Switch­ing tac­tics in am­bi­tious new move

Huawei makes bold sales drive with lat­est net­work prod­ucts

China Daily (Hong Kong) - - BUSINESS - By SHEN JINGTING shen­jingt­ing@ chi­nadaily.com.cn

Chi­nese tele­coms gi­ant Huawei Tech­nolo­gies Co Ltd showed its am­bi­tion to be­come a leader, rather than a fol­lower, in the net­work busi­ness field for cor­po­rate clients it re­cently en­tered by in­tro­duc­ing a new line of switches on Thurs­day.

The Shen­zhen-based com­pany un­veiled the Huawei S12700 se­ries of switch prod­ucts that in­tro­duce soft­ware- de­fined net­work ar­chi­tec­ture into cam­pus net­works for the first time in the in­dus­try. At a Bei­jing news brief­ing. Huawei said the S12700 switch will hit the mar­ket in Septem­ber and start large-scale com­mer­cial use in Novem­ber.

Wil­liam Xu, chief ex­ec­u­tive of­fi­cer of Huawei’s En­ter­prise Busi­ness Group, said the new prod­uct holds tech­no­log­i­cal ad­van­tages over ri­vals and will add mo­men­tum to sales of Huawei’s en­ter­prise net­work prod­ucts for years to come.

“The S12700 switch shows the in­dus­try di­rec­tion in build­ing cam­pus net­works,” Xu said. The tech­nol­ogy it con­tains sup­ports di­ver­si­fied trends in busi­ness en­vi­ron­ments, in­clud­ing cloud com­put­ing, ‘bring your own de­vice’ and big data-re­lated an­a­lyt­ics, he added.

Huawei’s move di­rectly chal­lenges dom­i­nant mem­bers of the sec­tor, such as US-based Cisco Sys­tems Inc, in the en­ter­prise net­work equip­ment busi­ness. “Cisco un­doubt­edly takes the lion’s share in the global switch mar­ket but Huawei is quite ag­gres­sive and is aim­ing high to be­come a leader in fu­ture,” said Zhao Hailin, an an­a­lyst with re­search firm IHS iSup­pli.

Un­like Huawei’s tra­di­tional busi­ness with tele­com car­ri­ers, where in­dus­try stan­dards are set by cer­tain global or­ga­ni­za­tions, the in­dus­try stan­dards in the en­ter­prise net­work gear mar­ket are es­tab­lished by those who de­velop the most ad­vanced prod­ucts, Zhao added.

“In the past, Huawei acted like a fol­lower be­cause it was a new­comer in the en­ter­prise busi­ness. Now, the com­pany has sent a sig­nal that it wants to lead the in­dus­try,” Zhao said.

Cisco had a 58.8 per­cent share of the mar­ket for switches, which con­nect com­puter net­works, in the first quar­ter com­pared with Huawei’s 2 per­cent, ac­cord­ing to data from IDC and Bloomberg.

Huawei of­fi­cially ex­panded into the en­ter­prise busi­ness and con­sumer-re­lated smart­phone man­u­fac­tur­ing in 2011, af­ter the tra­di­tional tele­com gear mar­ket got rel­a­tively sat­u­rated.

Huawei’s en­ter­prise busi­ness depart­ment has about 20,000 staff now, ris­ing sharply from just a few hun­dred two years ago. It bought a 49 per­cent stake in a joint ven­ture with Sy­man­tec Corp for $530 mil­lion last year, in the hope of bol­ster­ing its cor­po­rate-se­cu­rity so­lu­tions ca­pa­bil­ity.

“Now we have moved into a fast traf­fic lane,” Xu said at the Bei­jing event. He ex­pects Huawei’s en­ter­prise busi­ness rev­enue to in­crease 40 per­cent this year to about $2.7 bil­lion. By 2017, the com­pany aims to in­crease the seg­ment’s rev­enue to more than $10 bil­lion. “We are quite con­fi­dent about meet­ing that tar­get,” Xu said.

Huawei’s net­work busi­ness for cor­po­rate clients is still small. In 2012, the busi­ness gen­er­ated $1.9 bil­lion in rev­enue, up 26 per­cent from a year ear­lier and ac­count­ing for 5 per­cent of Huawei’s over­all group rev­enue. By con­trast, 73 per­cent of the com­pany’s rev­enue came from its tele­com equip­ment busi­ness, while its smart­phone busi­ness ac­counted for about 22 per­cent.

How­ever, Huawei hopes its sales from its en­ter­prise busi­ness will ac­count for 15 per­cent of the to­tal rev­enue by 2017. Its share of the tele­coms equip­ment busi­ness is ex­pected to drop to 60 per­cent by then, from 73 per­cent in 2012.

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