Hidden dragon Huawei: 'We’re making increased efforts at transparency'

Can the telecoms kit maker make it big in biz IT?


Huawei sent out a clear signal to its competitors in the global enterprise IT market on Tuesday with predictions of stellar growth for the vendor’s smallest business group over the next five years to reach revenues of $10bn by 2017. But analysts are sceptical about its chances of becoming a genuinely disruptive alternative to the likes of industry veterans Cisco, HP and IBM.

First the headline-making predictions, which came during various keynotes and press briefings at the Chinese tech giant’s global analyst summit in Shenzhen attended by El Reg.

Enterprise business group president William Xu said his division would reach worldwide revenues of $2.7bn, a whopping 45 per cent up on 2012 figures of $1.9bn (£1.2bn). Last year, in turn, was up 25.8 per cent on the figures from 2011, so it’s clear this part of Huawei’s business is growing pretty rapidly – more than any other in fact. To put it in perspective, Huawei’s bread-and-butter carrier business grew only 6.7 per cent last year, while the consumer group, which includes the rapidly growing device business, fared better at 8.4 per cent.

It’s clear that Huawei expects its enterprise group to take an increasing amount of the responsibility for corporate sales growth in the future, as the carrier infrastructure biz slows. The firm’s corporate controller CT Johnson revealed at the event that Huawei expects the share of overall revenues from carrier network sales to drop from 73 per cent to 60 per cent up to 2017.

There have been some questionmarks over the accuracy of some of these bold revenue estimates, however, after a previous claim that the enterprise business would hit $15bn by 2017 was revised down to $10bn. EPG president William Xu said the disparity was down to the habit of the enterprise group in its early days of using “contract sales” rather than total revenue for its business estimates.

“From 2011-12 the enterprise business was in a phase of start-up, so there have been adjustments in planning … and how we grouped accounts,” he said. “Small businesses often use contract sales figures to look more attractive. Now we have a requirement that all figures are recorded as sales revenue.”

So where does Huawei expect to make all this cash? Well, unsurprisingly, the vendor is strongest in its core area of networking kit – this part of the enterprise business aims to generate $1.4bn of the $2.7bn total for 2013.

The enterprise IT unit is fastest growing, however, aiming for a 65 per cent increase this year to reach $600m, flogging cloud and datacentre infrastructure, while unified comms aims to bring in a shade less ($550m), tapping Huawei’s strength in the network space. Its security and storage capabilities, meanwhile, were significantly enhanced after it bought out Symantec from the pair’s Huawei Symantec JV last year.

As with other parts of this sprawling technology giant, organic growth through heavily R&D-backed innovation is a core tenet, with R&D spend rising to over 13 per cent of total revenue last year. Xu was also at pains to stress the importance of co-operation with industry partners and building open, standards-based products that can easily slot into enterprise systems.

The firm has also managed some big name customers in the two years since the enterprise group was officially launched: building a cloud-based Universal Distributed Storage (UDS) system for number crunching on a giant scale at CERN, and a Huawei T-Series-based storage system for the world’s biggest utility – State Grid Corporation of China.

Forrester analyst Bryan Wang told The Reg that Huawei excels at making good quality kit at an attractive price. “With that, they will have good chance to grow in most of the enterprise product segments they are playing. Servers, storage and UC are classic examples,” he added. “With their legacy carrier network expertise, making enterprise routers and switches is also rather easy for Huawei, especially in terms of large scale and high end products. They are at the same level as Cisco or Juniper in that space.”

However, reaching that $10bn figure by 2017 will be a real challenge for Huawei, according to IDC analyst Ian Song. “Even in the dramatic growth mode it’s in, its key market is still the home one and there’s only so far you can grow in China,” he told El Reg. “It’s showing great traction in emerging markets but that’s not where the money is in the next few years. It has to penetrate developed markets.”

The United States is unlikely to feature among those developed markets anytime soon either, after exec vice president and one of Huawei’s three alternating CEOs Eric Xu claimed the firm is “not interested in the US market anymore”. Aside from being named as a national security risk by that high profile congress report last November, the firm could be affected by a new US bill which effectively prohibits certain government agencies buying tech from any vendor thought to be “owned, operated or subsidised” by the People’s Republic.

Now Xu’s comment may have been more aimed at the carrier networks business but it will certainly have huge implications for the enterprise business, given that he also claimed the two “are very related to each other”. Either way, the fall-out from Huawei’s treatment in the US and to a lesser extent Australia, India and other hostile countries is a problem for the firm.

Broader topics


Other stories you might like

  • Microsoft fixes under-attack Windows zero-day Follina
    Plus: Intel, AMD react to Hertzbleed data-leaking holes in CPUs

    Patch Tuesday Microsoft claims to have finally fixed the Follina zero-day flaw in Windows as part of its June Patch Tuesday batch, which included security updates to address 55 vulnerabilities.

    Follina, eventually acknowledged by Redmond in a security advisory last month, is the most significant of the bunch as it has already been exploited in the wild.

    Criminals and snoops can abuse the remote code execution (RCE) bug, tracked as CVE-2022-30190, by crafting a file, such as a Word document, so that when opened it calls out to the Microsoft Windows Support Diagnostic Tool, which is then exploited to run malicious code, such spyware and ransomware. Disabling macros in, say, Word won't stop this from happening.

    Continue reading
  • CISA and friends raise alarm on critical flaws in industrial equipment, infrastructure
    Nearly 60 holes found affecting 'more than 30,000' machines worldwide

    Updated Fifty-six vulnerabilities – some deemed critical – have been found in industrial operational technology (OT) systems from ten global manufacturers including Honeywell, Ericsson, Motorola, and Siemens, putting more than 30,000 devices worldwide at risk, according to private security researchers. 

    Some of these vulnerabilities received CVSS severity scores as high as 9.8 out of 10. That is particularly bad, considering these devices are used in critical infrastructure across the oil and gas, chemical, nuclear, power generation and distribution, manufacturing, water treatment and distribution, mining and building and automation industries. 

    The most serious security flaws include remote code execution (RCE) and firmware vulnerabilities. If exploited, these holes could potentially allow miscreants to shut down electrical and water systems, disrupt the food supply, change the ratio of ingredients to result in toxic mixtures, and … OK, you get the idea.

    Continue reading
  • 1Password's Insights tool to help admins monitor users' security practices
    Find the clown who chose 'password' as a password and make things right

    1Password, the Toronto-based maker of the identically named password manager, is adding a security analysis and advice tool called Insights from 1Password to its business-oriented product.

    Available to 1Password Business customers, Insights takes the form of a menu addition to the right-hand column of the application window. Clicking on the "Insights" option presents a dashboard for checking on data breaches, password health, and team usage of 1Password throughout an organization.

    "We designed Insights from 1Password to give IT and security admins broader visibility into potential security risks so businesses improve their understanding of the threats posed by employee behavior, and have clear steps to mitigate those issues," said Jeff Shiner, CEO of 1Password, in a statement.

    Continue reading

Biting the hand that feeds IT © 1998–2022