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VoIP Systems

Report: Huawei Leads Softswitches

Huawei Technologies Co. Ltd. led the global VOIP softswitching market during 2005, a position analysts say is attributable to more than just the vendor’s low prices. (See Carrier VOIP Hits New High.)

That’s according to fourth-quarter and full-year 2005 “next gen” VOIP equipment sales stats from the telecom research house Infonetics Research Inc. .

Huawei controls 26 percent of the VOIP softswitch market worldwide, Infonetics says, a leadership position the vendor held both in the fourth quarter and for full-year 2005.

Infonetics would not release its estimate of Huawei’s softswitch revenue for the fourth quarter, but said softswitch revenue for all vendors was up 6 percent at $321.1 million. This puts Huawei’s number at around $83.5 million bases on a 26 percent share. (See Huawei Supplies V'fone Phones.)

Softswitches provide the call-control component of a VOIP or multimedia-switching infrastructure. They contain such functional components as call agent, media gateway controller, SIP server and SIP client. (See Who Makes What: VOIP Infrastructure Equipment.)

Western equipment vendors have in the past expressed anxiety at the low price points of Huawei gear. At first glance, one might suspect that price explains the vendor’s softswitch dominance. (See Huawei Gains Ground in HR Survey.)

But Infonetics directing analyst Stéphane Téral says there’s more to it than that.

“'Huawei is cheap’-- we have been hearing that for awhile now,” Téral says. “But now the new thing I’ve heard in 2005 is that Huawei actually has good products that are working as well as those made by Western vendors.” (See Huawei Signs 21CN.)

Heavy Reading analyst Graham Finnie agrees. “Huawei has had success worldwide with [its] softswitch, but the perceived price leadership hides a sophisticated and scaleable product with a range of billing interfaces and a Parlay API for third-party application server deployment,” Finnie writes in a Heavy Reading report.

Huawei’s softswitch leadership is also helped by consumers’ rapid acceptance of VOIP in Asia, where most of Huawei's softswitch sales come from. Asia/Pacific VOIP subscribers now number 14.2 million and will grow 251 percent to 49.9 million by the end of 2009, Infonetics predicts.

Huawei has deep relationships with some of Asia’s biggest VOIP operators -– China Telecom Corp. Ltd. (NYSE: CHA), for example. (See China De-Skyping?.)

Téral says Huawei’s numbers were so high, Infonetics analysts did a double-take. “We had to check who was actually deploying that because we were talking about huge amounts of licenses and huge amounts of ports." (See Huawei Converges on America.) “But after checking, China Telecom did actually deploy that stuff,” Téral says.

Téral believes Huawei is also making inroads in the European market by making headway with Tier 2 carriers – so much so that the Tier 1s have begun taking notice. (See Huawei Lands German Deals.)

Infonetics says Nortel Networks Ltd. leads the North American softswitch market, while Sonus Networks Inc. (Nasdaq: SONS) comes in a close second. Nortel also remains the top vendor of combination media gateway/softswitches, Infonetics says, with Siemens in second place and Huawei in third. (See Nortel & Huawei: Broadband Buddies.)

Téral blames the Huawei’s relative lack of success in North America on its failure to get cozy with incumbent vendors and integrators. He points out that Huawei seems indifferent to the fact that most Americans can’t even pronounce the company’s name.

Overall, 2005 was an explosive year for VOIP equipment, Infonetics reports. Worldwide VOIP equipment sales exceeded $2.5 billion, a 50 percent jump over 2004.

Worldwide revenue for all VOIP gear grew 21 percent to $785.3 million in the fourth quarter, Infonetics says. The Dell'Oro Group , which also published fourth quarter numbers Tuesday, says the softswitch and media gateway market grew 64 percent year over year. (See Dell'Oro: VOIP Gear Up.)

Infonetics says every class of VOIP equipment it follows was up in 2005, and all but media servers and Class 5 softswitches were up sequentially in the fourth quarter.

Infonetics believes the VOIP equipment market will grow 145 percent by the end of 2009, when sales will be $6.2 billion.

— Mark Sullivan, Reporter, Light Reading

oemarket_com 12/5/2012 | 4:05:24 AM
re: Report: Huawei Leads Softswitches Low prices can only compete for short term, if without support from a good quality. Huawei's continuous success and growth in its overseas sales demonstrate that the quality of its products are at the same level of those better-known western vendors, if not better.
It is just a matter of time that Huawei's brand will be as credible as other leading vendors.
melao 12/5/2012 | 4:05:24 AM
re: Report: Huawei Leads Softswitches "He points out that Huawei seems indifferent to the fact that most Americans canGÇÖt even pronounce the companyGÇÖs name."

That is an odd comment. If somebody cannot pronounce Huawei, they should go back to school or something.

The problem of Huawei inside USA is a branding problem. Since the CISCO incident.
zher 12/5/2012 | 4:05:23 AM
re: Report: Huawei Leads Softswitches In another artical at lightreading, Vodafone signed a 5-year contract with Huawei. As the No. 1 cellular provider in the world, I believe Vodafone considered not only the price, but also the quality, right? So did BT 21CN.

where are NT, LU, and MOTO?
zher 12/5/2012 | 4:05:23 AM
re: Report: Huawei Leads Softswitches why would you think so?

If we have to break the market into pieces, then I'd rather break the world into APAC, North America, EMER, and so forth.
zoinks! 12/5/2012 | 4:05:23 AM
re: Report: Huawei Leads Softswitches Are these numbers somewhat misleading? Taken without context, the Huawei numbers are daunting.

However, what percentage of Huawei's revenues were from China and other Asian countries where its much more difficult for a non-Asian business to compete?

I'd prefer to break out the data into Asia and non-Asia numbers and see where they stand against the industry.

zoinks!
wrussell 12/5/2012 | 4:05:22 AM
re: Report: Huawei Leads Softswitches In North America Huawei operates under the name Futurewei so Americans can pronounce the name easily
zoinks! 12/5/2012 | 4:05:20 AM
re: Report: Huawei Leads Softswitches I raised the question because the Chinese market is difficult to be successful in for non-Asian companies. I thought an interesting view of the data would be to separate APAC data from all the others (and yes, the other markets should be shown too).

zoinks!
paolo.franzoi 12/5/2012 | 4:05:20 AM
re: Report: Huawei Leads Softswitches

To win a major opportunity when there is a major telecom player in the same country is difficult at all times. No matter what the company. That is why the Marconi losses in 21CN are so stunning.

Even in the US - Alcatel had to buy DSC. Nortel always played 2nd fiddle to Lucent. etc....

seven
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