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Huawei taps IPTV, mobile broadband for growth

Telecom vendor focusing on IPTV, next-gen business support systems and mobile broadband to expand global presence and hit 25 percent year-on-year growth target in 2011, says exec.
Written by Kevin Kwang, Contributor on

China's largest telecommunications equipment manufacturer Huawei Technologies is intent on growing its software division within the Asia-Pacific region as well as break into the U.S. market, an executive revealed. Mobile broadband, business support systems and Internet protocol TV (IPTV) will be key focus areas this year, he added.

According to Henry Hou, branding director at Huawei Technologies, its software and applications division is focused on assisting customers increase revenues and improve operational efficiency through addressing challenges such as the rise of free Internet services. Among telecom operators, specifically, their inability to convert high levels of mobile traffic or bandwidth growth to improved revenues is something that the Chinese company is keen to assist in, he added.

"There will be huge growth in the level of mobile traffic but it will generate very little growth in revenues as telecom operators come to terms with Web 2.0, social-networking services such as Twitter and Facebook and the value they have brought to consumers," he said in an a-mail interview with ZDNet Asia.

Hou noted that Huawei has identified four key focus areas for 2011 to continue growing its software business, namely new-generation business support systems (NGBSS), mobile broadband, IPTV and constructing service delivery platforms.

For NGBSS, in particular, he said that there will be "more opportunities" for the company as telecom operators consider business transformation and are looking to implement IT transformation as the first steps toward that change.

As for service delivery platforms, he cited the example of its Digital Shopping Mall, which was released in October 2010. The Digital Shopping Mall is essentially a hosted service delivery platform with "pre-integrated telecom services, IT applications and a content store" for customers such as telcos, the executive explained.

Some of the notable customers for this offering include the Telefonica Group in Latin America, XL in Indonesia and OTT in Tunisia. Huawei is also in talks with Singapore's SingTel, among others, to implement this service, Hou revealed.

In terms of regions for growth, Hou identified Southeast Asia, the Middle East, Southeast Africa, South Pacific and Western Europe as areas that the software team will be channeling its attention on.

"As we enter into the mobile Internet era, we believe there will be opportunities for growth in solutions [related to] NGBSS and mobile broadband," he added.

With these plans in place, Hou said the software and applications division is aiming to grow 2011 contract sales by 25 percent over last year's US$2.86 billion. The division accounted for 7 percent of the company's overall revenue last year, raking in US$1.99 billion, he noted.

Earlier today, Huawei announced that it aims to more than triple annual sales to US$100 billion in the next 5 to 10 years as it expands into cloud computing and small business networks, according to a Bloomberg report.

Richard Yu, chief marketing officer at Huawei, said in the report that the company's move away from the traditional phone-network market is because of limited growth prospects. In fact, it is projecting sales growth this year to be less than half of the 24 percent revenue increase in 2010 as the company faces challenges such as appreciation of the Chinese yuan, labor shortage and accelerating inflation, added Huawei's vice president Fan Chen in the same report.

"The traditional telecom market will have a growth in volume that can only support our expansion to about US$40 billion in annual revenue. So we are looking to expand our business with enterprise, devices and cloud computing," Yu said.

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