SHANGHAI--As the market for telecom network equipment continues to shift, Chinese vendor Huawei is striking out into a related field--technology sales to large businesses--as a way to diversify its revenue sources and make use of its learnings in the telecoms market.
And the company has shown some significant progress in sales to the enterprise: Huawei said it passed $2.5 billion in enterprise revenue last year and is on track to post $3.5 billion in revenue this year in enterprise sales. The company said it has had a compound annual growth rate of 40 percent in each of the years since it launched its enterprise business in 2011, and based on that growth the company expects to grow its enterprise business to $10 billion annually by 2017. Company executives discussed Huawei's progress in the enterprise sector during a company convention here.
It's no real surprise that Huawei is looking to bulk up its revenues with sales of equipment and services to big businesses. Many of the same technologies it sells to wireless and wireline network operators--including switches, gateways, software-defined networking technologies, virtualization and cloud storage and processing--are also in demand among big businesses looking to move away from dedicated legacy storage and equipment and into more agile products.
However, much of Huawei's enterprise sales to date have been to Chinese businesses. The company said it continues to work to expand its enterprise business into emerging and established markets, including the United States, though many of its prize customers are located in its home country of China. Executives in Huawei's enterprise business group repeatedly declined to break out Huawei's enterprise sales by region.
Huawei doesn't sell any of its technology direct to enterprise customers; instead it relies on channel partners and other indirect sources to get its products into customers' hands. In many cases, wireless and wireline carriers sell Huawei's equipment to big businesses, though Huawei executives generally shy away from naming the company's top carrier sales partners.
Huawei's enterprise products range from servers to data centers to cloud services, and are used by a wide variety of companies. For example, Scotland's Ibrox Stadium for the Glasgow Rangers Football Club used Huawei's Wi-Fi access points, switches and routers to build a Wi-Fi network for some 50,000 spectators. And Huawei provided China Central Television with storage products to aid the broadcaster's move to HD programming.
Catherine Du, director of the branding department in Huawei's marketing and solutions sales group for its enterprise division, said that the company is looking to sell its products into a variety of industries, including into the government, education, energy and media sectors.
Interestingly, Huawei earlier this year reorganized its sales operation to more closely align its enterprise and carrier business groups (Huawei's carrier business group sells network equipment to wireless and wireline network operators). Du said the company's new Products and Solutions unit oversees sales of equipment to both carrier and enterprise customers.
Huawei has been steadily upgrading its enterprise product offerings, and today sells a wide range of data storage and cloud computing solutions. The company's most recent product launch is its Active-Active Data Center, which the company said is a data center for enterprise customers that essentially maintains two independent copies of an enterprise's data center in real time. The product is designed to allow enterprises to immediately and seamlessly fall back to a standby data center that contains all of the applications and information stored in the company's primary data center. Thus, an enterprise won't lose any data by switching over to the back-up data center because both the primary and back-up data centers are "active," meaning they both are updated with data at the same time. Such technology is key for high-volume businesses like ecommerce sites.
Huawei isn't the only telecom equipment vendor looking to expand its sales by heading into the enterprise market. Tim Krause, CMO of Huawei rival Alcatel-Lucent, said that a big part of his job recently is to increase Alcatel-Lucent's technology sales into the enterprise sector. He said that "the problem set there [in the enterprise] is not hugely different fundamentally than what we're accustomed to solving at larger service providers," he said, noting that big businesses sometimes need to manage the same kind of transaction-heavy networks that network operators themselves need to deal with. Krause noted that less than 10 percent of Alcatel-Lucent's revenues today come from the enterprise sector, but that the company wants to grow that percentage.
This puts Huawei, Alcatel-Lucent and others into direct competition with the likes of IBM, HP, Accenture and others that have traditionally served up technology sales to big businesses.
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