Huawei's HarmonyOS market share in China has climbed strongly to 17% in the first quarter of 2024, which not only highlights the excellent performance and wide market recognition of the HarmonyOS system, but also marks the first time that it has surpassed Apple's iOS system in the domestic market and become the second largest operating system in China. This achievement is not only an affirmation of Huawei's technological innovation capabilities, but also a major breakthrough for the entire HarmonyOS ecosystem.
At this historic moment, Huawei's move to launch the pure-blooded HarmonyOS system is undoubtedly of far-reaching significance. With its unique advantages, such as smooth operation experience, rich application scenarios, and strong compatibility, the pure-blooded HarmonyOS system can attract a large number of new users to try and fall in love with it. By continuously optimizing system functions and improving user experience, Huawei is expected to convert these new users into loyal fans, further enhance customer stickiness, and consolidate and expand the leading position of the HarmonyOS system in the market.
At the same time, as the market share of the HarmonyOS system continues to rise, the related enterprises of the A-share Huawei industry chain will also usher in unprecedented development opportunities. As one of Huawei's partners, iSoftStone plays a pivotal role in the promotion and application of the HarmonyOS system. With its expertise and experience in software development, system integration, and cloud services, iSoftStone will undoubtedly become one of the most representative companies in the HarmonyOS ecosystem.
With the continuous improvement of the HarmonyOS system and the further expansion of the market, iSoftStone and other enterprises related to Huawei's industrial chain will usher in a broader development space and more lucrative profit returns. The success of Huawei's HarmonyOS will not only promote the rapid development of China's operating system industry, but also inject new vitality and impetus into the global technology industry.
So, what key role does iSoftStone play in the industrial chain of Huawei's technology giant?
First of all, we have to mention that iSoftStone, as Huawei's core information technology service provider, has a long history of cooperation, and the 16-year deep cooperation has witnessed the common growth and progress of both parties. Today, iSoftStone has been promoted to Huawei's core ecosystem partner, which is undoubtedly a high recognition of its professional capabilities, service quality, and cooperation between the two parties.
iSoftStone plays an indispensable role in the construction of Huawei's HarmonyOS, Euler, Kunpeng, and HUAWEI CLOUD ecosystems. iSoftStone is deeply involved in R&D, testing, and deployment in various ecosystem fields, providing Huawei with comprehensive and efficient information technology service support. It can be said that without iSoftStone's support, Huawei's pace of construction in the ecosystem may be difficult.
In addition, iSoftStone's service tentacles have also extended to Huawei's various product lines, including carrier business, enterprise business, terminal business, cloud business, and intelligent vehicle business. This comprehensive business layout enables iSoftStone to give full play to its professional advantages in the field of information technology services and provide Huawei with more accurate and efficient services.
Because iSoftStone plays an important role in Huawei's industry chain, the part of its revenue from Huawei has also shown a good trend of growth year after year. From 4.344 billion yuan in 2018 to 7.983 billion yuan in 2022, the compound annual growth rate is as high as 16.43%. This figure not only reflects iSoftStone's strong competitiveness in Huawei's industry chain, but also indicates that the cooperation between the two parties will be closer and deeper in the future.
As an important strategic layout of Huawei, the HarmonyOS system is like a bright star, leading the development direction of future intelligent technology. It is divided into two core parts, one is HarmonyOS for the majority of end consumers, and the other is the open source HarmonyOS for downstream enterprises and end consumers, which together form a strong cornerstone of Huawei's intelligent ecosystem.
In the vast universe of Harmony OS, iSoftStone is like a bright star, and it is honored to be Huawei's first batch of excellent ecosystem partners for HarmonyOS Connect. Today, iSoftStone has widely used its products in six major fields, including smart home, sports and health, smart travel, smart office, audio-visual entertainment, and education care, bringing unprecedented intelligent experience to consumers.
In the vast world of Open Harmony (open source Hongmeng), iSoftStone is even more courageous and has established a subsidiary, Honghu Wanlian, to fully undertake iSoftStone's strategic layout in the field of Open Harmony. Among the subsidiaries, iSoftStone directly holds a 45% stake, while Huawei's Hubble holds a 5% stake, demonstrating the firm confidence and in-depth cooperation between the two parties in the Open Harmony ecosystem.
On April 15, 2022, Honghu Wanlian and Huawei officially signed an Open Harmony ecosystem enablement cooperation agreement, marking iSoftStone as Huawei's first batch of Open Harmony ecosystem enablement partners. This cooperation will undoubtedly promote the vigorous development of the Open Harmony ecosystem, providing more enterprises and developers with strong technical support and broad innovation space.
In addition, iSoftStone's contribution to the Open Harmony open source community is also remarkable. As of May 15, 2024, iSoftStone has modified more than 500,000 lines of code in the open source community, accounting for 0.86% of the code, ranking fifth in community contribution, second only to Huawei, Shenzhen Kaihong, Kaihong Zhigu (a subsidiary of Topway Information) and Runhe Software. This achievement fully demonstrates iSoftStone's professional strength and outstanding contribution in the field of Open Harmony, and also indicates that iSoftStone will continue to play an important role in the field of intelligent ecology in the future.
So, when we dig deeper into iSoftStone, which is Huawei's close partner, how does it perform?
In the grand picture of performance, iSoftStone has undoubtedly drawn a picture of growth full of vitality and vitality with its excellent performance. From 2018 to 2023, iSoftStone has been making great progress like a bamboo shoot in spring, with its revenue rapidly climbing from RMB 8.139 billion to RMB 17.581 billion, which has nearly doubled the growth rate, which not only attracts the attention of the industry, but also highlights the company's strong market competitiveness and development potential.
However, the path to growth has not been easy. In 2021, iSoftStone suffered a brief setback in net profit, mainly due to the limited development of its important partner Huawei. However, it is precisely this challenge and dilemma that has tempered iSoftStone's indomitable spirit and laid a solid foundation for its subsequent take-off.
In 2023, the complex and volatile global economic situation will bring new challenges to iSoftStone. Enterprises' willingness to invest in software development and intelligent transformation has weakened, which undoubtedly has had a certain impact on iSoftStone's performance. However, iSoftStone has not been discouraged by this, but has responded to market changes with a more proactive attitude and sought new growth points.
Fortunately, the rise of Huawei's HarmonyOS system has brought new opportunities to iSoftStone. The number of HarmonyOS users continues to grow and has exceeded the 700 million mark, which indicates that the HarmonyOS system is gradually becoming the mainstream choice in the market. At the same time, Huawei has also continued to be recognized by major manufacturers such as AutoNavi Map, Meituan, NetEase Games, WeChat, and JD.com, and has launched the HarmonyOS version of the APP. As an important partner of Huawei, iSoftStone is expected to fully benefit from Huawei's rise in the future and jointly create a more brilliant future.
However, cooperating with a giant like Huawei also requires iSoftStone to maintain its independence and right to speak. Only on the basis of equality and mutual benefit can the two sides achieve a long-term and stable cooperative relationship and avoid over-dependence. iSoftStone is well aware of this, so in the process of cooperating with Huawei, it has always maintained a clear mind and a firm stance, laying a solid foundation for the company's long-term development.
So, does iSoftStone have more eye-catching highlights hidden in this company?
First and foremost, it is its excellence in R&D and technology. From 2019 to 2023, iSoftStone will continue to invest a large amount of money in R&D, and the annual R&D expenses will be stable at about 1 billion yuan. This kind of large-scale R&D investment has undoubtedly laid a solid foundation for the improvement of its technical strength. With this unremitting effort, iSoftStone has successfully created the first operating system with cross-instruction set, SwanLinkOS, and has continuously launched software distributions based on this system to meet the needs of different industries, and has achieved remarkable results in the fields of commercial display, power, industry, and education.
iSoftStone has successfully built the first cross-instruction set operating system, SwanLinkOS, and continues to launch software distributions based on the system, mainly for commercial display, power, industry, education and other industries.
In addition, iSoftStone has also demonstrated its deep heritage in the field of operating systems. iSSEOS, iSSEOS, the enterprise server operating system independently developed by iSoftStone, not only realizes the compatibility and adaptation of mainstream Arm/X86 architectures such as Intel, Haiguang, Kunpeng, and Feiteng, but also launches the open-source Euler one-stop service solution, further consolidating its leading position in the field of operating systems.
It is worth mentioning that iSoftStone has also further enriched its product line through the acquisition of Tongfang Computing. In the field of AI servers, Tongfang has two technical routes, Ascend and NVIDIA GPUs, especially its AI server products developed based on Ascend, which have performed well in the domestic market. This acquisition will undoubtedly bring new growth momentum to iSoftStone, which is expected to complement its original software business and jointly build an integrated "software + hardware" layout of the whole industry chain of "HarmonyOS + Euler + Gauss + Ascend + Kunpeng", thereby greatly enhancing the company's overall competitiveness.
In addition to its outstanding performance in the field of technology, iSoftStone also excels in terms of customer resources. Although Huawei is still one of its important customers, the proportion of revenue from Huawei is gradually decreasing. This means that iSoftStone is actively expanding its customers in other fields to achieve a more diversified business layout. In addition to Huawei, iSoftStone also has many leading customers in the industry, such as Baidu, Tencent, Alibaba, ByteDance, Didi, JD.com, Sina, etc., and has established close cooperative relations with the three major operators and six major state-owned commercial banks. This broad customer base not only provides a strong guarantee for the company's performance, but also lays a solid foundation for its future development.
Finally, we might as well summarize the full text succinctly.
As a leader in the field of software and information technology services in China, iSoftStone has already won wide acclaim in the domestic and international markets for its excellent technical strength and innovation capabilities. In the cooperation with Huawei, a global technology giant, iSoftStone has deeply participated in the ecological construction of Huawei's multiple operating systems with its deep industry experience and strong technical support, providing strong support for Huawei's global business expansion.
Huawei, as a leading technology company in China and around the world, has been committed to building its own and controllable operating system to ensure its leading position in the global market. In this process, Huawei understands that it is difficult to achieve the comprehensive development of the ecosystem on its own, so it actively seeks close cooperation with high-quality partners in the industry. With its deep technical background and rich industry experience, iSoftStone has become an indispensable partner of Huawei.
As Huawei continues to expand in the global market, its operating system ecosystem is also becoming more and more perfect. In this process, iSoftStone not only provided Huawei with professional technical support and solutions, but also actively participated in the construction of Huawei's ecosystem to jointly promote the prosperity and development of the entire ecosystem. It is foreseeable that with Huawei's further expansion in the global market, iSoftStone will fully benefit from this trend and achieve its own sustainable development and growth with its close cooperative relationship and strong technical strength.
In summary, iSoftStone, as a leading software and information technology service provider in China, has demonstrated excellent technical strength and innovation capabilities in cooperation with Huawei, providing strong support for Huawei's global expansion. In the future, with the deepening of the cooperation between the two sides, we have reason to believe that iSoftStone will continue to benefit from this trend and achieve more brilliant achievements.