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Huawei targeting premium ICT supplier status (Business-cloud)

Mar 25, 2014


March 17, 2014

Huawei Enterprise, the ICT arm of the Chinese telecommunication giant, is targeting the premium ICT space.

It's hard being an enterprise hardware supplier in the IT business today. Commoditisation has squeezed much of the profit out of the market for those who owned their supply chain and led to mass sell-offs and redundancy. Part of this was happening before the Dot Com crash and the subsequent rise of commodity servers and data centres. Hardware refresh cycles were getting longer even as innovation cycles for faster hardware were getting shorter.

The woes of the big players

What pushed many companies over the edge, however, was companies extending the life of their hardware and then beginning to move to cloud computing. IBM, HP and Dell have all been hit hard. Dell responded by going private so it wasn't further pressured by the stock market. HP has done its restructuring, redundancies and sell-offs in public as it tried to distance itself from over reliance on hardware and make money off of software and services. Such public attention has hurt HP and it is struggling to maintain market share in its core user base. IBM has fared slightly better by moving its managed services over to cloud, investing heavily in acquisitions and recently selling off its x86 commodity hardware business along with 7,500 staff.

Huawei bucks the trend

With all of this, it might seem strange that Huawei would launch an enterprise ICT division into a difficult market. What will surprise many is that not only has it been launched successfully but it is making money. According to Patrick Zhang, President, Marketing and Solutions department, growth in 2013 was up 32% year-on-year from US$1.85bn to US$2.5bn and in 2014 Huawei is projecting another rise of 40%.

While the established IT vendors are busy selling off parts of the production chain and moving towards a more varied and cost driven supply chain, Huawei is consolidating its hold on the hardware it sells. Yelai Zheng, President, IT Product Line, Huawei says "we don't sell the pieces for ICT we sell complete solutions and we manufacture everything ourselves."

In the past 30 years, the larger established IT vendors have taken a similar approach but only where the economies of scale made sense to them. This changed with the growth of small companies focused on single products who were able to do shorter innovation cycles. By selling to the larger companies they were also able to get greater economies of scale and deliver components at a lower cost than these companies could buy.

With many low cost vendors based on China and neighbouring countries, Zheng is very concerned that Huawei should not be seen as a low cost vendor. "There are people out there" he said while pointing to CeBIT, "who can sell the hardware much cheaper than us. We are not low cost. Our focus is on quality and delivering reliability."

To illustrate his point Zheng talked about a UK company that was having reliability problems with servers they had purchased from another vendor caused by heat. "Our servers were able to sustain the level of performance that they wanted because we test for a higher working temperature" said Zheng.

Going after the SSD market

Another example of how Huawei Enterprise is looking to carve out a name for itself is in the launch of the ES3000 PCIe SSD. Huawei is claiming that this is the fastest SSD drive on the market and has installed it in the FusionCube, the platform recently certified by SAP to run their in-memory database SAP HANA.

Henry (Hongbin) Zhang, Server Marketing Director, Cloud Computing, IT Product Line says "we have put software in our drive which helps customers with their data. We can detect hot and cold data and will write out cold data to improve performance. We also understand the data warehouse and use the SSD as a log to help recover data in-memory should the machine lose power"

When asked about longevity of Huawei's SSD, Zhang didn't answer the question directly. Instead he said "the software should consider the balance of the read and writes to try and avoid using only one device. If customers have a lot of SSD drives, they should use technology that can sync large volumes to a lot of devices to balance wear on the devices"

Huawei are using MLC on their drives like many of their competitors such as FusionIO but have stopped short of publishing any technical information as to what they are doing in software to extend the life of MLC to ensure it can match the performance and longevity currently being delivery by competitors such as SanDisk.

Huawei Enterprise is focused on converged systems

One of the key messages for enterprise IT systems buyers from Huawei, is that they are very focused on converged systems. While the FusionCube appears to be just another blade server, Zhang says otherwise. "It is not a blade server because we have put in a second chassis for hard drives. Our competitors need to use a second box for their storage while we have everything in the one place."

This might just sound like a bigger box with two chassis hidden inside it. "No" says Zhang. "We are using a single backplane inside the box to improve the performance." What will be interesting is how long it takes before HP and IBM, the two main blade server vendors, either do the same thing or prove how they can move storage just as fast using other connectors.

ICT is more than just the hardware

Having the hardware is not enough for an enterprise customer. They want to be able to run software that has been tuned for the platform and which will give them the best possible performance. At present, there seems to be no obvious software division within Huawei Enterprise and their stand at CeBIT was dedicated to hardware rather than software and services.

The SAP HANA certification of the FusionCube is good news for Huawei but Zheng is keen to point out that this is not a one vendor solution. "We can run Oracle and other products on FusionCube" he said. What nobody at Huawei was able to say is when the FusionCube will be certified for other solutions.

Software defined everything

At a lot of conferences over the last 18 months, the issue of software defined network, (SDN) application defined networks (ADN) and network functions virtualisation (NFV) have been hot topics. HP has even gone so far as to create a whole new business division around NFV as it seeks to improve its telco market share for hardware systems.

Huawei showed off its own NFV and SDN architecture in London recently and gave more details at Mobile World Congress (MWC). Zheng believes that the telco’s are trying to decouple their hardware and software stacks and this is why Huawei has launched its NFV solutions. When asked where Huawei was with its ADN stack he said "we will make an API [application programming interface] between the orchestrator and the application later. Openstack will be part of the API but we need a different type of API which will act as a platform for the traditional IT area."

One of the challenges the Zheng sees, is the use in IT systems of prioritisation. "Telco does not like the priority approach, they want everything standardised." With a foot firmly in both camps, it will be interesting to see if Huawei can achieve more than IBM and HP, both of whom are working with telco’s on exactly this problem.


Huawei Enterprise has captured a good market share in the enterprise ICT space in just three years. By asserting that it is not a low cost player, it is seeking to put itself in the same space as IBM and HP when it comes to the CTO and IT Director looking at replacement solutions.

It is also targeting the telco market in conjunction with the mainstream Huawei business although political considerations in countries such as the US could seriously hamper its ambitions there.

While it is delivering on its own targets, the lack of an obvious software and services business does raise some questions as to whether it can survive by being the platform of choice for the major software houses. Those companies it wants to be seen as competing with realised that this was a model that they couldn't rely on and now have strong software divisions. Huawei Enterprise needs to think about where it will go in that space in order to be the key ICT provider for enterprises.