Huawei

Corporate PresentationCorporate PresentationHUAWEI TECHNOLOGIESHUAWEI TECHNOLOGIES

Corporate PresentationCorporate PresentationHUAWEI TECHNOLOGIESHUAWEI TECHNOLOGIES

To Enrich Life Through Communication

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Huawei Cooperation Review

Industry Transformation

Huawei’s Preparation

Huawei’s Value Proposition – with Telcos

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An innovative and customer-oriented ICT company

established in 1988 and fully owned by its staff.

Over 35,000 staff members (over 48% engaged in R&D); more than 10% annual revenue invested in R&D.

Full product portfolio including wireless products, network products, application and software products and terminals.

A leading global supplier with products deployed in over 100 countries, including the US, the UK, France, Portugal, Russia, Brazil, Singapore and Thailand, and serving 28 of the world’s top 50 operators.

Contract sales amounted to US$8.2 billion in 2005. over 58% of which (US$4.8 billion) was from international

markets.

Huawei Technologies

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Continuous Growth

Serving 28 of the world’s top 50 operators

Strategic partner with BT, Vodafone, Telefonica, etc.

Contract Sales（ USD1 billion ）

0

1

2

3

4

5

6

2002 2003 2004 2005

2.67

3.83

5.58

8.2

7

8

9

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Financial Performance

2001200220032004

2,2902,1282,6943,827

258108384624

204311385396

342355389487

20%7%23%31%

Year ended December 31

R&D Expenditure

Cash Flow From Operations

Net Income

USD in millions

Notes: All financial data listed prior to 2005 are audited by KPMG.

Revenue

Return on Net Assets

1,933

345

255

180

47%

2000

Revenue amounted to US$6,400 million in 2005

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Total staff: Over 35,000 employees

Human Resources

Supply Chain: 8%Administration: 6%

R&D:48%Marketing, Sales and

Customer Service : 38%48%38%

6% 8%

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Global Presence

8 regional headquarters, 85 branch offices outside China

3-level customer service system (HQ, regional, local)

ThailandSaudiArabia

India

NepalPakistan

Russia

Kazakhstan

Kyrgyzstan

South Korea

Malaysia

Vietnam

Philippines

Ukraine

Egypt

Germany

Singapore

Indonesia

Australia

Kenya

South Africa

Zimbabwe

AlgeriaMorocco

UK

ArgentinaChile

Peru

Colombia

Mexico

USA

Nigeria

Huawei Technologies(Headquarters)

Tunisia

France Canada

Bangladesh

UAE

PortugalItaly

Brazil

NetherlandsPoland

Sweden

Shenzhen

SpainBulgaria

Uzbekistan

Ecuador

Venezuela

Turkey

TurkmenistanGreece

Romania

Sri Lanka

Cambodia

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Huawei works with top management consultancies to bring world-class expertise to the

company, provides customer end-to-end delivery with high quality .

Management Transformation

consulting

consulting

Organization Transformation

Integrated Product Development and Integrated Supply Chain

Human Resources & ESOP

Financial Management

Quality Control

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Full Audit by Key Operators

Strategic Partnership Selection• Auditing Concern Areas

– Management Systems– Environmental – Sourcing with Human Dignity – Project Management – Product Realisation – Policy Strategy and Planning – People – Relationship Management – Facilities – Capacity – Risk Management

• Qualification ( Auditing) Philosophy– Strategy and Policy– Process supporting– Process Implementation– Quality Control– Continuous Improvement– Thought Leadership

Completed Auditing Overview

Motorola(2000-2003)

BT (2003-2005)

FT(2004)

Vodafone(2005)

O2 (2004)

Cable and Wireless(2005)

DT(2005)

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Global R&D

Global R&DStockholm, Sweden － Base Station architecture and system

design, Radio technology and RAN algorithmsDallas, USA － ASIC technology and CDMA algorithmsBangalore, India － Software technology/platformMoscow, Russia － Algorithms and RFShenzhen, China － CN, service platformsShanghai, China － RAN, terminals, ASIC chipsetsBeijing, China － Packet CN, GW, TerminalsNanjing, China － BOSS, 3G services

CMM5 and IPD (Integrated Product Development) have been widely

implemented into product development.

Four R&D divisions (Central software division and institutes in Ban

galore, Shanghai and Nanjing) have been awarded CMM level 5 certi

fication.

Adopts asynchronous development, unifies product commercialization and

speeds up response to market.

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R&D Based on a Shared Platform

Constructing a “speed, quality and cost” advantage, through modular

structure, standardization and sharing technology (CBB methodology).

Uniform operation and maintenance platformUniform operation and maintenance platform

IP+Opticalplatform

IP+Opticalplatform

Common software and hardware platformCommon software and hardware platform

Fixedaccess

platform

Fixedaccess

platform

Wirelessaccess

platform

Wirelessaccess

platform

Servicecontrol

platform

Servicecontrol

platform

Intelligentnetworkplatform

Intelligentnetworkplatform

Terminalservice

platform

Terminalservice

platform

Uniform engineering and material development platformUniform engineering and material development platform

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Persistent investment in standards and patents to be at the forefront

of future technology.

Standards and Patents

Standards

Participated in 70 international standardization organizations including ITU, 3GPP.

Patents

Domestic Patents 　　　　　 9600 pcs

Authorized Patents 　　　　 1844 pcs

PCT International and Overseas Patents 1574 pcs

5% of international UMTS essential patents (69 patents), No.5 of global telecom companies　　（ Till 31 Dec. 2005 ）

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Huawei E2E Delivery Process Overview

Ad/trade show mgt- Info mgt

Relationship mgt- Relationship mgt- Buz partner mgt Sales

executionSolution design

- Resource allocation-Customer sat mgt-Market req- Market forecast- Offering info

Sales mgt- win- leadership team- drive sales exection

Opportunity point mgt

CusTOmer

CusTOmer

Req mgt

Understand Market

Perform Segmentati

on

Portfolio Analysis

Dev Bus

Plans

Align & Optimize

Manage & Assess Perf

pro logisticsmfg

Supply chain plan

CRM

Partner and supplier mgmt

FIN / HR / IT

MM

IPD

ISC

OR

Research, standard, patent

Technology roadmaps

Brand mgt

CS

issues

Contract signature

Concept

Plan Develop

Qualify

Launch

Life Cycle

req NPIEngineering implement TS

Spare parts mgttraining

Narrow e2e delivery

Broad e2e delivery

Within C2C framework, e2e delivery focuses on customer commitment to committed delivery

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Global Supply Chain and Logistics System

Shenzhen manufacturing and logistic center—supplies globally. Hangzhou factory manufacture data-com—low level products . Brazil factory—supplies to Latin America. Beto-Huawei—supplies to Russia and Eastern Europe. Hub in Holland—supplies to Europe. Hebei manufacturing center—supplies to northern China and Russia. Dubai logistics center—supplies to middle Asia and Africa.

Beto -Huawei, Russia

Brazil-Huawei, Brazil

HeBei, China

Shenzhen Headquarter, China Cairo Factory, Egypt

Amsterdam, Holland

Dubai

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Supply Chain Processes Overview

MAKE

Make Product

Enable Make

ORDERMarket Product

SOURCE

Source Product

Enable Source

DELIVER

Deliver Product

Enable Deliver

PLAN

Plan Supply Chain Enable Plan

Su

pp

liers

Cu

sto

me

rs

RETURNHuawei RETURN

Customer-oriented, process-based, building partnerships and sharing information

Integrated high-efficiency and open supply chain with advanced IT tools

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Global IT System

E-business foreground applications (suppliers, partners, customers and employees)

EAI (Tibco/WebMethod...)

E-business Collaborative

Application Integration Basis

PDM System PTC Winchill

Customer Relations Management Related

System

Advanced Planning

System i2 APS

ERP System Oracle MRP/INV/...

ERP System Oracle AP/AR/FA/CST/GL

EMAIL/PROXY System

SAP HR

Product Development

Supply Chain Market/TS

Fin Management HROAGroupware System

Lotus Notes

Intelligent Business

Business Intelligence & Decision Support SystemData Warehouse

Web Project

Logistics Bar Code System

DMS/WMS...

WAN

Common DB Sever

Web Sever, Common Web Sever+Apps Sever, Common Apps Sever

DB SeverSAN Storage

System

International Network

InternetBackbone Network

Campus LAN, LAN

Exabyte/Veritus Backup System

DMZ

Info Securit

y Infrastructure

Video/Call Conference

Service

OA Support Facility & Service

Local NetworkPartners’ Network

Data Center Disaster Recovery Center

Call Cent

er

Message Service

Proxy

Certification Center

Directory Service

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3G

World-leading wireless network supplier, 18 commercial UMTS networks

NGN

No.1 in global VoIP market (Dittberner)

Intelligent Network

No. 1 in global market (21.6% of users) （ Ovum ） Optical Network

No.1 in global LH+MR DWDM market (Ovum-RHK)

Access Network

No.1 in global IP DSLAM market (Infonetics)

No.1 in global MSAN market in 1H05 (Infonetics)

Data Communication

No.3 in worldwide service provider routers (Gartner)

Industry Position

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VISIONTo enrich life through communication

MISSIONTo focus on our customers’ challenges and needs by providing excellent communications network solutions and services in order to consistently create maximum value for customers.

Vision and Mission

www.huawei.com

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Serving our customers is the only reason Huawei exists; Customer demand is the fundamental driving force of our development.

High quality, excellent service, low operating costs, and giving top priority to meeting customer requirements to enhance their competitiveness and profitability.

Continuously performing management transformation to realize efficient process-based organization operation for ensuring high quality end-to-end delivery.

Developing with our peers in the industry as both competitors and partners to jointly create a favorable environment and share the benefits of the value chain.

Development Strategy

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Fulfilling our social responsibility as a responsible corporate citizen

Social Responsibility

A dedicated member of the United Nations Global Compact

December 2004 Tsunami: Donated 2.42 million USD worth of telecom equipment and an additional 2.42 million USD in cash from the company and its employees

August 1998 Flood (China): Donated US$3.7 million worth of equipment, and US$1.85 million in cash schools.

Education Fund: Donated US$3.09 million to set up a fund to

help needy students complete an undergraduate education.

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Business Operation Models Face Transformation

80s － mid and late 90s Mid and late 90s － early 21st century

21st century

Network layout

Technology updates

Homogeneous

services

Service quality

Network-focused

Service provisioning

capability

Service marketing

Customer increase

ARPU

Service-focused

Converged network

Converged services

Industry chain re-

structuring

Integrated

information services

Customer-focused

How should operators and equipment suppliers adapt to a more customer-

focused business operation model?

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Cross-industry Penetration and Intensifying Competition

Carriers compete on a broader scale Expanding into the IT service field to create value for business users

Expanding into content & entertainment and other fields to create value for end users

IT Infrastructure Mobile

Fixed Voice/Data

Applications

Broadband Internet

Content,Entertainmen

t

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Change of Revenue Structure

Diverse contents & services and their short lifecycle makes time-to-market

critical.

Voice （ Including mobile ）

IT services for business users

Content services for consumers

1980 Voice operation　　　　　　　　　

2002 Transformation 2010 Non-voice operation

$

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Value Chain Transformation

Forepassed telecom value chain distributing

Terminal

Carrier

Equipment supplierService provider

Future telecom value chain distributing

Terminal

Carrier

Equipment supplier

Service providerValue

Value distribution is shifting toward terminal and business service. The

“carrier + equipment supplier”- focused value chain is meeting serious

challenges.

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Customer need quickly addressed through product roadmap.

Marketing organization has shifted to the frontier, which:

allows customer needs to be quickly transferred into a product roadmap through CCM (customer

commitment management).

ensures rapid roll-out of new products and services.

CollectAnalyze and

validate

Taken into product roadmap

Follow-up and carry out

Customer Marketing

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Customer requirement oriented: Understand customer’s real requirements

following

Huawei

Local carrier

China branch

Global VendorGlobal

Carrier

Global Market

1031

The customer in the previously called customer requirement oriented is always local customer according to our lesson learnt in NGN. We are actually five levels behind global requirements.

At the time of products, sales dominate; while at the time of solutions, especially non-voice service, consulting, solution + business model are the main marketing methods. The conformance of the strategy and the vision to the customers’ expectation decides their loyalty to the products. Customer requirements are the strategy and vision, which reflect the future market.

Vendor

1

Vendor

2

Vendor

3

Vendor

n

Solution Marketing Capability

Competency among vendors

Middle Vision

Low Vision

Sales capability

Corporate capability and pot

entiality


entiality


entiality

High Vision

60

70

90

Marketing CapabilityCustomer Expectation

Score

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Consultancy-style Marketing

Service consultancy Network layout &

design Network optimization &

capability management

Network aggregation

Joint marketing

Specialized management operation contract

General design, construction, operation and maintenance

Maintenance of special fields and 3-level maintenance

Design management and capability management

construction, operation and maintenance

Technology and business plans & cooperative business expansion

Network layout & solution design Cooperation process integration

Application Database or content Mobile equipment

management

Pre-sales cooperation

solution design

Professional service

Outsourcing maintenance

Management operation

Management capability

Content trusteeship &

solution application

Customer

Improving wide-ranging service capabilities and supporting operators to

expand to the two ends of the value chain

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Experience-oriented Marketing

Creating experience-based environment for end-users and establishing

open lab for ISPs/ICPs to attain value from end-users.

Terminal Producer

Operator SP/CPTerminal Producer

Operator SP/CP Huawei inTouch Lab

Operation R&D Engineering Brand

Cooperation

AP(1-N) DeploymentAP(1-N) Deployment

Experiencing EnvironmentOpen Lab

Long-distance VCOL

support

Application/contentVerification

Terminal IOTVerification

Service Integration Verification

Application/content

experience

Application layout

AP Deployment

Terminalexperience

Long-distance application

AP Experience

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Product-line Aggregation

Providing total network and end-to-end solutions; enabling the advantage of future network aggregation

Aggregating product lines; actively handling future network aggregation and service transformation

End-to-endSolutions

Application and Service

IP+Optical Bearer Network

Wireless/ Wireline Access Network

Core Network

Wireless/ Wireline Terminals

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Future Network Architecture - Simplified

Key Features ： Convergence, Mobile, Broadband, Content & Service

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Future Technologies Research

Establishing laboratories to research FMC, IMS, WiMAX, IPTV, and other

innovative technologies, riding the future trend of network convergence

and service transformation.

Mobile Access

Fixed BB Access

IMS core

(CSCF/HSS/…

)

Personal App Platform

ICTPlatform

Media AppPlatform

Business Operation Support System

GSM/UMTS/CDMA/WiMAX

Single billing, multi services and tariff package

Operator’s Organization SupportNetwork oriented to customer oriented

xDSL /FTTx/Cable/WLAN

Metro IP over WDM MPLS IPV4/IPV6

FMC solution

Bearer Layer Service POPService ControlBRAS

GSNWSNMG

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Increasing Investment in Service Application and Terminal

Providing abundant service applications and terminals to help operators

expand to the two ends of the value chain.

Terminals

Interactive

Get involved

Specially Designed

Impression

IMPS

Game

Mobile E-mail

Web/WAP Surfing

LBS

Streaming

M-RBTMMS

Service & Applications

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Value Proposition-- Views on Telecom Industry

• “Size does matter”!– Leveraging global economies of scale– Global market expansion into high growth markets– Global sourcing

• Open interfaces and standardized products

• Market trends– Unpredictable customer demands - no more killer application!– IT, telecom and entertainment convergence– UMTS ubiquity!– Always more competition!

• Speed to market has never been this important!– Need to address multiple market segments– Need to address markets with different cultural background

A quick-response vendor can reduce the business developing cost !

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Value Proposition-- Telcos: Need Support From Strategic Partners

-> Minimize risk from transformation in the telecom industry

• Asia is leading the new round in the telecom industry.

• Speed to market is the key.

• Economies of scale is the key.

-> Looking for committed partners, not box sellers

“We have no clue of what our customers want. Our customers have no clue of what they want. Customers know good when they see it.”

-> We are selecting Companies, not Products

• History track

• Development trend

• Potential for the Growth

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Value Proposition– Collaboration with Carriers’ R&D• Joint Annual Planning

– Sharing marketing intelligence – Regular workshop for dedicated issues– Monitor and survey on-going projects

• Open interfaces for executive team and development team

• Co-marketing and Co-service Innovation– Create customized service– Joint development– Host a value chain and innovate new revenue– Some alpha trial and test,– Dedicated solution development– Joint standardization actions

• New Business Model and Profit Model– Outsourcing– Alliance and service exchange – Overseas extension and service operation– Introduce SP/CP and service bundling

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JPOR Joint Planning andOperations Review

TWG Technical Work

Groups

PMT Process Manage

-ment Teams

NSQR Network & Service

Quality Review

• Release Planning• Architecture• Testing

• Operations&Capacity Management

• Product Management & Marketing

Planning Direction

Status

Issues/Actions

Customized Service Development Governance Model

• Operator Service BP

• Operator & Vendors implement Service BP corporately

• Operator: Requirement Market

• Vendors: Technique Product

Time to market, Quality of product, Network & service

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Foundation Version NFoundation Version N Foundation Version N+1Foundation Version N+1

TDT platform

… …

PDT Wireless INPDT Wireless IN PDT Fixed INPDT Fixed IN

AIS TEAM

AIS TEAM

CMCC TEAM

CMCC TEAM … TELEFONICA

TEAM

TELEFONICATEAM

BTTEAM

BTTEAM

…

PDT Mobile dataPDT Mobile data

TEAM

TEAM

SUNDAYTEAM

SUNDAYTEAM

…

PDT OSSPDT OSS

CHINATELECOMTEAM

CHINATELECOMTEAM

HUTCHSONTEAM

HUTCHSONTEAM

…

PDT Platform

Note:

PDT-Product Development Team

TDT-Technology Development Team

…

•Dedicated Team in PDT for each key customer

•Close interaction between PDT & key customers guarantee the quick customization

•Benefit from every upgrade of TDT platform

•Every upgrade is to fulfill the most trendy new major capability-set

•Upgrade steadily for high quality of both TDT & PDT platform

•Reusable for all PDTs to save the comprehensive cost

Joint Development (R&D)

--Platform Strategy Supports Quick Response

-3~5 new features/services for AIS per month

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Service Test: Tests the service against the test plan in simulatedand live environments

Service Test

Definition: Defines the detailed plan and requirements needed to implementthe service or technology

Definition

Feasibility: Determines the best network implementation of the service or technology

Feasibility

SG-11

SG-9

SG-4 SG-2

SG-1

A phased process that defines how new technology, features and services are realized. – 6 Phases – 4 Major Decision Points– Concurrent operation encouraged while managing risk

D1

D2

D3

SG-14

CSD

ROMA

Feasibility Report

TP, FSD, OTP, SOTP, FRS, Proj Plan

SW/HW, Test Plans

Test Results,Certification Matrix

Concept

Concept: Defines a high levelview of the service idea and associated time and cost

SG-13

MSD

Development: Creates the physical realization that implements the given requirements

Development

Introduction: Introduce to all geographic areasand begin Life Cycle Management/Customer Care

Introduction

SG-0Service/TechnologyLaunch

Service Gates (Can We Go Forward)SG-14 Start ROMASG-13 Start FeasibilitySG-12 Start Feasibility DecisionSG-11 Start DefinitionSG-10 Start CommitmentSG-9 Start DevelopmentSG-8 Start Design ImplementationSG-7 Start Unit TestSG-6 Start IntegrationSG-5 Start Performance VerificationSG-4 Start Acceptance TestSG-2 Start ORTSG-1 Start IntroductionSG-0 End Introduction

Decision Gates:(Should We Go Forward)D1 Proceed with DefinitionD2 Proceed with DevelopmentD3 Proceed with CI or GAD4 Proceed with Life Cycle

D4

Current Service Realization Process (SRP)

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Joint Go To Market---How OR, MM, Go To Market & IPD Link Together

IPD Process

Roadmap

Business

Plan

Con

cept

Pla

n

Dev

elop

Qua

lify

Laun

ch

Life

Cyc

le Charter

PMT Project

Mkt

Ass

ess

Seg

men

tatio

n

Opp

ortu

nity

Dvlp

Biz

Pla

n

MM Project

MKTG PDT Project

PCRProject

Pro

du

ct Lin

e Level

Pro

du

ct Level

Re

qu

ire

me

nts

Ma

na

ge

me

nt

(Pro

cess

& T

oo

ls)

HW Biz Strategy

HW Historical Data

Technology

Customer Wants & Needs

Offering Requirements

Emerging Product Requirements

MM

Requirements

Project

Other events triggering PCRs

Market Requirements

IPD Marketing Program - Conceptual Diagram

LegendKey Inter-project (Inter-process) Handover Points

Handoff to Market

Management Process

Handoff to IPD

Process

From a cross-process perspective, the requirements management process will link to MM and IPD processes

Alig

n B

iz P

lan

Mea

sure

Per

form

ance

Products Launch

Customer Communications

Release of Products

Marketing Promotion

Technical Support

Go To MKT

IPD

OR

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Joint Go To Market-Case Study

BT － Datacom SME Solutions Approved, Launch, Training, Road Show, etc.

China Mobile － PPS, etc.

China Telecom － Baby On Line, AS8010, ICT, etc.

Neuf Telecom － Triple play/IPTV

Deutsch Telecom － SME Markets Launch

Some resale partners such as

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Huawei Technologies Co., Ltd.Add: Huawei Base, Bantian, Longgang District, ShenzhenTel: +86-755-28780808Zip Code: 518129http://www.huawei.com

Enriching Life Through Communication

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