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Cisco nemesis Huawei retreating from the U.S.

After bashing from Congress, execs say company lost focus and interest; enterprise lives on in U.S. though

Huawei has retreated from the U.S. market after taking a beating from Congress on security issues with Chinese tech companies, according to this post in sister pub PC World. Huawei has also dialed down its long-term sales targets in enterprise networking by one-third, according to Reuters.

Huawei officials said the company, perhaps Cisco's most feared rival, is "not interested" and "not focusing" on the U.S. market anymore, and intends to rely on other parts of the world for sales growth. Huawei and Chinese technology companies in general doing business in the U.S. were the targets of unflattering profiles on 60 Minutes and a scathing report from U.S. Congress on the potential national security threats to America from sales of their products.

Huawei rejected the allegations and then engaged in a war of words with Cisco over intellectual property litigation proceedings and the threats each other posed to their home country. Cisco cut ties with ZTE after an internal investigation pointed to ZTE selling Cisco gear within Iran illegally.

"Apparently, due to whatever the geopolitical reasons, we are not focusing on the U.S. market," said Li Sanqi, Huawei's chief technology officer for the company's carrier group.

Li estimated that the U.S. accounts for about 30% of the world's carrier business, according to PC World.

"Don't get me wrong, I'd love to get into the U.S. market. Thirty percent, it's a high-value market," he said.

Huawei says the U.S. retreat only affects its carrier busiess, not the 10,000-strong enterprise operations the company established in Silicon Valley 18 months ago, or its consumer operations. A Huawei spokesperson said Huawei "continues to move forward" with enterprise solutions in the U.S. But Huawei did scale back its long-term targets for enterprise sales, to $10 billion by 2017 - the low-end of its $10 billion to $15 billion range.

Huawei Enterprise, which sells LAN switches, access routers and telepresence gear, did $2 billion in business in 2010 and had its sights set on $6 billion to $7 billion in 2012, but only achieved $1.9 billion in sales. In 2012, Huawei sold $500 million worth of Ethernet switches, according to Dell'Oro Group; and the entire worldwide enterprise access router market in 2012 was $2.7 billion, but 82% of it was owned by Cisco, according to Dell'Oro.

Even $10 billion by 2017 might be a stretch, according to Eric Xu, Huawei executive vice president and one of its rotating CEOs, in the Reuters report:

"If we can achieve $10 billion sales by 2017, that will be good enough for me."

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