Huawei targets services with new R&D initiatives

Huawei targets services with new R&D initiatives

“By explicitly embracing such a strategy, Huawei is signalling that services will be a key engine of future growth."

Huawei is ramping up services investment to support future growth with the company’s acting CEO, Eric Xu, driving the point home at this year’s Shenzhen-based Huawei Global Analyst Summit.

At the conference, Xu devoted 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 per cent 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 signalling that services will be a key engine of future growth,” predicts Kris Szaniawsk, research analyst, Ovum.

According to Szaniawsk, the vendor is predicting a CAGR of 10 per cent 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 $US350m over the next three years in consulting and systems integration capabilities, platforms, and methodologies,” Szaniawsk adds.

“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 virtualisation (NFV), datacentre, 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, Szaniawsk says Huawei also plans to focus on customer experience management (CEM) and network planning/optimisation, business-oriented managed services that support value creation, and to become a strategic partner of choice for operations transformation.

According to Szaniawsk, 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,” Szaniawsk adds.

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