Huawei stays ambitious as growth slows down

Huawei stays ambitious as growth slows down

Dana Cooperson/Ovum  |   May 09, 2011
telecomasia.net

At its eighth global analyst conference, Huawei articulated four overarching messages - Huawei is a global company based in China, not a Chinese company; its 10% growth in 2011 will come from devices and enterprise, not its carrier infrastructure business; Huawei’s new enterprise business is focused on the merging of communications and information technology in the “cloud”; and the company has moved beyond its box business to solutions and services. 

Huawei’s five-year results, including 29% revenue, 57% operating profit, and 49% cash flow CAGRs, are enviable. Its devices, enterprise, and cloud strategies take it in new directions, though several years will be required to judge results.
 
To be successful, Huawei must prove it can build solution partnerships; break open the US market; derive market differentiation from its unsurpassed product breadth and vertical integration (components, terminals/devices, infrastructure, services); grow services and solutions; and continue to demystify its inner workings.
 
Huawei’s globalization progresses apace, but still more openness needed
The message that “Huawei is not a Chinese company, but a global company” was not new, but that it continues to progress was evident through its many non-Chinese spokespeople and the facts and figures offered.
 
These included its many R&D centers outside China, its steady hiring of “top gun” experts in North America and Europe, and its leadership roles in various global standards organizations.
 
Huawei has grown to become the number two infrastructure vendor (behind Ericsson) as it has learned the ins and outs of international R&D, sales, and marketing.
 
And yet, doubts remain, particularly in the US. If it wants to truly crack open this major market, Huawei will have to submit to additional scrutiny of its products, processes, and practices. Its February “please investigate us” open letter indicates that it is confident of passing any audit to which it would be submitted.
 
The company encapsulated its modest (for Huawei) 10% growth strategy for 2011 as “expand in devices, lead in networks, establish in IT solutions.” Focusing on “all-IP” and expanding services will be key to strengthening its carrier business. A side trip for analysts to its new 12-building, 10,000-person Beijing R&D campus made Huawei’s IP ambitions concrete (no pun intended).
 
But Huawei’s real ambitions lie in devices and enterprise/IT. It has big plans to grow its device business, including smartphone, dongle, tablet, and set-top boxes, and to establish a consumer brand. Its nascent enterprise/IT business, which it claims already comprises 10,000 employees and $2 billion in revenue and spans government, energy, transportation, and finance, is meant to significantly increase its addressable market.
 
Establishing a global consumer brand, expanding into enterprise/IT, and consolidating its position in carrier networks give Huawei three very different sets of customers to woo and competitors to fend off, which may be too ambitious, even for Huawei.
 
Huawei’s cloud strategy is surprisingly detailed
 
Huawei’s cloud strategy, comprising hardware (compute, storage), software (virtualization, distributed file system, database management), and services (“cloud in a box”), was a well-kept secret. Huawei’s overwhelming barrage of claimed cloud capabilities included a platform, “SingleCloud,” integrated content distribution networking and caching, and policy and charging control.
 
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