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Tuesday, 18 April 2006 13:19

China's Huawei now a global force in telecoms

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My colleague Stan Beer's suggestion that "not much in the way of new technology comes out of China" and that "The Chinese also still need the expertise of Western companies to implement large scale complicated technology projects" (here) certainly does not hold true in the telecoms industry.

For several years now China's two leading telecoms network equipment vendors, Huawei Technologies and ZTE Corporation, have been winning significant contracts outside China, initially in less developed nations. For a time these wins were dismissed as being primarily the result of their low prices. That might well have been true, and might still be true to an extent today, but you have only to look at a few recent developments to see that this apology for their success no longer holds water.

Let's look at the performance of just one of them, Huawei, in the past 15 months.

The ETSI committee on Telecoms & Internet converged Services & Protocols for Advanced Networks (TISPAN) is the ETSI core competence centre for fixed networks and for migration from switched circuit networks to packet-based networks with an architecture that can serve in both. It is responsible for all aspects of standardisation for present and future converged networks including the NGN.

In January 2005, Huawei Technologies was selected by the TISPAN Working Group on NGN Architecture (TISPAN WG-2) as rapporteur. Active participation in such a body requires technological competence at the cutting edge of telecommunications development. This was the first time that a technical expert from China had been selected as Rapporteur for an ETSI Technical Report in NGN. According to Richard Brennan, ETSI TISPAN vice chair and TISPAN WG-2 chair "The work at TISPAN has been helped by the active participation and technical contributions of Huawei."

In March last year, respected US Telecom market researcher Heavy Reading reported in its 2005 Wireline Telecom Equipment Market Perception Study - which "measures how well makers of telecom equipment are faring in their efforts to capture the attention of their service provider customers - that "Huawei has already surpassed several incumbent vendors in perceived market leadership. Huawei's huge jump in market perception ratings from the Fall 2003 survey is the most remarkable and probably most important development in the wireline telecom equipment industry. What makes Huawei's ascendancy even more astounding is the fact that the company still has only a minimal presence in the North American market."

(It is still persona non grata in North America after a long-running battle with Cisco, now settled, over Huawei's infringement of Cisco's intellectual property rights.)

That same month, another research firm, Dittberner Associates reported that Huawei, was the lead supplier of media gateway and softswitch VoIP ports in 2004,with 24.8 percent of ports shipped into 100 deployments by 33 carriers worldwide. Nortel came in second with 18.21 percent. Sonus, UTStarcom and Siemens rounded out the top five with 11.36, 7.63 and 7.25 percent respectively leaving 31 percent of the market for other players.

On the global market the company is posting growth rates that established Western competitors can only dream about. In the first half of 2005, its international sales reached $US2.47 billion, 61 percent of the company's total sales. During that period it gained 19 new operator customers, the most notable of which was BT for what, according to Ovum, is likely to be the most lucrative component of its 21CN project. Wireless product sales were up 120 percent on the prior year. >>Page 2


By 30 June 2005, Huawei said it had obtained 11 UMTS commercial contracts ,and it claimed to be the first vendor to release a UMTS distributed base station. In 1H 2005, Huawei said it delivered GSM mobile softswitches to serve 20 million subscribers to 26 operators in 20 countries. Its CDMA2000 1xEV-DO networks have been deployed in 10 countries including the United States, Thailand, Mexico, Pakistan and Algeria.

Mere numbers do not necessarily equate to technological competence. But just last month HP, one of the lead global players in telecoms OSS software, formed a global partnership with Huawei to "help the world's telecom carriers manage their networks more efficiently and continue to provide the best possible quality of service to their end users."

The two companies will establish an OSS lab in Shenzhen of southern China for joint research and development, testing and validation, and pre-integration of OSS solutions.

You don't get to be taken on as a partner by a major global player like HP without the ability to make a real contribution to the partnership.

And, in December, Huawei Technologies, signed a global framework agreement with Vodafone for the supply mobile network infrastructure. The agreement established the terms and conditions for the supply of Huawei's products and services to any one of the Vodafone operating companies worldwide.

According to Huawei, it was the first time a telecommunications equipment supplier from China has received approved supplier status from Vodafone's global supply chain.

That decision followed two years of certification and testing by Vodafone on Huawei's mobile network product and the agreement bore its fruit this week when the Vodafone operator in the Czech republic awarded Vodafone a contract to supply a UMTS network.

Huawei is now a global hi-tech company with R&D operations in Stockholm, Dallas, Bangalore, Moscow in addition to several facilities in is home country. It claims to have applied for over 8000 patents, 1600 of which have been granted.

Huawei has a massive domestic market, and a huge talent pool from which to draw its - very low cost by Western standards - R&D personnel. No wonder its rapidly growing power, and that of its main Chinese rival ZTE, has been flagged as one of the drivers behind the Alcatel/Lucent merger.

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