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Partnerships Grow a Multi-Billion Dollar Industry

By Zane Wei, Director of Business Development Department, Huawei Intelligent Computing BU

Huawei’s intelligent computing business began in 2002 with the launch of its first line of telecom servers. At the time, Huawei was focused on core network, wireless, and software products that were all relatively isolated systems. The larger application ecosystem was still primarily inward-facing. In 2006, Huawei began to produce customized rack servers for specific industries, such as Internet customers. Over the following years, these products were rolled out to ecosystem partners. However, applications continued to be developed by customers. Huawei’s ecosystem efforts focused on the bottom-layer components, such as the Basic Input/Output Systems (BIOSs) and Operating Systems (OSs), and did not involve upper-layer applications.

As the company entered the enterprise market, Huawei servers were adopted throughout the telecom, finance, and energy industries. This required close collaboration with Independent Software Vendors (ISVs) and System Integrators (SIs) to sell products, as well as compatibility with various applications. Therefore, building a robust ecosystem not only enabled Huawei to serve customers better, but also to drive the development of server products more generally.

Today, Huawei’s server business has transformed into an intelligent computing business, with a dedicated business department and a goal to help intelligent computing become a USD 10 billion (CNY 67.7 billion) industry. This objective will require Huawei’s continuous investment in ecosystem collaboration. A strong ecosystem not only positions the industry to achieve its multi-billion dollar goals, but helps Huawei cultivate differentiated advantages to compete in the marketplace.

Build High-Quality Products

From the beginning, Huawei has set clear targets in the server market. One target was to build high-quality and broadly compatible server products. The company has achieved these goals by leveraging its strengths in chip and reliability design, its engineering expertise, as well as its peerless test capabilities in the telecom field.

For horizontal and vertical ecosystem partners, integration with Huawei products requires secondary investments so Huawei must prove its value before durable bonds can be formed between the cooperating parties. Such bonds will lead to products that are more competitive and more satisfying to customers. In such a context, products of outstanding quality are the prerequisite. For example, Japanese customers place a premium on stable and reliable servers as they are a business necessity in the earthquake-prone country. Huawei server products undergo thousands of simulated vibration tests in the lab to ensure their continued operation during the roughest quakes. This uncompromising quality is the basis of Huawei’s business success throughout East Asia.

Higher quality also equals proportionally great investments, often at the expense of price advantages. Can a price reduction be justified if it compromises product quality? This was the predicament faced by Huawei’s server management team; and their answer was “No.” Huawei goes to exceptional lengths to hone product quality, despite the loss of some orders. In this way, Huawei has built high-quality products its partners can always count on.“Never compromise on product quality” is the motto of Huawei’s intelligent computing business. It is also the guiding premise behind the collaboration between Huawei and its ISV and SI partners to build intelligent computing products. Superior quality has become one of Huawei’s hallmarks.

Value Chain Integration Makes 1 + 1 Greater than 2

Huawei’s intelligent computing business focuses on innovations created by the implementation of open-source interfaces for third-party access to the underlying hardware and basic software layers. In keeping with its commitment to build servers with customers’ requirements in mind, Huawei works with partners in various industries to integrate the value chain and launch combined products for customers. This achieves ‘1 + 1 > 2’ results and creates more value for customers.

  • Huawei and Microsoft launch the Huawei-Microsoft Azure Stack Hybrid Cloud solution. After the Azure cloud solution’s successful launch, Microsoft quickly became the world’s third largest cloud service provider, and began to extend its public cloud capabilities to the private cloud market. The private cloud market was also a focus of Huawei’s server business. Therefore, after high-level interaction between the two companies, Huawei and Microsoft decided to launch a joint Huawei hybrid cloud solution for Azure Stack. The solution was quickly recognized as a new choice for customers to access cloud services upon its release in April 2018, and the orders have kept coming in ever since.
  • Huawei and Red Hat sell bundled OS on Huawei servers with special quotation. In the early days, Huawei sold server-related hardware, but no OSs. OS vendors such as Red Hat were aware that, despite high sales, very few of Huawei’s servers shipped with a bundled OS. After several rounds of discussions, Red Hat and Huawei reached an agreement and decided to launch the OS sales Special Pricing Quotation (SPQ) model. This sales model pairs Huawei servers with Red Hat OS for some key accounts (for example, China Mobile). Under this arrangement, Red Hat provides Huawei with SPQ products to increase the sales volume of Red Hat OS products; Huawei sells the servers with a built-in OS to increase server profits; and customers buy packaged products at lower prices. This solution is a win for all parties.

Joint Innovation Benefits Customers

Huawei collaborates with partners to leverage both parties’ existing advantages when building server products, which creates new value points for customers.

Based on years of experience in technological innovation, and refined insights into future technology trends, Huawei predicted that big data and Artificial Intelligence (AI) would become mainstream server applications. Back when Huawei made this prediction, servers were still focused on traditional applications, and server architectures did not support big data processes. Therefore, Huawei’s Research and Development (R&D) team worked with Solid-State Drive (SSD) component suppliers to develop the industry’s first Peripheral Component Interconnect Express (PCIe) SSD accelerator card with a focus on big data applications. Soon after its market entrance, the PCIe SSD card became a significant selling point for Huawei servers; it not only helps customers boost their big data processing capabilities and deliver new value to clients, but it also significantly improves the profitability of Huawei servers. Looking ahead, Huawei will continue to work with suppliers, partners, and ISVs to create greater value for customers and build a robust industry.

Laying the Groundwork for a Multi-Billion Dollar Industry

Huawei has launched a series of server products based on the x86 architecture. Because the intelligent computing industry has built a mature ecosystem on the x86 system, the industry chain is complete. In keeping with Huawei’s business development plan for intelligent computing, the company also released a line of server products based on the Advanced Reduced Instruction Set Computer (RISC) Machine (ARM) architecture and AI-processor design. The ARM ecosystem will continue to grow and meet customers’ requirements for new application scenarios.

The construction of a complete ecosystem is a very difficult undertaking; and Huawei has made the long-term investment and collaborative agreements with partners needed to achieve this goal. Huawei’s long-term strategy is based on ecosystem development. Through strategic investments, Huawei works closely with ISV and SI partners to foster an open industry based on shared success. This cooperation lays the groundwork to build an intelligent computing industry valued at USD 10 billion (CNY 67.7 billion).

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