Huawei Steps Up in North America

PLANO, Texas -- Cutbacks and caution permeate most telecom vendor discussions these days, but Huawei Technologies Co. Ltd. is sounding more optimistic than ever. (See Huawei Predicts 29% Growth in 2009.)

This week the company told Light Reading that it is still serious about making in-roads in North America, perhaps the one region in the world where it has been the least dominant. Company executives say Huawei aims to keep hiring in the Dallas-Fort Worth area, where it has more than half of its 570 North American employees, and it will eventually consolidate its three branch offices into a single, sprawling corporate campus, somewhere in the North Dallas corridor.

In broadband access, Huawei isn't going to leave the North American market entirely to Alcatel-Lucent (NYSE: ALU), Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), and Ericsson AB (Nasdaq: ERIC). The company intends to ship a GPON product for North America this year, according to Huawei senior VP Charlie Chen. "This is a long-term offering for us," he says, comparing it to CDMA equipment, which Huawei first started selling in 2003 and still sells today even as carriers are making plans to deploy LTE and other 4G wireless technologies. (See Is AlcaLu's FiOS Share Slipping? and 'Run Away!' Nokia Siemens Retreats From GPON.)

Also in lab tests is Huawei's 100-Gbit/s WDM product for the North American market. You'll recall, the product prototype was discussed last year and described as capable of transmitting optical signals up to 2,000 km without requiring regeneration. Chen says the 100-Gig product will have trials in North America before the end of the year, noting that Huawei is also very serious about making a long-term play for North American long-haul networks. (See Huawei Raises the Optical Stakes.)

"Once a market hits a threshold, we invest," says Chen, referring to the company's decision to tackle the GPON and 100-Gig long-haul markets in North America. The timing of this market interest is key, too, as about one year ago, analysts were saying Huawei was perceived to be behind on 100-Gig technology and wasn't seen as being as interested in North America. (See Heavy Reading Homes In on Huawei.)

Fitting in and looking ahead
Huawei entered the North American market in 2001, and the company says it had sales of $250 million from the region last year. Not world-beating by any means, but Chen says the company is adjusting to the competitive climate. He says the company is "westernizing" its management structure with the help of management consultants, and hiring a steady mix of outsiders -- all eager to work for an employee-owned company that reports steady growth and isn't sensitive to the fluctuations in the stock market.

Also, Huawei is eager to put down the notion that all it does is compete by being the low price leader. Chen says in North America, especially, Huawei will not lead with price as the main way to win carrier business, and notes that the vendor has already lost several engagements because others gave up more profit margin. "Sustainable growth is a key to succeeding here, and we have to respect the market," he says.

Pointing to the offices behind him, Chen noted that Huawei employs a large North American marketing and business development staff, a luxury it wouldn't require if all that was needed was to lower prices: "Price is the easy part."

— Phil Harvey, Editor-in-Chief, Light Reading