Eric Xu, Rotating CEO Huawei
Last week Huawei staged its Connect Conference in Shanghai, the all in one event to replace three separate Cloud, Network and Developer’s Congresses.
The three day event showcased the Chinese vendor’s wares and the company’s aspirations to become a global cloud services provider while peppering attendees with all the buzzwords around digital disruption, the cloud and the internet of things that have glazed the eyes of every jaded tech commentator who’s attended a corporate conference this decade.
However Huawei’s pitch came with an oriental twist that could end up tying up its North American and European competitors in knots as the company positions its cloud offerings in the telco food chain.
One of the fascinating things with Huawei is how the company has a panel of three executives who take turns as Rotating CEO, the current incumbent Ken Hu lead the first day’s proceeding with an overview of the company’s cloud and service offerings along with launching an expanded consultancy agreement with Accenture.
It was fellow director Eric Xu who gave a broader overview of the positioning of the company versus competitors like Cisco and Ericsson in a market where both telcos and communications equipment vendors are repositioning themselves as they face genuine, and potentially painful, disruption.
For any business, the last thing we want to see is no change. With change there are opportunities. As the enterprise IT architecture around the world is moving towards the cloud, that is an opportunity for Huawei and we can capture those opportunities for our business growth.
These were defiant statements from Xu as he swatted away a Singaporean journalist’s question about the company missing its target of $10 billion in enterprise sales by 2016. According to Xu that target has been put back two years but Huawei still sees enterprise IT as being a key market.
How Huawei plan to differentiate themselves from other players such as the merged Dell or HP Enterprise comes down to their market knowledge, Xu believes.
From the time we decided to enter the enterprise business several years ago until all the way today we have so many teams talking to enterprises. Over those years we have established a deep understanding of industry verticals and enterprises. I believe we have a deeper knowledge on that side than internet companies. Therefore we’re in a better position to understand the individual needs of industries and companies.
Getting to market though is a challenge for the Chinese company and it sees telcos and consulting firms such as Accenture and Infosys as being their key distribution channels.
At this point of time we have no plans to provide services ourselves outside of China. Our current strategy outside of China is to work together with telecom service providers with the right capabilities for public cloud services.
When asked by one of the US based journalists about the threat of white box and software defined products, Xu was dismissive of what value those potentially market disrtupting factors would have on Huawei’s business.
From our point of view our focus is on creating value for telecommunications service providers and enterprise customers. Whether white box has an impact on our business, only time will tell. One thing I know for sure is you can’t buy white box base stations.
Xu’s defensiveness over white box and software defined solutions is reminiscent of Cisco’s position five years ago when earnest executives and comms people from San Jose explained to journalists over drinks how Software Defined Networking presented no risk to their router business. Time eventually did tell.
Cisco’s experience seems to be a lesson that Huawei’s management has learned in their expansion of their cloud and IT infrastructure offerings. In this, the Chinese company’s evolution is something that not just existing competitors will be watching but also cloud service providers such as Amazon and Microsoft.
My Take
Huawei’s continued shift to the cloud and software makes sense in a world where software defined networking is redefining their industry. That strategy though does not come without risks or challenges.
In moving into enterprise cloud services, Huawei will have to deal with a marketplace that’s stagnant and struggling as Kurt Marko observed in his commentary of the VM World event.
Whether Huawei can compete with the likes of Amazon may rely on its touted openness and customers’ reluctance to being potentially locked into one company’s sandbox along with the ability of their telco and consulting partners being able to sell their products.
Telcos as a major distribution partner may be a problem as well, while it’s understandable providers want to move up the value chain as the development of 5G networks offer the opportunity to offer more products, their track record on executing in value added services is patchy at best. However if Huawei can sell them the kit, the inability of telecommunications executives to manage their own market disruptions is hardly the Chinese company’s problem.
It was also notable also how few North American or non-Chinese Asian carriers were among the case studies being touted by Huawei, reflecting the suspicion of Chinese companies among the close US allies of South East Asia and Australia. Although Intel’s CEO taking the stage on the final day and GE’s involvement show not every US enterprise has problems in dealing with a Chinese company.
Overall, Huawei’s pitch is a very Chinese take on a changing tech and business world. To Western ears, a lot of the disruption talk is both strange and familiar at the same time. For the company’s European and North American competitors, Huawei Connect did send a clear message that they too are responding to a rapidly evolving IT and telecommunications marketplace.
Image credit – via Huawei
Disclosure – Huawei covered most of the author’s travel and expenses. Infosys is a premier partner at time of writing.
