In 2004 the networking giant Cisco sued a little-known Chinese company called Huawei for IP (Intellectual Property) theft. Some two months later the case was dropped and settled out of court. Huawei promised to modify their designs, change their software and manuals. Rumours circulating at the time alleged that the Chinese government got involved and told Cisco that if they wanted to operate in China, they should leave Huawei alone.
Huawei was started by People’s Liberation Army officer Ren Zhengfei in 1988, specialising in the research and development of communications systems.
In the west the initial push has been towards core networking equipment for carriers and ISPs (markets which have historically been dominated by Cisco). In this market, Cisco’s normal approach was to offer a base product, then charge extra for additional software feature sets. Huawei’s approach is …. more generous, they include the all of the ‘extras’, while pricing the system around 60% of what Cisco charges for the base platform alone.
Support – throwing people at it
Low, all-inclusive pricing isn’t Huawei’s only winning approach.
If a large customer of Cisco reports a problem, it goes into their tracking system and the customer might be lucky if it’s looked at in a few days. If it’s identified as a bug, it might take a few weeks to isolate and fix.
In China engineering talent is relatively cheap and their universities produce very high class students (and lots of them). This brings Huawei another advantage – huge manpower. When bugs are passed to Huawei, they go to their pool of, something like, 20,000 engineers, leading to the faults being tracked and fixed extremely quickly.
The Big Boys are buying Huawei too
Slowly Huawei started to make big inroads into the high-end markets. BT has even selected them as part of their 21st Century Network, (21CN). It’s rumoured in the market, that this will lead to the demise of Marconi (who failed to be selected, even though they’d been a partner of BT for decades).
Cisco – that’s just the start
If you’re in any form of communication business, don’t kick back and think, “Well Cisco needs a competitor. We should be OK.” Huawei’s plans extend far beyond merely eating Cisco’s lunch.
If you get a chance to wander into Huawei’s showroom in China, you may be lucky enough to get taken into a hangar the size of a football field. In one small area there’s the ISP/Telcocore kit, we’ve mentioneed. The rest of the space is filled with other technologies such as IN (Intelligent Network – the brains behind telco voice networks), GSM, GPRS, Edge, 3G, NGN (Next Generation Networks i.e. IP-based voice and data networks like BT’s 21CN), xDSL (both end-user and network), optical (driving fibres), routers and LAN switches and of course consumer devices for it all.
Huawei are currently supplying all sorts of companies. Ever wondered who makes the new USB 3G datacard for Vodafone (the USB one that works on Windows, Mac and Linux)? Huawei.
Initially Huawei picked a ‘small’ market to concentrate on, but now they’re ready to attack the bigger ones. They have the equipment, and the resources to make a huge dent into the existing players markets of all sorts. It won’t just be Cisco suffering.
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