Huawei Expects Relentless Growth

Huawei is nothing if not doggedly optimistic. Despite persistent knockbacks in the U.S. and other markets, the Chinese vendor is predicting (in its annual report, published today) an annual growth rate of 10 percent for the next five years: Based on its 2012 revenues of 220.19 billion yuan renminbi (US$35.49 billion), that would take it to annual revenues of about RMB355 billion ($57.2 billion) in 2017. (See Huawei Expects 10%+ Growth in 2013.) And although Ericsson AB is positive about this year's market -- see Euronews: Ericsson Accentuates the Positive -- it's likely that Huawei will very soon snatch, and retain, the Swedish giant's "biggest vendor" crown. (See Ericsson Retains Its Crown – Barely.) So where is this growth going to come from? Well, not so much from the traditional telecom network hardware and software product lines, even though the vendor's Carrier Network Business Group registered year-on-year sales growth of 6.7 percent to reach RMB160.1 billion ($25.8 billion) in 2012. Huawei expects any growth for this group to come from demand for professional services (managed services, consulting), cloud service enablement and carrier data center builds. More explosive potential exists for the vendor's Enterprise Business Group, which saw its annual revenues increase 25.8 percent to RMB11.5 billion ($1.85 billion) last year. Huawei has been focusing on enterprise customers for less than two years so it is still building momentum with its focus on cloud computing, data center technology and storage. The Consumer unit, with its focus on smartphone development, has been very high profile during the past year. It grew its revenues by 8.4 percent to RMB48.4 billion ($7.8 billion) in 2012 and by the end of last year was the number three smartphone vendor globally, according to Gartner. But for all its gusto, the vendor is aware that, as an increasingly large player in the global technology sector, it is prone to the type of weakness that has killed off other large players (think Nortel, although of course that company wasn't named by Huawei). In the annual report, group CEO Ren Zhengfei notes that Huawei is committed to ensuring its staff play by the rules and limit their financial compensation to the salaries, bonuses and incentives they get from their employer: "No income from outside Huawei is allowed," notes Ren. "History tells us that that if large companies miss a turning point and start to decline, few of them can reverse the situation by restructuring themselves. Naturally, we would hate to fall; so we must restrain ourselves, observe rules, and stay united and dedicated." With 150,000 employees, that's a tough policing job and Ren can be sure that every other player in the market will be watching every move made by Huawei's staff just as closely as the Chinese vendor's own human resources team. — Ray Le Maistre, Editor-in-Chief, Light Reading