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Though profitable, Huawei says it has 'streamlined' its organization in the US. Is the government's investigation starting to become a factor?

Huawei Cuts Some US Staff

Phil Harvey
News Analysis
Phil Harvey
6/15/2012
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Huawei Technologies Co. Ltd. has cut several staff in its Plano, Texas, offices, as well as in other locations around the U.S. The company hasn't revealed the numbers behind the cuts, but our sources say somewhere around 50 (mostly marketing employees) were let go in May.

When contacted by Light Reading, the company provided the following statement:

We recently consolidated and streamlined our organization to sustain a profitable infrastructure business in the U.S. The new organizational structure will allow Huawei to continue to provide US carrier customers with the best technology solutions while maintaining our cost structure. Huawei’s commitment to the US infrastructure market and our US carrier customers is unchanged.


Huawei's commitment may be unchanged, but one source close to the company says Huawei's service provider clients are skittish because the vendor is still under investigation by the U.S. House Permanent Select Committee on Intelligence (HPSCI). That committee's spokeswoman told Light Reading last month there is no update available on what the investigation has uncovered. (See Australia's (Safe) Bet Against Huawei.)

The government's investigation of Huawei is making it tough for the vendor to get traction inside of networks that have the federal government as a customer, the source sources. "Federal agencies have made it clear that they will not have any of their traffic running over Huawei equipment," the source says.

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

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Soupafly
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Soupafly,
User Rank: Light Sabre
12/5/2012 | 5:30:01 PM
re: Huawei Cuts Some US Staff


Predictable to anyone observing closely.


Almost 4 years ago the chinese started stratigically moving the brightest & best to what had been known as FutureWei. (Brightest & best means they speak the best english, have an alert mind thats inquisitive, open & engaging. Etc.)


But they have achieved very little (to date) for the significant spend they have devoted to the NA market. I would attribute that to 3 principle reasons.


a) Competitive Positioning; NA is the last battle ground for Cisco, Juniper, Ericsson, Alu & NSN. Lose critical market share & momentum in NA & some of them are done. Global competitors are aware of this.


b) Politics; The anti-dumping claims and government support allegations against them have all taken a toll. The government investigation is more of a smoke-screen. They will find nothing that can be conclusively proven.


c) Change; The tactical battles have shifted. The US vendor community is now actively engaged in a software, consulting, services battle with global competitors. Its significantly more complex than the traditional hardware/OS sales model & value chain.


Expect to see more of these announcements, over time. There is a strong maturity component to the cycle the chinese are in. The teams that I have engaged with over the years are significantly weaker (and conversely much hungrier) than their western competitors. Thats also a factor....

Flook
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Flook,
User Rank: Light Beer
12/5/2012 | 5:29:53 PM
re: Huawei Cuts Some US Staff


Good observations. Also, this sentence caught my eye: ""Federal agencies have made it clear that they will not have any of their traffic running over Huawei equipment," the source says.


 


Does this mean no communication (not even email) between US-Chinese agencies? I am sure many networks in China have Huawei equipment, and any traffic between the two companies will probably traverse networks in third countries that might be using Huawei equipment. Would be interesting to know how much digital communication there is between the two governments and how its handled.


 


Picking up on one of your points--Yup, if Huawei were to be successful in the NA market, some of those marquee names would be in deep trouble.


This is childish, counerproductive.









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