Huawei steps up to rescue telecom

Karen Liu/Ovum
02 May 2012

There is a moment in the classic disaster movie story arc when the hero turns to his companions and declares, “Look, I know this is a crazy, bold move, but it’s our only chance.” Huawei recently made such a declaration at its annual global analyst event.

Huawei is expanding from its core telecom equipment market laterally into the larger adjacentmarkets of enterprise IT and consumer devices.

It is also expanding in both directions vertically, relying increasingly on its own silicon supply from subsidiary Hisilicon and attempting to lead its carrier customers into value-added services. But don’t mistake these directions as simply ambition from a large and growing company.

Huawei sees that no existing responses assure that the flood of data traffic can be met with adequate network investment. It has even named its new corporate R&D function “2012 lab,” not only after the current year but also the disaster movie.

Could Huawei 2012 become the next Bell Labs?

Huawei responded to a drop in profits in 2011 by increasingly spending on R&D rather than cutting all expenses. Over the past few years it has continued to hire large numbers of engineers across the board, reaching a total of 62,000 with 11,000 added in 2011 alone. It believes it has matured beyond following or even leading the industry and now seeks to steer the industry direction.

Historically, industry-leading R&D has not been a pure numbers story. Earlier this year at the OFC conference, Huawei made a big push to demonstrate advanced technology both on the show floor and in prestigious post-deadline technical papers. At the time, we speculated that only Huawei is in a position now to take over the industrial research mantle from Bell Labs.

We don’t know at the moment how many of the 62,000 R&D staff are part of the corporate 2012 lab. Whatever happens though, the new research lab is already sounding different from the 20th century model where top researchers were free to pursue their own directions. One of the stated purposes of the corporate R&D function, in addition to business unit R&D, is rapid response to changing needs – a sort of hybrid cloud model for engineers if you will.

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