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Thursday, December 14, 2017
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Is Huawei on the way to be a $100 billion company?

Monday, October 30, 2017

Huawei has laid bare its ambitions to become a $100 billion tech giant within the next two years. In an interview with TechRadar Pro, Qui Heng, president of Enterprise Business Marketing for Huawei Technologies, provided clues as to how the Chinese company intends to reach that figure two years ahead of the target it gave itself back in 2011.

100 billion is incidentally also the number of active connections Huawei expects to exist by the time that 5G is (finally) deployed.

In 2010, the company sold $28.3 billion worth of kit and services, and a year later unveiled its “cloud-pipe-device” strategy with a roadmap to reach a twelve-figure revenue by 2021. Back then, the company was the 10th largest mobile device vendor, far behind the likes of Nokia, RIM, Motorola, Sony Ericsson and HTC.

It has, in just a few years, surpassed them all, becoming the second biggest Android vendor behind Samsung. But while devices are great for revenue, the same can't be said for margins/EBITDAE/profits, which is why Huawei has been keen on reinforcing existing partnerships and seeking new ones, not unlike the Microsoft way.

“We are the only one with a full spec solution, we can provide [the] most appropriate solutions for our customers”, boasted Heng, a point that was hammered home by Rohitashwa Pant, SVP Central Industrie 4.0 at German robotic specialist KUKA. He acknowledged that finding a company that can rival Huawei for its breadth of services and solutions is near impossible.

“Huawei is a one stop shop for services, we can provide a comprehensive full spec solution to our partners: connection, storage, cloud compute, IoT platform…”, Heng added.

The immense pool of data accumulated by Huawei over the years means that its depth of knowledge ranks amongst the best in many key enterprise verticals (telco, transportation and logistics, banking and finance etc).

Its experience as a provider of outdoor telco equipment - delivering products that must work reliably either in the freezing cold of Siberia or the scorching sun of the Sahara deserts – allowed it to devise an energy saving data centre solution holistically.

But beyond sensors and a modular rack space design, Huawei can dig deeper to tweak the way a data centre works; by finetuning the very components that populate key hardware parts like. Unbeknown to many, the company is also a recognised fabless silicon designer and uses its Hisilicon Kirin parts in its flagship smartphones (unlike some competitors).

And while Kirin will not replace Intel’s Xeon for traditional workloads, Huawei will adapt it to fulfil other specific duties. A Kirin chip, Heng revealed, is used in the company’s flagship enterprise SSD solution, the Oceanstor Dorado, for compression, decompression and deduplication tasks, with data reduction ratios of up to 7:1 (depending on the types of file).

Storage was a leitmotif weaved into the interview which leads us to believe that Huawei has very big plans in the enterprise storage segment, probably not going as far as competing with Samsung head-on though.

Partnerships are also the main driver to allow Huawei to grow its public cloud business. The company wants to become a top-five player; its CEO, Guo Ping, made a promise to fulfil it at the company’s Connect event in Shanghai and although it will compete solo with Alibaba in China, it has no plans to go alone outside of its home turf.

Instead, expect Huawei to rope in key partners like T-Systems to build data centres in the target territories and use Huawei kit to achieve that. 

The firm’s CEO reasserted back in September that Huawei has set its sights on only 1% of the ecosystem it wants to help build, leaving its partners to feast on the rest. He likened the strategy to that of the three major airline alliances – SkyTeam, Star Alliance and Oneworld.

Then there’s the unquenchable thirst for bandwidth that Huawei is betting on to push optical networks by default in lieu of legacy copper, especially given that the price disparity has all but vanished. “Optical is the only way to go for new projects and projects that come at the end of a life cycle”, Heng quipped.

The former head of wireless at Huawei hinted that hardware will remain the focus of the company’s R&D ambitions with a big dollop of software thrown in. 

As of 2016, more than 80,000 employees (45 per cent of its workforce) worked in Huawei’s research and development division and allocating R&D resources to segments where Huawei can become number one (or cement its leadership) is a key strategy to reach its $100bn annual run-rate. The company also ploughed a staggering 14.6 per cent of its 2016 revenue in research and development.

Ominously, Heng suggested that China will win the 5G contest – if ever there was one – because it has far more 4G base units compared to the rest of Europe; that will allow for a far smoother transition. 

Recent predictions from analyst firm CCS Insight estimate that more than half of the estimated one billion 5G users in 2023 will be in China, and Huawei is well positioned to snatch the lion share of the projected $44 billion expenditure on 5G macrocells between now and 2021.

The largest obstacle to 5G spectrum allocation is not technology, he said, before adding that European governments need to think about improving 4G performance before aspiring to get 5G right.

Huawei previously laid out its vision for 5G stating that it expects latency to drop to 1ms and throughput to rise 10Gbps with a 1Gbps uplink.

By: DocMemory
Copyright © 2017 CST, Inc. All Rights Reserved

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