This year’s Huawei Global Analyst Summit in Shenzhen felt like it had fewer product and service announcements than last year’s, but nevertheless it managed to deliver interesting insights into the vendor’s changing business focus – not the least of which is the relentless expansion of the vendor’s global-services business – and what might be driving it.
Huawei’s determined expansion of its global-services business continues to deliver results. Its Global Services business unit experienced 21% year-on-year revenue growth in 2013, compared with a mere 4% for the Carrier Network business and 8.5% for Huawei as a whole. Double-digit growth is never easy to sustain over an extended period, but the vendor is not expecting any serious slowdown yet and forecasts that its Global Services business will grow 17% in 2014.
The growth in Global Services is part of a larger business shift taking place within Huawei. The Carrier Network unit accounts for 70% of business, a figure that the vendor expects to fall to 50-60% by 2018 as revenues from its Enterprise and Consumer business units expand. However, it is the services part of the business that will bolster the Carrier Network group’s revenues over the next few years, and the vendor expects Global Services to become the biggest component of its Carrier Network business.
What is driving this growth in services? Clearly, Huawei has a large base of existing network clients and implementations around the world into which it can sell its service offerings. This is something that Huawei’s CEO mentioned in his keynote, although he – or his translator – undersold what is currently occurring in the market by suggesting that Huawei’s services growth was something that just “happened naturally.”
Growing revenues in global services is not quite so effortless: There has to be something that helps the vendor position itself against more-established rivals such as Ericsson, NSN/Nokia and Alcatel-Lucent. In the early days, aggressive pricing played a role, as did Huawei’s willingness to throw any number of keenly priced engineers at an issue, but more recent wins suggest that a well-thought-through CEM strategy is one of the factors helping the vendor expand its services business.
It’s no coincidence that Huawei’s SmartCare CEM offering was one of few specific products or solutions to get a name-check in the opening keynotes at Huawei’s global analyst summit. This comes as little surprise, given the rapid growth this business is experiencing and the support this particular set of tools and capabilities is providing within Huawei’s broader Global Services business.