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Huawei Aims for $100B & Cloudified Telcos

Huawei Aims for $100B & Cloudified Telcos
Scott Raynovich
Scott RaynovichApril 11, 2016
11:17 am MT
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SHENZHEN, China — Here at Huawei‘s analyst conference, company leadership presented a vision for a wide expansion of cloud, mobile, and telco capabilities that could make it a $100 billion company by 2020. The company will focus on mobile technologies that can scale to gigabit speeds and 1 millisecond latency, more affordable data processing capabilities, Internet of Things (IoT), and building unified cloud platforms for both enterprise and telecoms based on open and interoperable standards.

Huawei executives made many references to leading U.S. cloud platforms, including Amazon, Microsoft, and Facebook. The message was also focused on how Huawei could help communications providers move as quickly as possible to the cloud model.

What’s remarkable was how open executives were in criticizing the telecommunications industry for falling behind in building cloud providers and delivering customers what they referred to as the “supreme experience.”

Eric Xu, Huawei’s deputy chairman of the board and rotating CEO (Huawei has a system for changing CEOs every six months), described the telecom industry as falling short in providing consumers adequate services and customer experience.

“What Amazon is [is] what telcos want to offer in the future — all online,” said Xu. “Why can’t the telcos do that? Why can’t they use an online system? If the operating system can’t be changed to one that supports ROADS with an Internet architecture, it’s very tough for telcos to meet the needs of consumers and compete with OTT players.”

Huawei’s “ROADS” strategy stands for “real-time, on-demand, all-online, DIY, and Social.” Xu noted that the ROADS strategy has three principles:

  1. All hardware resources must be pooled.
  2. Software architecture must be fully distributed — only with distributed architectures.
  3. Full automation — service provisioning and fault repair should be automated.

Some analysts observed that Huawei was reinforcing that it can be a leader in cloud and software-defined infrastructure.

“Huawei has been out front in the message of cloudifying and driving software-driven transformation of telecom networks,” said Michael Howard, service provider equipment analyst with IHS, during a discussion over lunch. “This could help service providers deliver new, relevant services.”

Xu described the many challenges of supplying a telco infrastructure that can scale to support bandwidth-thirsty applications such as virtual reality (VR): “The biggest challenges are about the applications. The biggest with 5G, enhanced mobile broadband; the other is massive machine communications. The third one is ultra reliable and low-latency connections” for applications such as VR.

In just a few years, these applications will require nearly 10 Gb/s in throughput and 1 ms latency, said Xu. Latency is the biggest challenge to supporting such applications.

Huawei presentations delivered at this company-sponsored event covered a broad swath of both enterprise and telecom technology, hitting the standard hot buzzwords of the communications industry — 5G, IoT, VR, and cloud. Huawei described IoT and VR in particular as the services of the future to fuel what executives described as “$100B B2B” in sales for the company by 2020. Xu said that Huawei can also achieve US$80 billion in the consumer market, promising a business that could reach a staggering $200 billion in revenue.

It’s clear that Huawei’s ambitions are large and cannot be ignored, as it’s now one of the largest technology providers in the world. The Chinese company reported $60.8 billion in revenue and $7 billion in operating profit in 2015 (audited by KPMG), representing a revenue increase of 37 percent year-over-year.

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Scott Raynovich

About Scott Raynovich

Raynovich is the VP of Research and Analysis at SDxCentral Previously, he was Chief Analyst and Publisher of The Rayno Report (www.raynoreport.com), which was acquired by SDxCentral in October of 2015. Considered an expert on networking and service-provider technology, he has been covering these areas as an editor, analyst, and publisher for 25 years. He was the Editor in Chief and Editorial Director for Light Reading for a decade, where he started the Heavy Reading Insider research service. Prior to joining Light Reading, Raynovich was Investment Editor at Red Herring, where he started the New York Bureau and helped build the original Redherring.com Website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog and a Folio award for Best Website. His analysis has been featured on prominent media outlets including NPR, CNBC, The Wall Street Journal, Bloomberg, and the San Jose Mercury News.

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