Huawei Faces Uphill Battle In Enterprise IT Market


If you follow network and telecom industry news in the U.S., most of what you hear about Huawei, the Chinese maker of IT infrastructure equipment, is negative. Articles have detailed how various governments and private entities worldwide have placed restrictions on Chinese infrastructure technology in general or on Huawei in particular. The claims against Huawei range from it being a quasi-private extension of China’s army to an intellectual property thief to a maker of poor-quality products.

What you rarely hear is that the 25-year-old company is the world’s second-largest producer of telecom gear, generating $35.5 billion in revenue worldwide last year. Its main markets outside of China are Africa, Latin America and the Middle East, where its value proposition is to offer solid, low-cost infrastructure equipment. Almost three-fourths of its revenue comes from telecom gear, about 22% from consumer phone handsets and 5% from enterprise IT.

The negative rhetoric is so damning that it seems inconsistent with Huawei’s success. Could a company with annual revenue of more than $35 billion, most of it from outside of China, be run or influenced by shadowy military figures? Would the presence of Huawei on the world stage as a respected provider of complex and critical technology be worth as much or more to the Chinese government than what could be stolen through cyber espionage performed on the back of Huawei products?

Yet it’s true that Huawei’s founder, Ren Zhengfei, was a major in the Chinese army, where he served with distinction, and there can be no doubt that his military experience and connections helped the company’s initial success in China. And Huawei and the Chinese government haven’t provided enough transparency to prove it’s an independent company.

Many governments are unconvinced that the security of Huawei’s products can be trusted. India, Australia, the U.S. and others have worked to ban Huawei and ZTE (a smaller, more obviously state-owned company that deals in telco equipment and handsets) from national core networks.

Huawei Faces Uphill Battle In Enterprise IT Market
Wed, 29 May 2013 14:45:00 GMT

Barry Hesk

Intrinsic Network Solutions

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