Huawei Aims to Become 1 of World’s Top 5 Cloud Players

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3Q 2017 | IN-4739

Huawei wants to become a top cloud player. Strongly rooted in telco business, Huawei will likely utilize its telco expertise and relationships to move more aggressively into cloud, something which ABI Research believes is going to happen, given the upcoming 5G commercialization.

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Huawei’s New Cloud BU Is Booming


During Huawei Connect 2017, Huawei announced its future cloud strategies, with the aim to compete with the world’s top cloud players. Since its inception in March 2017, Huawei’s Cloud  Business Unit (BU) has grown exponentially, and is already serving 45 Fortune 100 companies. Via its new hardware platform, Atlas, which enables pooling of GPU, HDD and SDD resources, and its DevOps tool, DevCloud, Huawei believes it has the capabilities to challenge Amazon AWS, Microsoft Azure, Google Cloud and Alibaba Alicloud to become the trusted cloud partner for both telecommunication players and enterprises alike.

Video and V2X to be Key Drivers


Despite its heavy push into the enterprise sectors, Huawei is very much a telecommunications infrastructure vendor. 56% of Huawei’s 2016 revenue came from operator business, including fixed and wireless. Another 34% came from consumer business, which includes smartphone and other broadband products. The remaining belongs to enterprise business. At the same time, around 45% of Huawei’s revenue comes from China, following by Europe and Asia Pacific.

As compared to its major cloud competitors, which have strong presence in the enterprise market, Huawei is looking to take advantage of its footprint in the telco industry by growing together with them. For example, Huawei believes video is the next essential service in telecommunications services. The company partners with various OTT content providers in the Asia Pacific regions and hosts their contents in Huawei regional data centers. In doing so, Huawei can offer a package of network hardware, video optimization and monetization solutions, video platform and content to telcos who recognize the opportunities in videos and contents.

At the same time, Huawei Cloud IoT platform enables Huawei to tap into the IoT market, especially in cellular vehicle-to-everything (V2X). As a partner of the 5G Automotive Association, Huawei has been active in V2X, having showcased its solution with Vodafone, China Mobile and other telcos. Other than the low latency and high bandwidth of the 5G network, V2X also requires HD video streaming, instant response, and intelligent analysis to different roadside conditions, all of which are performing in the cloud environment. 

5G Is Key to Demand for Cloud


Huawei has already strong presence in the telco industry, a trillion-dollar industry in revenue with annual capital expenditure of US$ 500 billion. However, for Huawei to mount a strong challenge to the existing players, the company needs to hope that the telco industry will stop dragging its feet in digital transformation processes. Enterprise cloud players, like AWS and Alibaba, often pursue volume and growth over margin and are very aggressive in price cutting and cost reduction. This constant improvement of cloud computing capability has proven popular among enterprise customers. Given how telcos are facing significant obstacles and speed bumps in seeking growth in video and IoT, Huawei will need to differentiate itself from the incumbents.

Nonetheless, ABI Research believes that Huawei’s confidence is well placed. Akin to how Ericsson’s presence in the core networks and BSS / OSS market propelled its rise to one of the world’s top software companies, Huawei can equally place its faith in increasing demands for cloud solutions by the telco industry. All future telco business services will be cloud-based, due to the upcoming 5G network architecture. As a result of its existing relationship with telcos, Huawei has deployed 830 data centers worldwide, 420 of them cloud data centers.

At the same time, enterprises may look for Huawei when they need to deploy mission-critical or business-critical applications. Huawei’s experience and expertise in deploying carrier grade cloud solutions will provide enterprises the resilience, redundancy and reliability they desire. Given that cloud BU is now a horizontal business unit, connecting Huawei’s carrier business group and enterprise business group, Huawei can offer carrier grade cloud solutions to enterprise customers, in combination with both fixed and wireless network infrastructure solutions. Key industries, such as logistics, manufacturing, utilities and public safety, will certainly welcome an end-to-end integrated approach to the deployment of mission-critical network.