Huawei is ramping up services investment to support future growth. Huawei’s acting CEO Eric Xu drove the point home at this year’s Shenzhen-based Huawei Global Analyst Summit by devoting his keynote to the vendor’s services plan and announcing that Huawei’s carrier business strategy will now be powered equally by services and products rather than just product-driven as in the past.
Services R&D bolstered by joint innovation
One could be forgiven for thinking that Huawei was already pursuing a joint services-product strategy given the healthy 19% CAGR of its global services business over the past five years, but services revenues still constitute only around one third of Huawei’s carrier networks business.
By explicitly embracing such a strategy Huawei is signaling that services will be a key engine of future growth.
The vendor is predicting a CAGR of 10% or more for total revenues over the next three to five years, increasingly driven in its carrier business by software and services. To support this, Huawei plans heavy R&D investment around both IT and services.
In particular Huawei plans to invest $350m over the next three years in consulting and systems integration capabilities, platforms, and methodologies. The vendor believes that carriers will be in particular need of prime systems integrator expertise to help them implement ICT infrastructure transformation that involves software-defined networking (SDN) and network functions virtualization (NFV), data center, cloud, and server technologies. This mirrors Ovum’s view that SDN/NFV will be a strong driver of systems integration business.
In addition to becoming a prime systems integrator, Huawei also plans to focus on customer experience management (CEM) and network planning/optimization, business-oriented managed services that support value creation, and to become a strategic partner of choice for operations transformation. Initiatives Huawei is investing in to support this strategy include:
NFV/SDN Open Lab R&D centers in China to support innovation and multi-vendor integration
Customer Experience Transformation Centers (CETCs) to support joint innovation and customer-centric operating models.
a Service Provider Operations (SPO) lab in Ireland to support CSPs’ operations
Service Operations (SvcOps) Support Centers to support improved service delivery
open platform and enterprise architecture to facilitate operations transformation.
A common theme to these initiatives is making better use of open collaboration and partnering to drive joint innovation, an approach that Huawei will need to focus on more than it has in the past.
“Huawei’s QoE approach is larger than the network elements,” TE0006-001055 (April 2015)
Vendor Services Review: Huawei Technologies, TE0006-000905 (August 2014)
“Telecom vendors pitch services at network and ICT transformation,” TE0006-000942 (September 2014)
Kris Szaniawski, Lead Analyst, Intelligent Networks