Huawei U.S. Leader On Winning Against Cisco Through 'Openness', AWS Relationship And U.S. Market 'Commitment'

Huawei Exec Talks Channel, U.S. Strategy

Huawei executive Ian Foo spoke with CRN about the company's channel strategy and why "trust has to be built" for the Huawei to succeed in the U.S. market.

The Chinese network and telecom giant is winning over global market share networking rival Cisco as switching revenues jumped 70 percent year over year to $359 million during the first-quarter 2017, while wireless WAN sales are also growing at a rapid pace.

Ian Foo, director of network switching, gateway and security product line at Huawei U.S.A, said the $75 billion company has been climbing up the market share ladder over the past few years through its open networking approach, changing sales models and unique R&D strategy.

In an interview with CRN, Foo also talks about Huawei's channel strategy and commitment in the U.S. market. "The understanding, the awareness, the trust has to breadth – we're working on that," Foo said.

How is Huawei winning over market share from Cisco?

One thing that's really resonated well with the industry globally and customers in general, is our focus is on delivering a truly open solution. A lot of vendors will claim open capabilities, in that they implement an API or they have a couple partners here or there. We've taken our approach to open to a whole different level. We provide and design end-to-end solutions across the board -- whether it's a data center, the WAN or the campus -- you can buy an end-to-end Huawei turnkey solution.

However, understanding that true enterprise networks run [several vendors'] technologies, and typically best-of-breed that varies depending on the needs of the customer, we built our solutions to be completely modular and interchangeably open ... you can take any core component and interchange that with a third-party that implements a public standard, or with many third parties within a wide ecosystem that we're building, to develop a value-based solution for an enterprise … That openness and ability to provide the widest array of choice and flexibility has resonated extremely well, globally, with all of our customer-base.

Can you give some examples of just how open Huawei is becoming?

If you look at our cloud data center solution, we integrate with VMware. We're VMware vSphere NSX certified, which is the most popular hypervisor virtualization solution in the enterprise today. However, we also just recently announced a partnership with Microsoft Azure and with RedHat for their OpenStack-based solution. We provide our own OpenStack solution and we are a primary contributing member and leader in the OpenStack community so that customers have choice in the solution they implement.

Huawei has had some trouble breaking into the U.S. market. What is your strategy in the U.S.?

I can talk to you about the overall strategy we use globally and how we believe that will fit and provide value in all markets, regardless of geographically location. By focusing on the innovation, on delivering solution on a common platforms, making more open and flexible options, we believe that from a global perceptive, the solutions differentiate themselves. How that is absorbed at different rates in different markets varies a little bit, and we leave that to the local regional teams to deal with directly … I can tell you that we're committed to the U.S. market. We're committed to it.

What's your message for North American channel partners?

My message to North American channel partners would be to reach out to us. The largest challenge we have often is we get so caught up in what we're doing and we miss out on the information marketing side, which is an area we've built up over the last few years. Find out more about Huawei, learn more about our capabilities, reach out to our local regional team and find out what we have to offer. We're always happy to listen to the market which includes the channels -- it's extremely important to us. In the large part of the market, in many theaters, the channel is the market. They represent the customer. We're always willing to listen to them and find a way we can work together to bring value to their end users.

Do you think U.S.-based solution providers are hesitant to partner on Huawei?

Hopefullymanufacturerswe'll able to be improve the understanding of what Hawuei has to offer with potential channel partners out there. We're such a large company, we offer so much that a lot of the value gets lost in the breath of it.

The understanding, the awareness, the trust has to be built – we're working on that. We're committed to the market, and it can't be rushed. We'll do it at the pace that the market will accept it, at a rate that's still credible.

What is your technology partnership strategy?

We're trying to build a wide, comprehensive ecosystem with partners like RedHat, Intel, Microsoft -- but we also partner with next-generation industrialized IoT partners who are helping transform the enterprise. This is where the new value comes in. We partner with Honeywell, for example, elevator manufacturers, General Electric – so depending on the different verticals and the technologies at play, we work with our partners to enhance our data center solutions around those industrialized or IoT capabilities to add additional value. Delivering the network as a platform towards the next generation of industrialization has really helped us the last couple of years.

What's your strategy with AWS? Is there any partnership there?

Not to date. We currently don’t have a direct partnership with AWS in terms of leveraging their public cloud platform or integrating into it. We provide support for cloud systems and integration of public cloud but more on a generic basis whether it's AWS, Google or Microsoft. As we move forward, that may change.

Huawei's R&D strategy has been touted by many. So what's the formula there?

A core pillar of Huawei's success has always been a heavy focus on R&D and a very heavy focus on market-driven innovation. We've hit about 24 percent CAGR over the last four or five years to where we are now a $75 billion company. Across those years, we invested 10 percent of revenues back into R&D. So differentiating by being able to heavy leverage R&D and innovation around what are customer challenges now and in the future. Looking forward to try to anticipate those challenges has helped us a lot.

Technology-wise, what has been separating Huawei from your networking competitors?

We've made pretty big gains over the last four years in our positioning of the market. If you look at Ethernet switching overall, we're in the top three. With data center switching, we're within the top five. The strategy that's been working over the last four years that has gotten us to where we are is focusing on differentiation. The way we've been focusing on our data center solutions is to focus on the data center network as a platform, which is also part of our overall umbrella strategy to provide an all-cloud network solution that can be a platform for enterprise IT.

What specific data center technologies have Huawei improved on over the last few years?

We've been focusing on doing better data delivery, better data collection environments -- designing data centers that help support data delivery and collection to support newer technologies like artificial intelligence and machine learning. We also allow the network itself to integrate into that process, so providing better telemetry information and visibility into those applications and middleware platforms to enhance the capability of those technologies like artificial intelligence and machine learning and big data.

Describe Huawei's open networking vision going to forward?

We try not to take technology sides. We don't have a technology religion. So we'll partner and build the ecosystem that provides the greatest value to the customer. That allows them the widest variety of options so they can implement different options or they can shift their technology strategy in the future if they need to. Our solutions are open enough to allow them to pivot without having to lose any type of investment or impact the business while doing so.

Why should solution providers be pumped to join Huawei?

One thing that we do differently is that we constantly assess not just the technology solutions we offer to our partners to resell, but we constantly evaluate the revenue models and the different operating models that can add value for our partners.

In the data center space, for example, we had an announcement regarding our cloud platform capabilities. What we've done is design different scenarios for similar solutions that provide value for partners in different ways, so they have options for both maintaining the relationship with their customers and revenue streams themselves. We can deliver a data center platform or a data center network to the enterprise that a channel partner can resell. Aside from that, we designed the platform to be turnkey and packaged so we can deploy a data center that if a partner wanted to become a co-location hosted services or cloud service provider -- we provide the platform for them. This allows them to expand their business beyond what may have been traditional integration.

How else can channel partners leverage Huawei cloud offerings?

In some markets, we started piloting the ability for us to provide our architectures and platforms as a cloud service that they can resell directly. Channel partners can sell a cloud service that is managed and maintained by Huawei in certain markets, and we can co-brand that. So we can brand that under the channel partner if they want to so they can turn it into a Service-as-a-Service, if you will, so they can have an OEM-branded cloud service and sell it. There's value there in maintaining the customer relationship and having options for different revenue models.

Why should the channel community be bullish about Huawei?

The company firing on all cylinders. We're constantly innovating in not just technology ways, but business models to provide value to customers and channel partners globally. We're always glad to take on more partners to further our global expansion and growth across the market.