At Interop New York Huawei launched its US enterprise business and is taking aim at the mighty Cisco
Huawei has been a disruptor in the telecom market for years but remained only a perceived threat to enterprise infrastructure suppliers. Huawei’s broad portfolio coupled with it’s quality engineering gives Huawei a better than punchers chance of becoming a dominant enterprise vendor. Most enterprise buyers will likely stay with their incumbent vendors in the short term but Huawei’s massive size and scale make them a long term threat to the status quo. Taking center stage at Interop last week was industry veteran John Roese. Those of us that have been around the industry for a while recognize John as one of true industry thought leaders and associate his name with companies such as Nortel and Enterasys but had gone radio silent over the past couple of years. Well Mr. Roese reappeared at Interop New York but this time sporting a name badge that listed him as VP and GM of Huawei’s North American Enterprise business and they’ve aimed their crosshairs at the mighty Cisco. To date, Huawei has impacted the telecom and wireless markets, particularly in Asia but does have some big wins in Europe and a small presence in the US. In fact, Huawei’s win in the British Telecom 21 Century Network literally killed Marconi, a long time telecom mainstay. But, Huawei has never seemed all that interested in the enterprise market. They attempted to leverage the 3Com brand a few years ago with a joint venture but that ultimate failed and is now owned by HP. The threat was there but it remained more of an urban legend than actual reality. Well now it’s reality and Huawei is packing a pretty hefty punch. Huawei is bringing to market an enterprise line of products that is on par with Cisco. They have servers, routers, switches, unified communications, wireless LAN, telepresence and the list goes on – and it’s all home grown. Built from the ground up to work together. From a discussion I had with Roese at Interop, I can tell you the company has some lofty goals in the enterprise. Last year they only did about $2 billion in enterprise sales but want to be $15 billion in five years with about a third of that coming from Europe and North America. At that size they would be the #2 enterprise network and communications vendor behind only the mighty Cisco. This aggressive goal dictates that Cisco will have to be Huawei’s primary target. The other vendors just don’t have the share to get Huawei where they want to be. Will Huawei be successful in the US market? I’ll provide arguments to both and then sum it up at the end. Why they will be successful in the US: • The industry needs a #2 to Cisco. There are lots of companies that claim to be #2 to Cisco. HP, Juniper, Avaya, Microsoft, Aruba, F5, etc all can make claims in certain markets but there is no solution provider that can offer the end-to-end products that Cisco can. Well, now Huawei can. • Huawei has great technology. Many North American buyers know Huawei as those guys that ripped off Cisco source code and liken them to those Chinese made Chanel bags you can buy on Canal Street. While this might have been true years ago, it isn’t today. Huawei’s engineering is as good as any vendors. They have a massive engineering facility in China and now have a Santa Clara location to attract US engineers. • The company understands telecom, enterprise and consumer markets. Today the lines of where one of these domains end and the other starts is blurring. The ability to understand how to deliver service and maintain quality across telco, enterprise and consumer networks should provide Huawei a unique differentiator. Why Huawei won’t be successful in the US market: • Enterprise buyers are loyal to the Cisco brand. The US technology market, more than any other region loves brand names. My wife loves Louis Vuitton and most network managers love Cisco. Unseating Cisco is going to require Huawei making a strong showing and Cisco faltering and there is no evidence that Cisco is ready to cede this market to Huawei. • The US market has too many vendors already. The market Huawei is targeting already very saturated. There are over half a dozen vendors in each of the following markets: Wireless LAN, routers, UC, Video, etc. Sure none of them can offer the same breadth of products that Cisco can but the reason that an enterprise buyer might go to an Aruba, Brocade or Juniper is that they don’t want the end-to-end solution, which works against Huawei. • US buyers won’t buy from a Chinese manufacturer. Many US buyers do prefer to buy from US companies. Having the Chinese swoop in creates a threat where more US jobs may get moved over seas in favor of lower labor costs. Many US buyers will avoid Huawei in an effort to keep the engineering jobs here. If Huawei is going to be successful here in the US, the success is going to come later, not earlier. The company will need to get it’s broad product line into Asian companies with a foot print here in the US and make initial in roads that way. There’s lots of work to do but Huawei has the portfolio, financial resources and the desire to be a dominant vendor. Now it’s time for John Roese to execute.
