Who's afraid of the big bad Huawei?

Who's afraid of the big bad Huawei?

Summary: commentary Whatever Huawei does in the Australian market this year, one thing is sure: its competitors will be watching closely. The Chinese networking vendor has earned a reputation for winning deals by savagely undercutting their prices.

commentary Whatever Huawei does in the Australian market this year, one thing is sure: its competitors will be watching closely.

Renai LeMay, ZDNet Australia The Chinese networking vendor has earned a reputation for winning deals by savagely undercutting their prices.

And although it only has a relatively short history down under, several large contracts have already come Huawei's way.

The nation's second-largest telco Optus announced in February last year that Huawei would supply the network hardware used to build its next-generation ADSL2+ network.

And in December last year Zimbabwean mobile phone operator Econet announced Huawei would supply third-generation (3G) mobile phone hardware for a new service to be based in Auckland.

Vendors like Ericsson -- which currently has 1,400 engineers building Telstra's new national 3G network and is also a leading ADSL hardware supplier -- must be horrified at these developments, given the amount of money involved.

Optus alone will spend around AU$150 million on its new network.

Certainly the local telcos and CIOs -- who can only benefit from the increased competition -- are all too aware of what's going on.

AT&T's local managing director Jeyan Jeevaratnam told your writer yesterday his (predominantly large enterprise) customers were moving away from a Cisco-centric mentality.

"I think two years ago it was all Cisco, and I think that's changed," he said.

"Our customers are saying, we want to be able to use Juniper, we want to be able to use Huawei, we want to be able to use Polycom -- from a routers and a video conferencing perspective -- and Avaya for IP telephony, and Siemens and so on."

In any case Huawei has made it plain it plans to stay.

The vendor -- previously located in Melbourne -- announced in December its new Sydney HQ situated next to Vodafone's office in Chatswood would form "the nerve center of Huawei's operations in Australia, New Zealand, South Korea, Hong Kong and the South-Pacific Region".

But wait, there's more.

"The decision to locate its East-Pacific headquarters in Sydney is largely due to Huawei's belief on Australia's strategic location in the Pacific Rim and that the country itself boosts a rapidly developing next generation telecommunications infrastructure with a highly-skilled workforce," the vendor's Web site states.

Huawei has also joined the influential industry body the Service Providers' Association, signalling its intentions to play a part in the development of policy, and signed local distributors for enterprise hardware.

With the billions of dollars the large carriers are currently allocating, and a renewed interest from enterprise customers in next-generation converged networks, who could blame Huawei for wanting a piece of the pie?

The question will be, of course, just what level of service customers can expect from a vendor competing primarily on price.

What do you think Huawei's impact will be? Are their prices too low to sustain or will they win significant business from the incumbents? Send your thoughts to renai.lemay@zdnet.com.au

Topics: Telcos, Cisco, Mobility, Networking, Optus

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  • Why bad???

    Why is cutting price bad for customers? Apparently the author has been bought the other big fat overpriced companies.
  • Author response

    hi there,

    thanks for your comments. Of course prices going down is fantastic for customers! My point in this article was exactly that - that Huawei are likely to shake up the market a bit in Australia.

    However, like any relatively new supplier, the question must also be asked - what is their service like.

    Kind regards,

    Renai LeMay
    (the author)
  • Worrying Service

    I've actually got a stack of Huawei gear on my desk at the moment. I'm having a few drama's atm which is turning me off it though.
    a) I can't seem to download anything off their website. I can find the links, but the downloads always die. This has happened over a period of 3 months, so it's not transient
    b) the website is SLOW (chinese filtering anyone??)
    c) Their local disty seems pretty useless, hasn't returned my calls, and their links for software downloads for all the products leads to "sorry not yet available"

    So i've got this product, am willing to play with it, but can't get the software images, or the manuals for their IOS clone that is different enough to require some reading.
  • Who's afraid of the big bad Huawei?

    Why is a shake up of the market bad? It would cause the other vendors to stay on their toes and ultimately lower their prices too. Or are u advocating that we pay the exhorbatant prices of other big name vendors. How would a shake up of the market harm Australia in general other than the other big name networking companies? Did anyone say,"Big Bad Cisco" or "Big Bad Juniper" when they first appeared here? And Cisco even dominated the entire networking market for awhile. If anything I think market domination is bad, because nobody would have a choice, would they? Or are u saying that Hua Wei is big and bad simply because it is from China?
  • Author response

    hi Joe,

    I'm actually saying that a shakeup of the market would be good - for all the reasons you outline. The point is that Cisco, Ericsson and other vendors have reason to watch Huawei carefully - not that IT managers or telcos have reason to fear Huawei. IT managers and telcos can generally only benefit from downward price pressure on vendors.

    Kind regards,

    Renai LeMay
    (the author)
  • Why bad???

    Lower prices isn't bad of course.
    But if you ever seen the Linux vs. Windows debate, the same arguments can probably be used in this case as well.

    If the product is the same, but the price is lower, then it's not difficult. Problem is to find out the differences in the product before you buy.
  • Worrying Service

    John Griffin, Perhaps you could contact me directly and I can assist with software images and/or manuals.
    Call direct on 02 94686703
  • Then why other companies buy Huawei's products?

    I guess you just want to say something about a company you do not like. You do not know how to use a software but then blame the product.

    Nobody wants to spend more money to buy a product if one can buy a similar good one with a lower price. Is that right?

    Please do not use color-eyes to comment on things.
  • Ericsson, Nokia Siemens and alcatel-lucent are afraid

    Working for one of the above mentioned companies, I can tell you that Huawei have the most aggressive sales strategy that anyone in this market has ever seen, and Global HQ are taking serious note. Being backed by the Chinese goverment, they are in the position to undercut their products then slowly make back their money through software upgrades and managed services contracts. Once a product is in the operators network its very hard to just replace it with something else, so an expensive SW upgrade can re-coup a lot of lost money. It doesn't help that they pay their grad engineers fresh out of uni peanuts and unlike the developed world they are quite happy to work 100 hours a week 6-7 days a week. You end up getting the value of 10 Huawei R&D Engineers to 1 Swedish or Finnish Engineer. They are only going to get bigger and the big companies need to come to the table with something serious.
  • Huawei

    Huawei is Chinese and doesn't employ Australians - I'm not racist, but there are several instances of parochialism occurring with offshore corporations who practise this. I know because I was put up to them for a role. I am a 20-year Engineer with lots of experience in what they do and I was knocked back flat.
  • Re: Huawei

    As far as I know, there are many local employers in Huawei Australia.
  • Prices cut come via efficiency!

    I believe price cuts come via efficiency / may be price cuts drive efficiency.

    If Huawei is able to provide solution for lesser price, it is clear that their internal organization effeciency is high. This could be their sales efficiency, R&D efficiency, strategy efficiency, operational efficiency etc..

    Every privately owned organization is there to do business. Here it is not the "Politics" but the "Competition" which is the key driver - esp when the business is BIG and the competitors are "old" their egos clash with the young ones who are doing better.

    My lines are open for your comments.
  • Huawei is doing great!

    I have been working on Huawei mobile Core products for almost 4 years now (supporting Huawei core while having MS contract in Ericsson). I have the experience of working in Ericsson too. So far I believe that there is no way that Ericsson or Nokia can stop Huawei from taking the lead since Huawei R4 core product is very very stable and is extremely user freindly as comapred to Ericsson and NSN ones. The features like "internal USER tracer" etc, are super ones!

    And above all, Huawei has extremely smart pricing strategy which Ericsson and NSN cannot meet due to their labour laws!

    Huawei has penetrated europe, Africa, middle east, Asia and Australia as well.

    I my opinion giants like Ericsson and Nokia will have to come to level of Huawei and Huawei is going to force european market to change their labour laws to reduce their labor costs (if they want to exist in competition).
  • 20 yo Engineer

    If you are only 20 years old , how can you have the experience of a telecoms engineers?
  • Yes we are afraid...

    Have to agree with your comments totally.
    Im also one of the 3 you mention.
    Seems we are priced out of a lot of bids by Huawei.

    But the only saving grace (at present) is the perception that the Products they supply are inferior.

    The worry is they are pegging market share and slowly improving performance.

    (time to learn cantonese perhaps)