Huawei lets loose its technological ambition
Huawei may call it a “stand” but the hangar that looms over part of the Mobile World Congress in Barcelona leaves little doubt about the scale of the Chinese telecoms group’s ambitions.
Entry is not easy. A stern reminder of no photography is a final warning that here lies Huawei’s latest technologies and services that it doesn’t want its competitors to see, a far cry from just a few years ago when it was seen as the imitator desperate to copy the more established European and US groups such as Motorola and Ericsson.
Inside, rooms covering two floors teem with potential customers looking at the latest products that Huawei says will make networks more powerful, cheaper, easier to manage and more energy efficient.
To describe the company as just a telecoms equipment maker underplays a business that offers to build an entire ecosystem around an operator, ranging from broadcast masts and data centres to managed services and software, as well as handsets using its own chip set pitched against the highest-specification Android phones made by the likes of Samsung.
Huawei’s bunker shows off antennas that follow a phone user for maximum efficiency, instant video facilities for schooling and healthcare, traffic and surveillance systems with facial recognition, data centre designs and services, and miniature small-cell blocks capable of next-generation networks – as well as its latest handsets and tablets.
Both Huawei and ZTE, its Chinese rival, have stepped up their game producing smartphones and Android-based PC tablets that match or in some respects surpass the offerings on display from other manufactures, analysts said. Huawei’s Ascend 48 HD smartphone, launched here, is one of the first handsets to feature the latest version of the Android operating system and used a powerful quad core microprocessor – developed in-house.
Huawei introduced two handsets while ZTE launched eight, notes Dimitris Mavrakis of Informa Telecoms & Media. “The Chinese vendors . . . are clearly looking at the device business to grow top-line revenues and the increasingly competitive infrastructure market,” he said.
Huawei wants people, not just those businesses that buy equipment, to know its brand. It has appointed BBH, the ad agency, to develop its identity among consumers. This is a first for a company that has long been perceived outside China to be secretive, something that has contributed to problems in trying to increase its business in the US.
It is no wonder, as one industry analyst says, that rival groups in Europe are terrified of the competition coming from China. One senior executive says the quality of Huawei’s products has improved markedly in the past few years and it can no longer be written off as a cheap copycat.
This has meant pricing pressure and falling margins for companies such as Nokia Siemens Networks and Alcatel-Lucent, and also a forced change in strategy on less easily replicated managed services and next generation mobile broadband equipment.
Huawei’s presence is nearly matched by ZTE, whose name is beaming on to the palace at the top of the Barcelona conference venue in the evenings, and pressed on to every delegate’s entry passes, in its own global push.
ZTE has become the fourth-largest handset maker in the world by sales volumes on the back of its cheap but capable phones that are often used for unbranded sales, and the company is as much focused on its equipment business.
Wei Zaisheng, chief financial officer of ZTE, says the company plans to facilitate access to funding for regional partners, such as additional equity from potential investors and debt from banks to help them expand, though ZTE will not take equity stakes. He declined to identify the sources of funds to which ZTE has access, adding that process was at an early stage.
“The new strategy we have is to tailor make a technology solution with a financial package to help [operators] rapidly grow market share in a sustainable way,” says Mr Wei. “It doesn’t matter if the money comes from Europe, America or China.
“We hope to position ourselves to lead the development of good potential players. When we grow up with strategic partners then we can position ourselves with a bigger market share.”
Huawei and ZTE have yet to report 2011 figures but Mr Wei said ZTE had grown at twice the speed of the industry last year. He pointed to analyst estimates of a 33.4 per cent increase in revenue in the first three quarters, although declined to give revenue numbers that were still being audited.
Competition from ZTE and Huawei is only set to intensify. Huawei allocates almost half of its 140,000 staff to research and development. This is key in a sector where revenues are under pressure from a decline in traditional businesses such as voice calls, and new technologies are needed to keep up with the demand for data from mobile customers.
That many of those will be using either ZTE or Huawei handsets is just another piece of the pie for the Chinese groups.
Huawei lets loose its technological ambition - FT.com
