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Huawei Gets BT's Blessing

Light Reading
News Analysis
Light Reading
3/25/2004

China's Huawei Technologies Co. Ltd. staged a bit of a coup at a luncheon it held at The Dorchester Hotel in London today.

None other than Matt Bross, the CTO of BT Group plc (NYSE: BTY; London: BTA), turned up, along with more than 30 other BT staff and representatives from a number of other major carriers in the U.K.

And that's not all. Brian Levy, BT Group technology officer, gave a presentation in which he publicly praised Chinese equipment vendors in general, and Huawei in particular, for their "fantastic innovation," contradicting a widely-held Western stereotype of Chinese vendors, as manufacturers of low-cost "me-too" products.

Huawei's "responsiveness, its willingness to work with us" had Levy in transports of enthusiasm. "We feel that together we can take the industry into future growth. There's a common culture -- listening to customers. I wish we could find that in other companies."

"We're tapping into a fantastic resource," Levy rhapsodized, referring to joint development projects that BT and Huawei are working on. "To ignore that resource would be absolutely criminal."

Levy says BT and Huawei started talking to each other in 2002, and are now working together in couple of brainstorming "workshops," one of them related to BT's 21st Century Network concept.

BT and Huawei are also working on various projects together. One of them is based on an "alternative supplier model" under which the wholesale division of BT builds, operates, and maintains facilities using Huawei products, for use by other service providers. An example of this is EEscape Ltd., which is planning to roll out a nationwide VOIP service in the U.K. in April. The services are furnished by a Huawei softswitch bought by BT and installed in its Facilities Management Center (see EEscape Deploys Huawei VOIP Kit).

In other joint projects, BT and Huawei are developing a broadband home gateway and a WiFi phone.

BT and Huawei are also "evaluating" various Huawei products, presumably for use in BT's own network (as opposed to its Facilities Management Center, used by other operators). These include Huawei's Intelligent Network Service Control Point, softswitch, "voice gateways" (probably media gateways), and DSL modems, according to Levy's presentation.

At the luncheon, Huawei announced plans to expand its staff in the U.K. to 200 within three years, from about 80 now. It also announced some partnerships to help it grow -- with a BT division called Network Build Ltd., which builds networks (really); with Anixter Inc., for logistics; with STS Communications, an integrator specializing in optical networks; and with Accenture, for training customers.

— Peter Heywood, Founding Editor, Light Reading

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alcabash
alcabash
12/5/2012 | 2:10:45 AM
re: Huawei Gets BT's Blessing
sad, sad day for BT... did not know they could go that low... well... I guess UK copying the US three years late... no wonder they hired Bross
...from williams to BT...
sevenbrooks
sevenbrooks
12/5/2012 | 2:10:45 AM
re: Huawei Gets BT's Blessing

Is praising Huawei.

Wonder how many options he got for that? More or less than he got in Sycamore.

Wonder why he is not in jail.

seven
jim_smith
jim_smith
12/5/2012 | 2:10:44 AM
re: Huawei Gets BT's Blessing
What the heck does a CTO do at a service provider anyways? I understand what a CTO does in early stage startups, but at a service provider? Huh?

What are Matt Bross's credentials to warrant the "CTO" title?

What did he do at Williams? Take stock options from vendors and bankrupt the company? You can do that without hiring a CTO!

Is BT so stupid that they have to hire a crook to get stock options from a vendor? Or is BT's upper management hiring a scapegoat so that they can blame him when their stock option scam is discovered?

Can anyone please help me out here? Why did BT hire Matt Bross?

Einstein once said that there are only two things that are infinite, the universe and human stupidity, and I'm not sure about the former.
Peter Heywood
Peter Heywood
12/5/2012 | 2:10:34 AM
re: Huawei Gets BT's Blessing
In the hopes of having a less juvenile discussion on this board, let me put forward a theory:

1. The INFRASTRUCTURE side of things in telecom networks is rapidly getting to the point where everybody has more or less the same products and the name of the game is to minimize costs and maximize reliability. So:

Huawei (and ZTE) are set up to do well in this area because they have a huge home market, state of the art manufacturing and are using very sophisticated supply chain management and quality control processes. The Japanese did the same thing in the auto industry 20 years ago, and forced a huge shake-up and revolution among Western auto manufacturers. I suspect history is about to repeat itself in the telecom equipment industry.

If you talk to Huawei, however (as I have done, quite a bit), you'll discover that Huawei doesn't see the hardware side of things as a big differentiator. It recognizes that other vendors can manufacture in China, for instance. Which brings me on to point number 2:

2. The interesting stuff in telecom, and the area where companies can really differentiate themselves (whether they're carriers or vendors) -is in the SERVICES carried over the afore-mentioned (boring, low margin) infrastructure.

In fact, the most interesting thing about the latest infrastructure developments - the NGN/VOIP stuff - is that they (in theory) provide a platform that enables folk to be as creative as they like about the services they offer.

So, if you have a completely blank canvas for creating services, what services should you create? Answer: find out what users actually want.

That's what this love-fest between BT and Huawei is all about. Huawei isn't selling boxes to BT. It's helping BT figure out what services it should be offering its customers and then it's helping BT provide those services.

This is where Huawei thinks it has a big, intrinsic advantage over Western vendors. It piles in large numbers of highly qualified engineers to work with customers to figure out their requirements, and it piles in large numbers of highly qualified engineers to develop solutions to those requirements in double-quick time. As one Western engineer costs the same as five Chinese engineers, it's a tough thing to compete against. No wonder BT's Levy is saying it would be "absolutely criminal" to ignore this.

The big take-away from this article - and the one that should really scare Western vendors - is that BT says Huawei is highly innovative, the exact opposite of the stereotypical Western view of Chinese vendors.

Comments?

brahmos
brahmos
12/5/2012 | 2:10:28 AM
re: Huawei Gets BT's Blessing
due to obsolete nature of the main csco codebase,
just about anyone who are not hampered like that
AND have a large domestic market to scale up on
has a good chance. that way huawei has a leg up
on US startups who have to contend with csco's giant shadow and fight for a slice of pie. huawei, zte and utsi will be formidable competitors going ahead...they might keep on buying small usa startups to increase their pool of a++ experienced engineers.
Johnny G
Johnny G
12/5/2012 | 2:10:26 AM
re: Huawei Gets BT's Blessing
Well I am glad to see that we can finally have an adult discussion and rise above the need to bash some of our industries finest. Strange how itGÇÖs always those who are doing who get bashed by those who have still to prove themselves.

On to your Theory.

INFRASTRUCTURE

I believe I am not alone in agreeing with the infrastructure part of your theory, our industries best known analysts agree that China is fast becoming the worldGÇÖs workshop. ChinaGÇÖs economy has lowered the barriers to entry in the telecommunications industry, backed by a wealth of expertise and local opportunity. Not only does China have the worlds largest telecommunications industry, but it also has a highly competitive internal industry, enabling them to produce better, cheaper and faster. Agreed this is often commodity by the time it is produced and placed into the market.

SERVICES

When it comes to sustainability I agree that itGÇÖs ultimately the services that will drive the revenues, this is an area of key concern for any service provider, along with the need to reduce churn and attract new customers. Introducing new services, while keeping popular services fresh is where the industry will differentiate itself in the future.

MAKING BEST USE OF TALENT

Brian is absolutely correct to state that it would be criminal not to make use of these important resources. We only need to look at the population statistics within the area, China with its 1,3 billion people and India with 1.1 billion, this is almost one third of the worlds population. Not only that, but no other country has managed to grow their GDP at the same rate China has been able to over the past 25 years (average 9% per year). Too not take notice of this resource in the worlds biggest telecommunications market would mean that any industry-leading technologist were not doing their job.

I believe it is wrong to stereotype the Chinese vendors as lacking in the innovation department; Chinese are very capable and have a great ability to innovate, heck all you need to do is look at their history, they are the only nation to build a structure as big as the great wall; the forbidden city is far and away a great achievement, as is the terracotta army in Xian, lastly I do believe that they are one of only 3 countries to send a man into space, but then thatGÇÖs only rocket science heyGǪ..

Often Chinese products are better and do the job at a FAR lower price than we can achieve in the Western markets, if not WHY are our shelves so heavily stocked with these products. We must ensure we judge not only on capability and features, but also on the ability of the addressable market to pay, and the need to maintain a sustainable business.

There is a widely held belief that this will be the Chinese century, what we need to do is assess how best to work with it to the benefit of all.

Yu Shi Ju Jin

Johnny G
Johnny G
12/5/2012 | 2:10:25 AM
re: Huawei Gets BT's Blessing
Well I am glad to see that we can finally have an adult discussion and rise above the need to bash some of our industries finest. Strange how itGÇÖs always those who are doing who get bashed by those who have still to prove themselves.

On to your Theory.

INFRASTRUCTURE

I believe I am not alone in agreeing with the infrastructure part of your theory, our industries best known analysts agree that China is fast becoming the worldGÇÖs workshop. ChinaGÇÖs economy has lowered the barriers to entry in the telecommunications industry, backed by a wealth of expertise and local opportunity. Not only does China have the worlds largest telecommunications industry, but it also has a highly competitive internal industry, enabling them to produce better, cheaper and faster. Agreed this is often commodity by the time it is produced and placed into the market.

SERVICES

When it comes to sustainability I agree that itGÇÖs ultimately the services that will drive the revenues, this is an area of key concern for any service provider, along with the need to reduce churn and attract new customers. Introducing new services, while keeping popular services fresh is where the industry will differentiate itself in the future.

MAKING BEST USE OF TALENT

Brian is absolutely correct to state that it would be criminal not to make use of these important resources. We only need to look at the population statistics within the area, China with its 1,3 billion people and India with 1.1 billion, this is almost one third of the worlds population. Not only that, but no other country has managed to grow their GDP at the same rate China has been able to over the past 25 years (average 9% per year). Too not take notice of this resource in the worlds biggest telecommunications market would mean that any industry-leading technologist were not doing their job.

I believe it is wrong to stereotype the Chinese vendors as lacking in the innovation department; Chinese are very capable and have a great ability to innovate, heck all you need to do is look at their history, they are the only nation to build a structure as big as the great wall; the forbidden city is far and away a great achievement, as is the terracotta army in Xian, lastly I do believe that they are one of only 3 countries to send a man into space, but then thatGÇÖs only rocket science heyGǪ..

Often Chinese products are better and do the job at a FAR lower price than we can achieve in the Western markets, if not WHY are our shelves so heavily stocked with these products. We must ensure we judge not only on capability and features, but also on the ability of the addressable market to pay, and the need to maintain a sustainable business.

There is a widely held belief that this will be the Chinese century, what we need to do is assess how best to work with it to the benefit of all.

Yu Shi Ju Jin

dpb
dpb
12/5/2012 | 2:10:24 AM
re: Huawei Gets BT's Blessing
This is where Huawei thinks it has a big, intrinsic advantage over Western vendors. It piles in large numbers of highly qualified engineers to work with customers to figure out their requirements, and it piles in large numbers of highly qualified engineers to develop solutions to those requirements in double-quick time.

You can do anything you set you mind to when you have vision, determination, and an endless supply of expendable labor. -- Despair, Inc.

As one Western engineer costs the same as five Chinese engineers, it's a tough thing to compete against. No wonder BT's Levy is saying it would be "absolutely criminal" to ignore this.

Peter, probably what is more criminal is the origin of some of their code base. I had the opportunity to look at some of their older product from a couple of years ago and like most thought it looked a lot like cisco gear. Mind you they had a lot of stuff that looked like Polycom, Lucent and Nortel too. The similarities didn't end there. At first it looked just like a regular PSOS based piece of code containing bits of GateD. What was really odd were all the refernences to swidb, pdb etc. But what was really interesting were all of the referneces to EIGRP as IGRP2 along with stuff like DUAL: dual_ifdelete(): finish. Go track down your favorite IOS software developer and ask him the significance of these terms.

Granted this was a while back and I have not seen any of their newer gear so this may have change.

-David Bannister
(I don't work for cisco.)
Indy_lite
Indy_lite
12/5/2012 | 2:10:23 AM
re: Huawei Gets BT's Blessing
But what was really interesting were all of the referneces to EIGRP as IGRP2 along with stuff like DUAL: dual_ifdelete(): finish. Go track down your favorite IOS software developer and ask him the significance of these terms.

You can repeat the same story 100 times, but it does not mean the same thing happened 100 times. Huawei used a Cisco propriatary feature EIGRP - Huawei was insensitive enough to have done so. If they did EIGRP, then the function name dual_ifdelete() will be there, because DUAL is the name of the simple algorithm for EIGRP. I emphaisze, anyone who implments EIGRP on their own would have picked the same function name.

EIGRP is no particle physics, it is very simple, anyone would have done it - it just happened Cisco was the early bird in networking (it started shop earlier than others). There are plenty of crappy Cisco press books on the EIGRP.

Nowadays, EIGRP is not important because Cisco does not have the kind of market share it used to have. OSPF and IS-IS are more important for the customers. If Cisco's market share continue to drop, EIGRP would disppear - there is nothing magic here, Cisco patented something, it uses manopoly to kinda force customers to use its propriatry feature. But customer does not get anything more from this propriatry feature than they would get from OSPF or ISIS. When more customers start buying from Cisco competitors, they will stop using it.

From pure innovation point of view, EIGRP is not something to brag about.
Peter Heywood
Peter Heywood
12/5/2012 | 2:10:22 AM
re: Huawei Gets BT's Blessing
On the Cisco lawsuit, I posted a message about this on another thread a couple of weeks ago. Here's a copy:

On Huawei "stealing" Cisco router code:

It's worth reading the evidence from Dennis Allison, a lecturer from Stanford University Computer Systems Lab, who appeared as a witness for Huawei in the court case.

Cisco's charges of copying apply to:

- A small portion of code, the EIGRP module. Huawei says some rogue developers downloaded the code, which is available on the Internet, without company knowledge. This applies to version 1.5.6 of its VRP software, which was withdrawn. The replacement Version 1.7.2, which Allison also investigated, doesn't bear any similarities with Cisco's software according to Allison.

- The command line interface. This, too, has been totally revised following Cisco's allegations. In his evidence, Allison says the CLI deals with a lot of basic functions common to all routers, so folk are bound to use similar CLIs. He also points out that other companies, such as HP, use CLIs that are just as similar to Cisco's. Although Allison doesn't say this, I'm sure folk also adopt Cisco's CLI because so many engineers are familiar with it. In his evidence, Allison concludes that Cisco's CLI "is not a copyrightable expression" - notwithstanding the fact that Huawei has changed its CLI anyhow.

- "Binary image" similarities. Allison points out that both Cisco and Huawei use third party code for things like TCP/IP , PPP etc, just as all other router vendors do. So it stands to reason that there will be identical strings of code in both company's router software.

The bottom line is that this issue has probably been blown out of proportion.

It's also worth noting that Huawei's software development team in Beijing, who develop VRP code, has a CMM Level 4 certificate, validated by an independent assessor, KPMG. This implies that it follows rigorous procedures for ensuring software integrity. It's hard to see how Huawei could acheive this CMM level if it made a habit of stealing and reusing other vendor's code in its software.

Milord, I rest my case
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