Huawei plans to expand the enterprise network equipment market to challenge Cisco and Juniper

On the afternoon of August 8, Beijing time, as one of the world's largest telecommunications equipment suppliers, Huawei is working to diversify its business, develop communications equipment for enterprise customers, and help it build its own campus network.

Broad prospects

Although Huawei has become a giant in the telecommunications industry, it still has a small market share in the enterprise network equipment market. The leading companies in this field are Cisco and Juniper Networks. However, because Huawei has surpassed strong Western rivals in the telecommunications equipment market in recent years, the company believes that they are fully capable of gaining competitiveness in a new field.

In an interview, Xu Wenwei, director of Huawei's enterprise network business, predicted that the company's revenue from this business will increase by 40% this year, reaching about $ 2.7 billion. By 2017, the company plans to push this revenue to more than $ 10 billion. "We are very confident to accomplish this goal." Xu Wenwei said.

For Huawei, enterprise network equipment is still a new business. The company generated $ 1.9 billion in revenue through this business last year, a year-on-year increase of 26% and only 5% of its total revenue. In contrast, the company's telecommunications equipment business contributed 73% of revenue, and the mobile phone business also contributed 22%.

Matthew Ball, an analyst at market research firm Canalys, said that expansion into the enterprise network market is very important for Huawei because of the potential for fluctuations in the telecommunications equipment business, and Huawei can benefit from a more stable source of growth for enterprise network equipment .

Paul said that the investment of telecom operators is easily affected by the economic environment, but there are many potential customers in the enterprise network equipment market, and it is more stable.

Huawei sees opportunities in the enterprise network equipment market because the market will undergo major changes, and more and more companies have adopted cloud computing technology and the “employee bring their own device” (BYOD) policy. Xu Wenwei believes that the growth potential in this area is greater than that of telecommunications network business.

Obstacles still exist

Benefiting from years of accumulation in the telecommunications network field, Huawei does have a lot of technical resources, but to develop enterprise network business, the company still faces many obstacles.

One of the major challenges is to build sales channels. Huawei is the world's second-largest telecommunications equipment supplier after Sweden's Ericsson, but selling network equipment to enterprises requires the establishment of new distribution channels.

"This is a very difficult market for Huawei." Paul said. He pointed out that Cisco and Juniper have already established a huge sales network around the world, with a large number of sales partners. "It takes a lot of time and investment to build a dealer network." The company said.

"More and more sales partners see our potential." Xu Wenwei said. He said that there are currently about 3,000 partners worldwide selling Huawei's enterprise network equipment, and more potential partners have shown interest.

On Thursday, Huawei released a new switch product. Switches can connect PCs, mobile devices, printers, and data centers to create a network. Huawei said that this new software programmable switch will be available in September. The product can be upgraded through software updates, so when users want to add new features, they do not have to replace the new switch every time.

Xu Wenwei said that the company has invested US $ 600 million in research and development funds in the field of enterprise network equipment this year, compared with only US $ 500 million last year. He also expects that Huawei's R & D expenses will increase further.

Xu Wenwei said that Huawei's enterprise network business currently contributes about half of the company's overseas revenue, and overseas markets such as Europe, Latin America and Asia have performed strongly.

But the company faces a severe environment in the United States because Huawei ’s telecommunications equipment business has been rejected by the United States. The US Congress issued a report last October, recommending that telecommunications operators in the country not to use Huawei equipment to avoid threats to national security. But Xu Wenwei said that Huawei will operate in any place with potential users.

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