Forrester: Huawei must focus on growing enterprise business

Analyst Forrester says Huawei must focus on its enterprise business, even if at a loss, as carrier network revenues are no longer growing

Huawei must focus on its enterprise business if it is going to continue to grow its revenues in coming years.

This was the conclusion of a report released today by analyst Forrester, which claimed Huawei needed to expand its enterprise division, as revenues from its more established carrier business were starting to wane.

Huawei made its name providing networking equipment for telecoms carriers, recording revenues of almost $24bn in 2011 alone. However, growth has started to decline year-on-year, going from almost 50% from 2006 to 2007, to just 3% between 2010 and last year.

The report claims this slowdown could be attributed to less investment in carrier networks by providers in its home market of China, alongside a reduction in capital expenditure from carriers worldwide.  

As a result, Forrester claims the long-term growth plans of Huawei, Alcatel Lucent and Ericsson are tenuous if they continue to focus solely on this type of business.

Huawei entered the global enterprise market place in 2011. It went on an aggressive recruitment drive to source talent from other large technology companies, with employees totaling 20,000 in 2012 and set to grow to 30,000 by the end of next year.

It also bought out Symantec from its joint venture into security and storage products to boost its own enterprise portfolio, although networking will remain the core of its business.

Huawei made $1.5bn in revenues in 2011, but the division only accounted for 4% of its overall takings, 40% of which were from China. It aims to hit $15bn by 2015, equating to 20% of its overall revenues.     

It must take advantage of its established name in the Asian markets, according to Forrester, but it must also view Europe as a long-term strategy for enterprise sales.

Forrester said Huawei had to undertake work with local partners in the US to remove the stigma of its rumoured ties with the Chinese government, which are curbing growth in the region.

“Huawei has laid a strong foundation for the first year of its enterprise business launch and is investing heavily in pulling together competitive solutions,” concluded Forrester's report. 

“The firm will continue to invest in the enterprise market — even if it must operate at a loss for several years — simply because it must.”

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