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Huawei is more than just smartphones

China-based firm is investing heavily into developing the future

In the past year, you may have seen advertisements for smartphones by China-based electronics firm Huawei featuring some prominent athletes such as hockey star Jaromír Jágr and snowboarder Eva Samková. Huawei has been expanding its presence in Europe, one of its key growth markets.

Joy Tan, head of corporate communications
for Huawei Technologies 

Huawei has high expectations for growth, and also sees a whole new generation of superphones and related technology coming to the market bu 2020.

But phones and other consumer goods such as wearables and laptops only represent one-third of what the company does in terms of revenue. Much of its work is in information transmission and information storage, and processing. Its carrier business represents 59 percent and enterprise is 7 percent.

And while China is the most important market, accounting for 42 percent, the next is the EMEA region (Europe, Middle East and Africa) at 32 percent, while the Americas remain relatively minor at 10 percent.

The company is also heavily focused on research and is looking to new create technologies for the future.

Huawei had a breakthrough year in 2015, with global revenue up 31 percent in terms of US dollars and profit up 26 percent.

Profit in 2015 reached $5.7 billion, up 26 percent from 2014, and revenue was up 31 percent year on year, according to company figures.

The company also envisions double digit growth over the coming years, with the consumer sector leading the way in terms of expansion. In 2015, the consumer division grew 73 percent over the previous year.

The company was founded in 1987 by Ren Zhengfei and some other investors. “A the time the investment was only $3,500 and now in 2015 Huawei's global revenue was $60.8 billion, so that is quite a significant growth in less that 30 years' time,” said Joy Tan, head of corporate communications for Huawei Technologies. Prague was the first stop on a trip the Central Europe to increase brand awareness.

Huawei began in a rural area in China as a reseller of communication switches before starting to develop its own technology first for the local market and then expanding into developing countries by the year 2000. The early years were quite challenging, as conditions in rural areas and developing markets were far from ideal.

By 2005 overseas revenue exceeded domestic revenue, and the company was a preferred supplier of BT and Vodafone. In 2009 it launched the first LTE network in Northern Europe.

In 2010 the company transformed into an ICT company with its three current business groups — consumer, carrier and enterprise — and now wants to concentrate on those.

“We don't want to get distracted by all the opportunities out there; we want to stay focused on the information pipe,” Joy Tan said. “It is all about information. We are very, very focused on building up this pipe. We are not looking at applications. There are too many of them. Developing applications would be a distraction for us,” she added.

Instead, Huawei is developing data centers and servers to move a lot of data on the cloud.

Huawei is also looking to develop new technology and has joint innovation centers with many of the telecom companies it works with. “We joint innovate with these customers. We can capture their requirements and needs very fast, and we can develop solutions together with them very fast and then deploy them to the market,” she said.

Recently the company has also been looking to innovation for the next generation of technology because a lot of companies don't necessarily know where they want to go in the next five to 10 years down the road.

“For innovation we use our global talent. We have 170,000 employees worldwide,” she said. “Now we are deploying our talent globally.”

In the past, employees from China would be sent to other companies but now employees from Europe and other regions are sent where they are needed as well.

In countries outside of China, the number of local employees is around 70 percent and in the Czech Republic it is 90 percent. The company is also 100 percent owned by employees, which is a big motivating factor for productivity.

The company has committed over $1 billion to its developer platform to create new solutions in its labs. “ICT has become a very open system and we have to be open as well to work with all the partners,” she said. “That innovation mentality is really deep-rooted within Huawei. Everybody knows we are an innovative company. We are not just a manufacturer, we are very focused on high-end technology development,” she said.

Currently Huawei has 45 percent of its total staff, or 79,000 employees, in research and development, and has 16 R&D centers and 36 joint innovation centers. “That is the largest R&D workforce in the entire industry,” she said.

The company also collaborates with over 100 academic institutions. In 2015 the company invested $9.2 billion on R&D, representing some 15 percent of global revenues. In previous years it had been 10 percent. “We commit not just dollars but a lot of our workforce into research and development,” she said, adding that the company has had 50,000 patents over the years.

The R&D falls into two categories. First is for solutions such as consumer products that generate near-term commercial benefits, but much if it is into science and technology that doesn't generate immediate commercial benefits but pays off five to 10 years down the road. This research includes new materials, acoustics and optical sensing, for example. There is also a design center in Paris.

“It is a very established process for R&D and product development,” Joy Tan said.

Huawei develops is own chips, which is also an advantage. “If you are just buying chips you cannot build your differentiation because everybody is using the same chip. But when he have our own chip we can actually build in differentiating features into our smartphone and become different,” she said.

There is a 12-year cycle in the industry, she said, going back to 1994–95 when the first wave of truly usable mobile phones swept the market, and then again in 2006–07 with the first smartphones.

Joy Tan said in 2019–20 the next generation of  superphones will come out. “We envision that phone will be much more interactive than what we have right now. … It will almost become a digital assistant for people,” she said, adding that in the same time frame people will see 5G.

“Huawei is heavily investing in 5G technology. We have committed over $600 million in 5G research by 2018, and we have over 300 scientists and fellows working on 5G research in different parts of the world,” she said.

A big feature of 5G will be much higher speed, with consumers being able to download a high-definition film in one or two seconds. There will also be much more possibility for connections on your home network. “Your refrigerator, your toothbrush and so on can be connected to your system,” she said.

The new technology will also improve the response time in automatic driving, allowing a car to react much faster to a situation. “In a 4G scenario when you push the brake [the car] would still move 1.3 meters. That is a long distance. … Under 5G it would only move a couple of centimeters because the latency under 5G is so low. We envision under 5G automatic driving will be realized,” she said.

Another practical example would be municipal garbage cans or recycling bins all communicating with truck dispatchers, so collection could be more efficient based on whether or not the bins were full.

“We are very optimistic of the future,” she added.


by Raymond Johnston,, Prague 09.05.2016

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