Huawei Case Study

HUAWEI: Cisco’s Chinese HUAWEI: Cisco’s Chinese ChallengerChallenger

HUAWEI: Cisco’s Chinese HUAWEI: Cisco’s Chinese ChallengerChallenger

To Enrich Life Through Communication

Presented By:Presented By:Shrimant (093)Shrimant (093)

Neha Singh (094)Neha Singh (094)Pradeep Singh (095)Pradeep Singh (095)

Dhara Sodha (096)Dhara Sodha (096)Sumit Srivastava (097)Sumit Srivastava (097)

Presented By:Presented By:Shrimant (093)Shrimant (093)

Neha Singh (094)Neha Singh (094)Pradeep Singh (095)Pradeep Singh (095)

Dhara Sodha (096)Dhara Sodha (096)Sumit Srivastava (097)Sumit Srivastava (097)

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Time Line

1960,1970: Few network equipment suppliers.

1980: Introduction of Digital Technology.

1988: HUAWEI was incorporated as a private enterprise.

1990: Commercialization of internet & Privatization of telecom service providers.

1994: CISCO entered Chinese market.

2001: Dotcom bubble burst. American companies accounted for 75% of telecom equipment market in China within which Cisco accounted for 62%

2002: China became largest telecom market surpassing US.

2002: HUAWEI Overtook Shanghai Bell, an Alcatel joint venture. (Become dominant supplier of digital switches and Routers in China)

2005: Huawei became largest Chinese telecom equipment manufacturer, annual Revenue of US$6.7 billion.

2006: Among the rank of China’s “national champions”.

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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$6.2 billion in 2005. over 58% of which (US$4.8 billion) was from international

markets.

Also called as CISCO of China.

Huawei Technologies

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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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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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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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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

Four R&D divisions (Central software division and

institutes in Bangalore, Shanghai and Nanjing) have been

awarded CMM level 5 certification.

Adopts asynchronous development, unifies product commercialization and

speeds up response to market.

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3G

World-leading wireless network supplier, 18 commercial UMTS networks

NGN

No.1 in global VoIP market.

Intelligent Network

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

Optical Network

No.1 in global market.

Access Network

No.1 in global market.

No.1 in global market .

Data Communication

No.3 in worldwide service provider routers (Gartner)

Industry Position

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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

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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Strategic Alliances

Nov 2003: JV with 3Com called Hauwei-3Com. (Huawei 51% stake)

- Aimed at selling to Corporate customers.

- JV captured about 35% of Chinese corporate market.

- Expected to overtake CISCO to be the largest equipment

provider in china.

- Entered into JV to leverage 3Com’s strong brand.

2003: Formed a 3G research JV with Japan’s NEC and Matushita.

Early 2004: JV with Siemens, called TD-Tech

Signed a global framework agreement with VODAFONE Group to supply mobile phone network to any Vodafone company worldwide.

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CISCO STORY

• In 1984 two Stanford computer scientists ,Len Bosack and Sandy Lerner started Cisco.

• By 1987,the company managed to secure a sizeable venture capital from Silicon Valley for its large-scale expansion.

• In the early 1990s,with the growth of internet , Cisco expanded from a one product company into a service based leader in networking business.

• From 1995,Cisco took a series of acquisitions to broaden its service and product portfolios.

• To move into new market segments ,Cisco formed extensive strategic alliances with companies in the networking value chain.

• By the end of 1990s,Cisco had become a virtual manufacturer of networking products , running network of outsourced operations.

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CISCO STORY (cont.)

• In order to meet global demand for its products ,Cisco made alliances with local OEMs and distributors.

• Cisco entered China in 1994 with the opening of its first office in Beijing.

• In 1998,the company began to focus its attention on China to expand its business. Cisco opened its own subsidiary instead of forming Joint Ventures with local partners.

• Cisco also embarked a number of education initiatives to develop favorable relations with Chinese authorities.

• It launched its new R&D center in Shanghai in 2005.

• Cisco became the largest telecom networking company in the world , with 35000 employees and an annual revenue of US$22 billion in 2003-04.

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SWOT Analysis

STRENGTHS•International expansion provides company with access to many customers

•Low operating costs (low cost engineering) that support low-cost pricing strategy

•Broad portfolio of products to support end-to-end solutions

•Ability to leverage power and influence of government of China

•Installed base of Tier 2/3 telecom operators in emerging markets

•Inexpensive and highly qualified R&D workforce

•Undertaken joint R&D laboratories with foreign companies

•Early and heavy investment in 3G mobile communications technology

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SWOT Analysis (cont.)

WEAKNESS•Ties to Chinese government could limit international investment opportunities

•Lack of strong global presence, including in US and Europe

•Lack of credibility with Tier 1 telecom operators

•Strained relationship between U.S. employees and Huawei executives

•Difficult to adopt foreign accent for Chinese employees

•Failure of low price strategy in U.S. markets

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SWOT Analysis (cont.)

OPPORTUNITIES• Expand rapidly into high-growth geographies

• Expand rapidly through strategic alliances in Tier 1 accounts

• Become a top leader in professional services

THREATS• Partnerships and alliances are unsuccessful due to lack of experience in managing relationships

• Looming European recession could have a global effect and negatively impact product sales

• Immature organization implodes due to stress of rapid expansion

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SUGGESTIONS:

• Image changeover:

-- From low cost image to reliability.

• Improving track record in U.S markets by:

-- Accruing firm having sustained and consistent emphasis on R&D and Innovation.

• Creating brand awareness in U.S. through positive marketing and promotion by:

-- By concentrating more on CSR activities.

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SUGGESTIONS:

• More focus on network security.

• It should raise IPO to increase its funds in order to enhance its technical strengths.

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Huawei Technologies Co. Ltd. : Current Status

• 110,000 employees• 46 % engaged in R&D• 20 R&D institutes worldwide• In 2010 invested USD 2.606 billion in R&D• In 2010 revenue recorded USD 29.14 billion• Products and services deployed in more than 140

countries• Currently serves 45 of the world 50’s largest telecom

operator.

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Comparison of Cisco Systems & Huawei technologies Co. Ltd. (2010 statistics)

ParameterParameter Cisco Systems Cisco Systems HuaweiHuawei

Revenue (USD) 43.21 billion 29.14 billion

R&D investment 6.04 billion 2.60 billion

R&D investment as a percentage of Revenue

14 % 9%

Number of employees 110,000 71,825

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Product Portfolio Comparison

Huawei Technology Co. Ltd. Cisco Systems

Mobile and fixed broadband networks

Networking Device

Consultancy and managed services Network Management

Multimedia technology Cisco Software

Smartphones Interface and Module

Tablet computers Optical networking

Storage area networks

Wireless, Telepresence

Datacenter

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Huawei Technology India Private Limited (HTIPL)

• 1988 - Huawei established its R&D center in Bangalore – Huawei has set up one of the largest R&D centers in

Bangalore, to develop a wide range of telecom software– Currently employing – 2000 R&D center.– Has invested USD 200 million till date.– CMMi level 5 certified organization – Huawei's largest and fastest growing R&D center outside of

China• HTIPL's activities span

– end-to-end ownership of products– testing and delivery– to enhance the core competence for the global market.

• Growing Customer base in IndiaHuawei India’s clientele includes Top 10 telecom service

providerssuch as Bharti Airtel, MTNL, Vodafone, Reliance, Tata

Teleservices,Aircel, BSNL and other new operators.

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Cisco India

• Cisco India commenced operations in 1995

• Cisco has 7 Sales Offices in the region - New Delhi, Mumbai, Bangalore, Chennai, Pune, Kolkata and Hyderabad.

• India headcount is 7600+ including R&D, sales and business support staff

• Cisco Global Development Center is in Bangalore, this is the largest outside of the US– Joint Development Centers with Wipro Technologies and Infosys

Technologies in Bangalore; HCL Technologies in Chennai and Zensar Technologies in Pune

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THANK YOU

Documents

Huawei Case Study