Heavy Reading
EXECUTIVE SUMMARY

Remade in China: Huawei and the Future of the Global Telecom Market

The global telecom landscape is in a significant period of transformation at all levels. Carriers are embracing the vision of IP-based next-generation networks, converging services and infrastructures on IP and an IP Multimedia Subsystem (IMS)-enabled control structure to reduce capital and operating costs, offer multimedia-rich services, and eliminate the barriers between wireline and wireless networks. At the same time, carriers are finding themselves in increasingly hostile competitive markets, with cable MSOs and Internet-centric companies such as Google among the biggest threats.

Carrier consolidation has been one of the early effects of these changes. In the U.S., former regional Bell operating companies (RBOCs) are being rolled up into supercarriers, while Level 3 continues its acquisition binge to create a major wholesale operation with an extensive backbone and metro footprint. Consolidation is also underway in Europe, with many city carriers and pan-continental operators joining forces to offer more extensive services to broader geographies.

The result for the supplier community has been growing anxiety that these new supercarriers will require vendors of similar scope and scale. As carriers' top service priorities are now fixed/mobile convergence, IPTV, IMS/VOIP, carrier Ethernet, optical networking, and enhanced broadband, vendors have understandably begun to feel that bigger is better. Vendor M&A activity has already reached an unprecedented pitch, involving some of the world's largest suppliers – including Alcatel, Ericsson, Lucent Technologies, Marconi, Nokia, and Siemens. And that's just this year.


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Regardless of the larger forces at work in the service provider customer base, the most game-changing factor in the telecom supply market in the past five years has arguably been the expansion of Huawei outside of China. With the benefit of an expanding Chinese telecom sector driving basic revenue growth and substantial economic support from China's government, Huawei has been able to broaden its product line and address emerging market opportunities throughout the globe with such speed and power that the global telecom supplier market has been able to do little more than watch in stunned silence.

Last year, Huawei recorded nearly $6 billion (U.S.) in revenues. The company now has 35,000 employees, with products deployed in over 100 countries, and revenue growth exceeding 50 percent per year. In 2005, Huawei was able for the first time in its brief history to sell more internationally than domestically, and also penetrate Western Europe's top carriers, including wins at BT, Vodafone, Telefónica, and KPN.

Remade in China: Huawei and the Future of the Global Telecom Market analyzes the strengths and weaknesses of Huawei across seven key product/market opportunity areas:

Core voice switching (including VOIP) and next-generation network (NGN) technologies
IP Multimedia Subsystem (IMS)
IPTV
Optical networking
Data networking products for carriers
Access technologies
Wireless and mobility

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To create this report, Heavy Reading analysts conducted interviews with a variety of product managers at Huawei, attended company analyst events, and traveled to Shenzhen, China, to interview Huawei personnel directly.

Huawei's expansion outside of China, an initiative launched in 1996, has been the key to its growth, and represents the primary challenge for its continued success. Looking at Huawei's fundamental growth metrics, over the past four years it has expanded its contract sales (as opposed to the smaller figure for actual revenue) from $2.67 billion in 2002 to approximately $8.2 billion in 2005, with contracts at 28 of the top 50 network operators worldwide.


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Along with providing independent insight into Huawei’s current and projected expansion, the report delivers critical detail and analysis of Huawei’s market positioning and future development plans in the key technology sectors that will drive growth in the telecom market in the months and years ahead.


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Report Scope and Structure

Remade in China: Huawei and the Future of the Global Telecom Market is structured as follows:

Section I is an introduction to the report, with complete report key findings.

Section II provides a detailed analysis of Huawei's overall performance in the telecom sector, including breakouts by product line and regional markets. It also includes estimates for the company's performance in 2006, as well as insight into Huawei's key product strategies.

Section III focuses on the core voice switching and NGN sectors, again comparing Huawei's past and projected performance with key competitors.

Sections IV analyzes Huawei's prospects in the emerging IMS product sector.

Section V explores Huawei's IPTV product portfolio, focusing on its market standing in emerging markets in Asia/Pacific and Eastern Europe.

Section VI assesses Huawei's competitive positioning in the optical networking sector, including Sonet/SDH add-drop multiplexers (ADMs), multiservice provisioning platforms (MSPPs), digital crossconnect systems, optical switches, metro WDM systems, and long-haul DWDM.

Section VII evaluates Huawei's data networking portfolio as it pertains specifically to the carrier market (including carrier Ethernet switches and routers).

Section VIII covers access technologies, including DSLAMs, broadband remote access servers (B-RASs), and FTTH.

Section IX focuses on Huawei's portfolio of wireless and mobility products and technologies.

The report is essential reading for a wide range of industry participants, including:

Telecom equipment suppliers: How does Huawei’s emergence outside its home market affect your product positioning and marketing strategies? Where does your company fit into the telecom technology supply chain as it is being redefined? What are your competitive advantages compared with Huawei, and what areas require improvement? Which areas of your business are most susceptible to market share loss, and what strategies can you pursue to prevent that erosion?
Telecom service providers: How is the telecom technology vendor landscape changing, and how can you leverage those changes to your advantage? How will Huawei’s emergence as a global supplier affect your relationships with your established suppliers? Which product areas are Huawei’s strongest, and which are worth considering for your organization?
Investors: How will established technology suppliers be affected by Huawei’s expansion? Which companies are in the best position to compete against Huawei, and which are in jeopardy? How much will price pressure affect profitability in the telecom technology sector in the months and years ahead?

Remade in China: Huawei and the Future of the Global Telecom Market is published in PDF format.

LENGTH: 48 PAGES
PRICE: $3,795
SCOTT CLAVENNA
Chief Analyst, Heavy Reading
Scott Clavenna is the head of Heavy Reading's team of analysts and a leading authority on next-generation telecom technology. He has 14 years' experience researching the optical networks and broadband networking markets...
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TECHNOLOGY SECTORS ANALYZED
Core voice switching (including VOIP) and next-generation network (NGN) technologies
IP Multimedia Subsystem (IMS)
IPTV
Optical networking
Data networking products for carriers
Access technologies
Wireless and mobility
DELIVERABLES
48 pages of analysis covering the emergence of Huawei as a global supplier of telecom technology and its impact on equipment markets worldwide
Critical details of Huawei’s current and long-term product strategies in key next-gen networking sectors
Insight into Huawei’s plans for network expansion based on exclusive, one-on-one interviews with company officials
Detailed analysis of Huawei’s key strengths and weaknesses in seven different emerging telecom sectors
LENGTH: 48 PAGES
PRICE: $3,795
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