SHENZHEN, CHINA--Huawei Technologies is readying plans to offer public cloud services beyond its domestic market, venturing into some on its own, but its focus on US remains measured and uncertain.
The Chinese networking giant had positioned itself as "an enabler" of intelligent worlds, building more connections, widening data pipes, and facilitating digital transformation, said Eric Xu, Huawei's deputy chairman and rotating CEO.
Speaking at the company's annual global analyst summit here this week, Xu noted that an "all-cloud ICT infrastructure" was key to enabling organisations in their digitisation journey and Huawei was looking to help telcos build cloud-based capabilities and run digital operational systems.
Noting that cloud services was now a basic business model, he said: "Beginning in 2017, Huawei will focus on public services. We will invest heavily in building an open and trusted public cloud platform, which will be the foundation of a Huawei cloud family [that] will include public clouds we develop together with operators, and public clouds that we operate on our own."
A new cloud business unit had been set up to drive such efforts, he said, which also would focus on key verticals including healthcare and financial services.
This marked Huawei's first move to offer public cloud services outside its domestic Chinese market, where it launched such services in 2015. In a previous ZDNet report, Xu had said the vendor had no plans to do so, preferring instead to work with overseas telcos including Deutsche Telekom and Orange. Company executives added that Huawei needed to ensure it could properly run public cloud offerings in China before looking towards overseas expansion.
Xu acknowledged that Microsoft, Google, and Amazon Web Services (AWS) already were entrenched in the public cloud market and had strong advantages in the US and other developed markets. However, he pointed to Huawei's strong telco partnerships in Europe and its focus on building "local, secured, and trusted" public cloud, which were key considerations for enterprises in these developed markets.
He said Huawei's wide global footprint and capabilities would prove a competitive advantage in emerging markets against the likes of AWS and Microsoft.
According to Zheng Yelai, president of Huawei's new cloud unit, plans were underway to hire 2,000 employees for the business group this year.
Clement Teo, Ovum's principal analyst who was at the summit, said Huawei also had targeted emerging markets with its mobile strategy and was "smart" to adopt the same strategy for its public cloud services.
While developed markets already were crowded with players such as Google and Microsoft, Teo told ZDNet that markets such as Middle East, Africa, and India were "still an open game" and Huawei had well established relationships with telcos that it could leverage to grow its business.
He noted, though, that Huawei appeared to be overemphasising its telco services business and should offer more details about how it was driving its enterprise business. And while the creation of a cloud business unit was "interesting", it was still too early to assess what this could mean for the vendor.
In addition, he said the Chinese vendor needed to look at establishing further credibility in the enterprise space in order to address any doubts that might have lingered from its legal tussles with Cisco Systems over intellectual property rights.
Huawei in 2003 admitted to having duplicated Cisco's source codes in its routers, but said it had done so inadvertently and less extensively than the US vendor had claimed.
The business unit, though, remained the company's fastest growing, clocking a 47.3 percent year-on-year growth rate last year to hit 40.7 billion yuan (US$5.89 billion) in sales revenue. Yan Lida, president of the enterprise business group, said last month at Cebit 2017 that Huawei was expecting the unit's annual revenue to double every other year and likely to hit the US$10 billion target by 2018.
US footprint still small
Teo also highlighted Huawei's small footprint in the US, where it was missing out on a potentially huge revenue stream that could accelerate its target to hit US$10 billion in revenue for its enterprise business. "US will be important for them and, at least, in the long-term, they will need to be in the market. And right now, they're not there or have a very small footprint," the analyst said.
The Americas accounted for 8 percent of Huawei's revenue last year, down from 10 percent in 2015, though actual revenue dollars climbed from 38.9 billion yuan (US$5.63 billion) to 44.08 billion yuan (US$ 6.38 billion) in 2016. The region saw the smallest year-on-year revenue growth of 13.3 percent, compared to 41 percent in China.
The Chinese market remained its largest market, contributing 45 percent of Huawei's overall revenue last year, up from 42 percent in 2015, while EMEA accounted for about a third.
According to Xu, the company's US strategy remained unchanged across its three business units: telco, enterprise, and consumer. Carriers in the US were not a high priority market for Huawei, he said, adding that it would take a "step by step" approach with its US enterprise business. Smart devices currently also were not a priority focus for Huawei in the US, though, he noted that it would be in the future.
With the US currently under an administration that favoured an "America first" mentality and protectionist policies that encouraged bringing jobs back to the country, ZDNet asked Huawei executives if the Chinese vendor might be better off diverting its investment from US and towards friendlier markets such as those in Asia-Pacific.
Catherine Du, Huawei's director of marketing for enterprise, reiterated Xu's comments on approaching the US enterprise market "step by step". She also noted that Huawei was focused on addressing the needs of its customers and this meant the vendor would do whatever, or wherever, they needed Huawei to be.
Asked if that included manufacturing its products in US, Du said it had yet to hear of any request to do so.
Huawei in the past had faced significant challenges and security concerns in the US, where the government accused the Chinese vendor of spying on its government's behalf and urged a ban on its products. Furious over the allegations, Huawei in July 2013 described the US market as a ""commercial disappointment" and declared it was no longer interested in it, instead shifting its focus on expanding in Europe. It later backtracked on its claim to leave the US market.
Based in Singapore, Eileen Yu reported for ZDNet from Huawei Global Analyst Summit 2017 in Shenzhen, China, on the invitation of Huawei Technologies.