Inside Huawei’s APAC cloud strategy

The Chinese technology giant is counting on its strengths in hardware infrastructure and focus on research and development to make a mark in Asia Pacific’s public cloud market

With public cloud services accounting for just a sliver of overall IT spending in Asia-Pacific (APAC), it is no surprise that the world’s cloud suppliers have been jostling for a slice of the pie with investments in new offices, datacentres, partnerships and headcount across the region.

Huawei became the latest entrant in the market outside China in 2019 when it set up a new cloud region in Singapore to serve the needs of local firms and Chinese enterprises operating in the city-state. The company has since formed a unit that brings together its cloud and artificial intelligence (AI) capabilities to deliver cloud offerings tailored for specific industries.

In an exclusive interview with Computer Weekly in Singapore, Daniel Zhou, president of Huawei’s cloud and AI business group in APAC, talks up the company’s cloud strategy, including its views on acquisitions, traction in the region as well as plans for emerging Southeast Asian markets.

Could you share more about Huawei’s traction in the cloud market and how the company is differentiating itself from other players?

Zhou: When we started our cloud business about a year ago, we didn't have a dedicated cloud and AI business, which was only formed half a year ago. The idea was to consolidate our cloud and AI capabilities from our carrier, consumer and enterprise business into a single business group.

Compared with other market leaders which have been around longer than we have, we’ve been growing really fast. For the past three quarters, we have already achieved four times more revenue compared to last year. And every month, we see 10-15% growth in cloud revenue. All of that shows that Huawei can also do cloud well.

Customers often always ask me how we are different and what our unique proposition is. I think the first differentiator is our business-to-business (B2B) heritage. While our competitors have B2C (business-to-consumer) or e-commerce backgrounds and are doing great in coming up with new business models, we are more focused on what our customers really need rather than saying we have the best products and ideas.

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The second area is our expertise in hardware infrastructure. With Huawei Cloud, we can offer a full technology stack on our own, from the chipset to public cloud infrastructure. We also have the Huawei Cloud Stack that enterprises can deploy on-premise in their own datacentres.

Thirdly, I’d like to point out that we’re a pure technology company. Over the past 30 years, we’ve invested most of our profits in research and development (R&D). That puts us in a neutral position at a time when some cloud providers are investing in e-commerce and other areas.

As part of our “black soil” strategy of nurturing a robust ecosystem, we also welcome partners to work with us. For last two decades, we’ve done extremely well in China, especially in e-commerce, finance, transportation, logistics and other sectors which are leading the world. We’re now encouraging top Chinese companies to join Huawei in our efforts to go global.

Carrier business

With telco networks playing a key role in providing access to cloud services, how much of Huawei’s success in cloud is dependent on its carrier business?

Zhou: Very small, honestly – though our experience in the carrier business obviously helps as telcos can be resellers for our enterprise business. Also, access to cloud services requires bandwidth as well as content delivery networks which telcos provide. While we cooperate with telcos, they are not a major factor for our success and are one of our ecosystem partners.

You mentioned that Huawei has invested a lot in R&D, but has it considered making acquisitions to speed things up?

Zhou: For the last 20 plus years, many mergers and acquisitions, in my view, have not been successful, such as Alcatel-Lucent and Nokia-Siemens. In the ICT segment, most acquisitions are financially driven and even if they are strategy driven, the outcomes in the long term are not always clear. Huawei is not a firm believer in acquisitions. We tried, but in the end, we gave up and did everything ourselves. We are quite confident of the core technology we’ve built so far.

You talked about cloud providers with an e-commerce background, but those players have also claimed that they have an edge because they understand certain industries better than others. How is Huawei building up its industry expertise in that regard?

Zhou: Understanding vertical industries is important for a technology company, but we don’t expect to understand every single industry. If you're really doing that, you would have to give up a lot of other things.

We do have teams in the enterprise business group that focus on five to six key industries including government, internet service providers and banking and finance. We have experts in those teams who provide feedback to R&D teams. I’d say 40% of our knowledge of a particular industry comes from within while the rest comes from partners. So, while we understand finance, we’re not aiming to do better than Oracle and SAP, which we’re happy to partner with. This is our typical approach and it’s the same for other industries.

Research and development

Is there any R&D being done in the Asia-Pacific region outside China?

Zhou: We have an R&D centre in Singapore which is one of 12 centres globally where we can tap the best talent and market opportunities. So, for example, our headquarters for chipset R&D is in Shanghai, but we also do chipset R&D in Singapore.

Which are your key APAC markets, given the diverse adoption of cloud and AI in this region?

Zhou: This is a very diverse market as you pointed out, and there are huge differences from a regulatory standpoint. In this region, we’ve put our headquarters for cloud and AI in Singapore, which is clearly very important.

We know this market well because we were involved in the datacentre infrastructure of many of our key customers here for last 10 years. Indonesia, Malaysia and Thailand will also have huge potential, as they have a vibrant startup ecosystem. We already have datacentres in Hong Kong, Singapore and Thailand and we’re launching a datacentre in Malaysia by the end of this year, with Indonesia and the Philippines on the cards.

Partnerships

Major Kubernetes platform players such as VMware and Red Hat are partnering with cloud providers to let enterprises run their containerised workloads on public cloud services. Are you looking to partner with them?

Zhou: Most of our partnerships are with SaaS [software-as-a-service] providers that lack the IaaS [infrastructure-as-a-service] and PaaS [platform-as-a-service] capabilities which we offer. Our partnerships have been moving very quickly and we have more than 3,000 partners from different vertical industries in China. A significant number are already here in Singapore, even as we’re focused forging partnerships with local partners.

How has Huawei’s cloud and AI business unit been impacted by Covid-19 and how do you see things moving forward in the next few years?

Zhou: Covid-19 has had a significant impact on the ICT industry and accelerated digital transformation. During the first few months of the pandemic, we had a lot of demand from major customers looking for different kinds of solutions. They include the biggest banks and e-commerce customers which have been speeding up their transformation journeys from three to five years previously to just one to two years.

Although this year has been difficult for Huawei, we are surviving and doing quite well. By end of our third quarter, we still had more than 10% growth as a company. In the next three to five years, we remain confident of our business based on the long-term fundamentals of our company and employees.

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