Can Huawei crack the U.S. data center market?

Summary:U.S. Congressman says American IT buyers should steer clear of Huawei. But the Chinese networking giant is forging distributions in the U.S. in a bid to crack the data center market.

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Credit: Karen Friar

By product line, Huawei looks like any other data center equipment provider. Storage, networking and security software rolls out at a steady clip and market wins---mostly in China and emerging markets---follow.

Except for the U.S., where Huawei is a vendor that rankles national security experts and politicians regularly. When it comes to networking and telecom gear, Huawei is a relatively small player in the U.S. In fact, most IT buyers will recite the top vendors easily---Cisco, Juniper and HP. Huawei might as well not exist.

In emerging markets Huawei is much more successful. In fact, Huawei is essentially the roadblock for Cisco's global expansion. Every large technology player needs emerging markets---the Middle East, Latin America and Africa---to grow. In those emerging markets, where China isn't viewed as a security threat, Cisco more often than not runs into Huawei.

With that backdrop, the U.S. market may not even matter much to Huawei, but the company keeps trying and is eyeing an initial public offering. Whether Huawei cracks the U.S. market will be one of the key themes in to watch in the next few years. And the road is tough.

Rep. Mike Rogers (R-Mich.), chairman of the U.S. House Permanent Select Committee on Intelligence, was blunt on 60 Minutes.

If I were an American company today...and you are looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers' privacy, and you care about the national security of the United States of America.

That House committee on Monday will release a report that will rate Huawei as a security risk. Huawei has also drawn fire in Australia.

More: CBS News: Chinese telecom giant eyed as security threat | CNET: Inside Huawei, the Chinese tech giant that's rattling nerves in DC | ZDNet:  Huawei: We've been unfairly singled out  |  Life at Huawei's Shenzhen HQ: In pictures  |  Huawei gives IPO serious thought  |  Uganda orders probe into Huawei's fiber project  |  Huawei and Intel team up on server, cloud products  |  Huawei in cybersecurity pledge: 'We're not Chinese spies'  |  Huawei steps up expansion in Asia, EU  |  Huawei rails against Aus Govt 'vendor discrimination'  |  Despite NBN ban, Huawei reinvests profits into Australia

Nevertheless, Huawei continues with its plan to expand in the U.S. and work toward softening its image.

To wit:

  • At Interop, Huawei rolled out four storage products based on Oracle's database, Linux and VM. Huawei also provides switches, video conferencing and routers.
  • Huawei also landed U.S. distribution agreement with SYNNEX Corporation in May 2012. It followed up last week with channel deals with Communications Test Design Inc. (CTDI) and Condre Storage.
  • In addition, Huawei formed a support partnership with Essintial Enterprise Solutions Company. Tom York, Essintial Enterprise Solutions CEO, said the company was looking forward in participating in "Huawei's expansion into the U.S. market."

What will an IT buyer do? For now, buyers are likely to steer clear of Huawei. Who would want their data center dragged into a political flap? Over time, Huawei may get a foothold with pricing, products and time. First, Huawei will have to remove itself out of the political and security line of fire.

Topics: Networking, China, Data Centers, Security

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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