just Huawei. The irony was that Huawei—just as TikTok has been doing since—was putting all its efforts into escaping China’s gravitational pull to be as Western as it could, to compete on a par with the US giants. The risk for the cozy smartphone world dominated by Apple’s walled garden and Google’s Android ecosystem was always that a third way, born in the world’s largest smartphone market and corralling consumers, developers, and OEMs, would shake apart the duopoly. Again—here we are. The perhaps even more interesting news this week is that Shenzhen, the city at the heart of China’s high-tech industry—including Huawei, is stepping into the fray. As reported by the South China Morning Post, Shenzhen “plans to expedite the adoption of [Huawei’s] self-developed mobile operating system HarmonyOS, heating up the platform’s rivalry with Google’s Android and Apple’s iOS in the world’s largest smartphone market.” Not only does Shenzhen plan to “boost the number of its native apps built on HarmonyOS and push for their adoption across several major sectors,” the city’s 2024 Action Plan, published last weekend, mandates that “HarmonyOS-based apps will be adopted in sectors that include government services, education, healthcare, banking and finance, transport and welfare.” Back in 2019, I suggested that “if Huawei takes a broad view, playing licensor rather that product owner, then it will pull other device manufacturers into the mix—starting with its Chinese stablemates,” and a few months later that “if Huawei can coral Chinese (and maybe non-Chinese) smartphone makers to jump from Android to its own operating system and app store, it will be a massive achievement. It will also be a serious threat to Google’s lock on the Android market.” Visit OUR FORUM for more.

When I first started working with Microsoft over 30 years ago, we were still using MS-DOS with a Windows overlay, and they made me the top launch analyst for Windows 95. Copilot, like that old GUI overlay, is a precursor to Windows 12, but unlike that old GUI, Copilot will be actively helping to develop Windows 12 based on the massive user data that will be collected on Windows 11 by Copilot from customers and Microsoft employee usage feedback. In a way, this is a bit closer to the .NET wave when Microsoft responded to Netscape’s browser. The company made a hard pivot and, for a time, took leadership in browsers. But again, because the tool will be increasingly used to create what is coming, the development cycle won’t only be faster, but it is likely to make a technology jump far bigger than either of those other two events. This is Microsoft Bob, Clippy, and Cortana done right. Each of those products was powerful in concept but failed because the technology at the time fell far short of both the requirements and expectations of the developers and users. AI is also being hyped ahead of its capabilities, but it is advancing by several magnitudes faster than anyone has seen before, suggesting the hype, in a few short months, will be exceeded by the coming reality in 2024 and 2025. To say this is big is a huge understatement. This effort’s eventual goal is to turn your PC into a personal and work companion, co-worker, mentor, mentee, and, I expect for some of us, a friend. Let me explain. I’m going to start with security because this morning, I was reading an article where a ransomware company that wasn’t paid a ransom turned the victim of their attack into the SEC because the victim didn’t report the attack as is required by law. This adds another layer of pain to the victim as it basically makes them a criminal because they didn’t properly report that they were attacked, turning a law enforcement entity into a tool for the criminal organization. That is so twisted. Part of the problem with security breaches, and particularly ransomware, is that the attacker can generally work for an unlimited amount of time to create the problem and is free to make as many mistakes as they can before executing the attack successfully, while the defender’s tools only allow the security organization to respond once the attack is successful. One of the most compelling demonstrations was from Melissa Grant, who I’ve known for years. She and her partner showcased how a user of Copilot could simply ask their Copilot-enabled PC to do things like write copy, create pictures, format slides and documents, and copy edit with natural language commands (no learning command phrases) to more quickly create higher quality documents and slides. Her demonstration supported a Wharton study that showcased a 30% initial productivity improvement when using tools like this and up to an 80% improvement when the user became familiar with using AI. What the Wharton study did not address was how much improvement would result if the AI was advancing as fast as it currently is, suggesting that both of those metrics are understated against the more advanced AIs rolling out over the next several years. While I expect much of the PC of the future will reside in the cloud, I expect the Windows 12 hardware will evolve to more closely match this Cortana demonstration of a few years back, where you increased interface with your PC as if it were a person. Much of the information you’ll see today that would be on a screen will instead be projected into a type of floating VR display that will resize itself based on need. We’ll develop a far deeper relationship with our hardware, which will evolve quickly from something like an ever-smarter digital pet to a digital friend. Learn more by visiting OUR FORUM.

On the internet, people need to worry about more than just opening suspicious email attachments or entering their sensitive information into harmful websites—they also need to worry about their Google searches. That’s because last year, as revealed in our 2024 ThreatDown State of Malware report, cybercriminals flocked to a malware delivery method that doesn’t require they know a victim’s email address, login credentials, personal information, or, anything. Instead, cybercriminals need to fool someone into clicking on a search result that looks remarkably legitimate. This is the work of “malicious advertising,” or “malvertising,” for short. Malvertising is not malware itself. Instead, it’s a sneaky process of placing malware, viruses, or other cyber infections on a person’s computer, tablet, or smartphone. The malware that eventually slips onto a person’s device comes in many varieties, but cybercriminals tend to favor malware that can steal a person’s login credentials and information. With this newly stolen information, cybercriminals can then pry into sensitive online accounts that belong to the victim. But before any of that digital theft can occur, cybercriminals must first ensnare a victim, and they do this by abusing the digital ad infrastructure underpinning Google search results. Think about searching on Google for “running shoes”—you’ll likely see ads for Nike and Adidas. A Google search for “best carry-on luggage” will invariably produce ads for the consumer brands Monos and Away. And a Google search for a brand like Amazon will show, as expected, ads for Amazon. But cybercriminals know this, and in response, they’ve created ads that look legitimate, but instead direct victims to malicious websites that carry malware. The websites themselves, too, bear a striking resemblance to whatever product or brand they’re imitating, to maintain a charade of legitimacy. From these websites, users download what they think is a valid piece of software, instead of downloading malware that leaves them open to further attacks. Indeed, malvertising is often understood as a risk to businesses. Still, the copycat websites created by cyber criminals can and often do impersonate popular brands for everyday users, too. If Google ads have been around for over a decade, why are they only being abused by cybercriminals now? The truth is, that malvertising has been around for years, but a particular resurgence was recorded more recently. In 2022, cybercriminals lost access to one of their favorite methods of delivering malware. That summer, Microsoft announced that it would finally block “macros” that were embedded into files that were downloaded from the internet. Macros are essentially instructions that users can program so that multiple tasks can be bundled together. The danger, though, is that cybercriminals would pre-program macros within certain files for Microsoft Word, Excel, or PowerPoint, and then send those files as malicious email attachments. Once those attachments were downloaded and opened by users, the embedded macros would trigger a set of instructions directing a person’s computer to install malware from a dangerous website online. Macros were a scourge for cybersecurity for years, as they were effective and easy to deliver. But when Microsoft restricted macro capabilities in 2022, cybercriminals needed to find another malware delivery channel. They focused on malvertising. Today’s malvertising is increasingly sophisticated, as cybercriminals can create and purchase online ads that target specific types of users based on location and demographics. Concerningly, modern malvertising can even avoid basic fraud detection as cybercriminals can create websites that determine whether a user is a real person or simply a bot that is trawling the web to find and flag malicious activity. Learn more by visiting OUR FORUM.