Light Reading
The Chinese vendor can now claim to be the biggest telecom systems vendor, at least based on reported first-half sales

Huawei Snatches Ericsson's Crown

Ray Le Maistre
7/24/2012
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Huawei Technologies Co. Ltd. can now lay claim to being the world's leading supplier of telecom hardware and software, following the publication of its sales for the first half of this year. (See Huawei Increases H1 Sales by 4.5%.)

There are no doubt a number of variables that make the comparisons slightly uneven -- particularly the breadth of portfolios (Huawei has made a big push in the enterprise technology and mobile devices sectors in the past year) and the impact of currency exchange rates. But at a basic level, and using the U.S. dollar as the unifying global currency, the Chinese vendor is now bigger than Ericsson AB (Nasdaq: ERIC).

While, at current exchange rates, Huawei's reported revenues for the first six months of 2012 total US$16.1 billion, Ericsson's come in at $15.25 billion (106.3 billion Swedish kronor). (See Ericsson Sets Q2 Benchmark.)

Nokia Networks , with first-half revenues of $8 billion (€6.59 billion) is some way off the pace, and Alcatel-Lucent (NYSE: ALU) and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), which haven't yet reported their second-quarter sales, will not be troubling the leading duo. (See Restructuring Costs Hit NSN's Q2.)

Table 1: Vendor Ranking by H1 2012 Revenues (in US$)

Ranking by H1 2012 revenues Vendor H1 revenues in US$
1 Huawei 16.1 billion
2 Ericsson 15.25 billion
3 Alcatel-Lucent 8.13 billion (estimate)
4 Nokia Siemens Networks 8 billion
5 ZTE More than 5.8 billion




AlcaLu reported first-quarter revenues of €3.2 billion ($3.9 billion) and is expected to report sales of around €3.5 billion ($4.23 billion) for the second quarter when it reports its latest earnings on July 26. (See AlcaLu Issues Full-Year Profit Warning and Bad Start to 2012 for AlcaLu.)

ZTE stated recently that its revenues for the first six months of 2012 will be greater than the RMB 37 billion ($5.8 billion) it recorded a year ago.

— Ray Le Maistre, International Managing Editor, Light Reading

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Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:26:52 PM
re: Huawei Snatches Ericsson's Crown


There are certainly some caveats there (the enterprise sales, as Ray mentioned), but I'd agree it's a milestone for Huawei.

Soupafly
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Soupafly,
User Rank: Light Sabre
12/5/2012 | 5:26:50 PM
re: Huawei Snatches Ericsson's Crown


An amzing achievement!!


Many congratulations to the team behind Huawei. They have accomplished a minor miracle.


In 2005, they had little (if any) EU representation (and by EU I dont mean the present enlarged EU which has half of Eastern Europe as members, I mean the orginal inner six and outer 7 members).


Just 7 years later, in 2012, the historical vendors in these markets have been completely over-whelmed by the level of competition and ferocity of challenge emanating from china. Specifically, Ericsson, NSN & ALU. And we havent mentioned ZTE yet, either.


To temper my congratulations, it has been accomplished with;


a) over $30b USD of government finance,


b) a workforce that is 1 dimensional in ethnicity & composition - i.e; more than 80% chinese - save a few public & client account facing positions, and


c) built on cloning all the existing equipment produced by western vendors.  With any tweaks or improvements "patented" so they can claim they are generating IPR.


My question;


It will be fascinating to see how the chinese deal with been in a leadership position, Its something they have, no doubt, been preparing for, but its a completely different posture than the "work-hard upstart from china, with the wolf-pack culture" that they have used & exhibited to get here.


The next stage will require a mindshift change in terms of culture and customers will continue to demand more and they will now expect it because H is No.1.


 

DCITDave
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DCITDave,
User Rank: Light Beer
12/5/2012 | 5:26:50 PM
re: Huawei Snatches Ericsson's Crown


Congressman Mike Rogers just read this article and shot out his computer screen. 


:)

Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
12/5/2012 | 5:26:49 PM
re: Huawei Snatches Ericsson's Crown


If I recall from last year, Huawei is flattered by its devices revenue in this comparison. I believe Ericsson is still the largest supplier of network equipment and services, no?


Would be interesting to see the break-out for the first half 2012.

Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
12/5/2012 | 5:26:49 PM
re: Huawei Snatches Ericsson's Crown


"It will be fascinating to see how the chinese deal with being in a leadership position"


Arguably, that's the situation it finds itself in with LTE... well, among the leaders anyway, rather than playing catch-up as it did in 3G.


This does bring new pressures, but also opportunities.

Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
12/5/2012 | 5:26:48 PM
re: Huawei Snatches Ericsson's Crown


Ericsson is well ahead in RAN revenue. Huawei and NSN are/were roughly equal for the number two position, with NSN bolstered by the Moto revenues.

digits
50%
50%
digits,
User Rank: Light Beer
12/5/2012 | 5:26:48 PM
re: Huawei Snatches Ericsson's Crown


It could well be that a combination of currency exchange rate shifts and higher revenues from handsest have pushed Huawei past Ericsson overall, esp now that Ericsson doesn't have its slice of Sony Ericsson contributing to its top line. It's quite possible that by the end of the year Ericsson will have regained top spot. 


 


For sure it would be more interesting to compare apples vs apples -- this overall comparison is admittedly tokenistic and merely indicative of what we have seen for the past 10 years - Huawei eating the lucnh of the European/North American vendors.


I have requested divisional and regional sales breakdowns from Huawei but I imagine I won't be granted my request.


And I'd be pretty sure in saying that ericsson and NSN would have the highest Services revenues of any of the vendors. RAN infrastructure would be v interesting to break out, as would optical.


Maybe if Huawei would IPO then we could get to see al the numbers!! :-)

telecomchamp
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telecomchamp,
User Rank: Light Beer
12/5/2012 | 5:26:47 PM
re: Huawei Snatches Ericsson's Crown


What will be interesting to see that instead of copying products o western vendors, how they now actually drive innovation......


I feel they are good sloggers and with one dimensional cheap chinese labour they would not be able to hold on to this position for a very long time

Gaurav2410
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Gaurav2410,
User Rank: Light Beer
12/5/2012 | 5:26:46 PM
re: Huawei Snatches Ericsson's Crown


Fully agree with you. Without Chinese government funding, Financing from Chinese Banks at ridiculuos low interest rates and copying western vendor's products, Huawei would never have reached this position. Also the figures are largely contributed by the device sale (Handsets, Modems etc).


Huawei should povide breakup of its figures on the basis of Regions and BU's just like other vendor do.


 

singhpp
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singhpp,
User Rank: Light Beer
12/5/2012 | 5:26:42 PM
re: Huawei Snatches Ericsson's Crown


What seems to be the problem? There is still a lot to copy.

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