Today at the 8th annual Huawei Analyst event in Shanghai, we witnessed the start of a new journey which will see the Chinese infrastructure and solutions giant place large bets in the ICT space.
Reinventing itself as an end to end provider in the Cloud, Pipe and Devices markets is a bold move which was hinted at last year but is now front and center of the company’s strategy. Chief Marketing Officer, Richard Yu set the scene well with a view that we will see a doubling in Mobile Broadband over the next five years and 70% of SME adopting cloud services while network traffic surges several hundred percent. Huawei will continue to bring an engineering and r&d focus to the market with more than 20,000 new staff added in these areas in 2011!
Most significantly though is the ambitious goal of making enterprise ICT a core part of Huawei business alongside Infrastructure and Devices.
Having gone from unknown to market leader in mobile broadband and from niche player to a major global force with its SingleRan approach to mobile networks, Huawei now has set its sights on the enterprise market. Can Huawei compete and challenge the industry’s 800lb gorilla in the enterprise space? Huawei has shown it has the aptitude to solve technical problems and the business prowess to take advantage of disruptive technologies to forge an entry path in new industries. While enterprise ICT has one giant player, there does appear to be discontent in the value chain and there are certainly significant new challenges as consumer side innovation leaks into the business world (iPhone, cloud services, personalization).
The impact of Huawei on the infrastructure market and its leadership in mobile broadband devices (USB modems etc) are well known but did you know Huawei has a significant presence in enterprise solutions? Prior to today, I certainly didn’t. A couple of stats jumped out from the hundreds of PowerPoint slides that we saw today. Huawei Enterprise group has already achieved $2Bn in revenue, employs over 10,000 and boasts over 6,000 r&d staff dedicated to solving enterprise problems in the ICT space.
Huawei has expanded in dramatic fashion with revenues more than tripling since 2007 on the strength of its infrastructure business and growing international presence. Infrastructure represents approximately 2/3 of the company revenue while the fledgling device business accounts for about 17% today. Perhaps most impressively, international sales have reached 65% of total as Huawei has become a truly global player with operations in over 140 countries.
Looking to the future, Huawei has already resourced and positioned strongly in the cloud space with over 2,500 engineers working on the topic and has a vision to leverage its vertically integrated supply chain to help business in select verticals master the transition from IT to ICT.
A $2Bn, 10,000 employee start up in the enterprise space is not a bad starting point. Huawei has the luxury of cherry picking which verticals to go after first while in the long term planning to be a horizontal player.
With presence in 140 countries, established service, repair and customer centers etc, Huawei could become a significant challenger as businesses look to address opportunities in communications, collaboration, video, telepresence and cloud based services and platforms. Huawei is already eating its own dog food with a strong commitment to cloud services in its Shanghai operations which operates approx. 6,000 virtual machines at any given point and has moved many key business processes to the cloud.
Huawei has achieved leadership in the Pipe, has a fledgling position in Devices (more on this tomorrow) and has set out its stall to be a major player in Enterprise as well as the machine of things segment. While there are many challenges ahead in establishing its enterprise division as a global leader, it would be a very brave analyst who would dismiss their chances. Existing enterprise solutions leaders should take note that there is another well funded, well resourced vendor coming to play.