Huawei seeks growth in enterprise network business
Huawei is attempting to gain a firmer grip in the enterprise market by diversifying and developing communications gear used by the corporate world to build personalized campus networks.
The Chinese telecommunications equipment manufacturer, one of the largest in the world, is still a minor player in the manufacture of equipment specifically designed to cater for the needs of the average enterprise client.
Cisco and Juniper currently rule the roost, but as reported by The Wall Street Journal, Huawei wants a slice of the action.
The enterprise market generated $1.9 billion in revenue for the company last year. In an interview, Huawei senior executive William Xu said that the Chinese firm aims to increase revenue in the enterprise segment to $2.7 billion this year, an increase of 40 percent.
By 2017, the telecommunications equipment maker wants the enterprise market to generate over $10 billion a year for the company.
Xu says that Huawei is "quite confident" about meeting this target.
In the first half of 2013, the company enjoyed a 10.8 percent increase in revenue, recovering from a poor first half in 2012 where profit dropped 22 percent -- which Huawei blamed on the state of the global economy. Huawei has set a target of 10 percent compound annual growth rate for the next five years.
Although revenue is increasing across the board, the market for telecoms equipment in the United States remains a disappointment to Huawei. Scott Sykes, Huawei's vice president of international media affairs admitted that there were no opportunities for the Chinese telecoms equipment manufacturer across the pond in the foreseeable future, and as a result, the firm has began focusing on European markets.
"Despite the fact we have done our best to communicate about our company, and have been in business for 26 years with telecom operators around the world, the challenges we face in the U.S. are not about Huawei or the security of our equipment," Sykes told ZDNet.
The United States situation shows how volatile the telecom-equipment business can be, and so diversifying products could become crucial for the company's future success. Demand tends to be stable, and as more companies adopt cloud computing and extend their networks to include mobile devices -- especially when introduced through bring-your-own-device schemes -- the market for enterprise-grade solutions could be a major profit driver.
However, with fierce competition from U.S. players, Huawei may find securing enough sales channels problematic.
Towards this end, Xu said the firm is increasing its research and development budget for enterprise network equipment, and expects this trend to continue in the foreseeable future.