Huawei now #2 telecom supplier in the world

[Dave Farber <dave () farber net>]

Begin forwarded message:

> From: Stan Hanks <stan () colventures com>
> Date: December 1, 2009 6:01:53 PM EST
> To: dave () farber net
> Subject: RE: [IP] Huawei now #2 telecom supplier in the world

> We use Huawei in several of our portfolio company networks. I’m goin 
> g to try to answer what I can here, without crossing NDA boundaries…
>
> When we started the process, some years back, there was heavy  
> pressure from certain groups to discontinue our discussions. There  
> were rumors, innuendos and broad hints that Huawei had in fact  
> reverse engineered Cisco’s IOS and some of the line cards for the GS 
> R. No one was ever able to demonstrate in an absolute manner that th 
> is had happened. My own use of the various CLIs were not a whole lot 
>  different from my experience with other manufacturers who had previ 
> ously sought to emulate the Cisco CLI language to make configuring e 
> quipment a simpler matter for engineering professionals – an in-exac 
> t copy, close enough to be familiar, different enough to be frustrat 
> ing.
>
> There were also issues raised about the ownership, rumors that it  
> was only semi-private and that it was in fact controlled by the  
> Chinese central government. While this would have been interesting,  
> I didn’t see it as being a “show stopper” in any way. Given  
> that we were talking about private network placement, even if there  
> were “bugging technologies” or the like it would not have been  
> possible for any information so gained to have been exported to an i 
> nterested party.
>
> There were, and are, concerns about life cycle costs. When dealing  
> with any vendor for mission critical equipment, you have to worry  
> about what happens if they are unable to provide contracted support.  
> I mean, aren’t there a whole lot of “no one ever got fired for  
> buying Nortel” guys really, really sweating their futures right now?
>
> I can’t comment on pricing other than to note that in every case whe 
> re we asked them for a quote, the provided an apples-to-apples techn 
> ology solution at a price point that provided a clear economic win.  
> How, exactly, they did that relates to the concerns above about stab 
> ility and unforeseen costs in the future. If they are a private comp 
> any, and are selling at cost or a loss, then that’s non sustainable  
> and sooner or later there will be repercussions. If they are being p 
> ropped up by the central government, then that raises other issues.  
> If, on the other hand, they’ve just figured out how to do this for a 
>  fraction of the cost of the Other Guys, then that’s a whole  
> ‘nuther discussion…
>
> In my dealings with their sales team and technology professionals, I  
> was very impressed by what they brought to the table. They didn’t ha 
> ve “cutting edge” or “ahead of the curve” technology in the  
> offered products, but the glimpses offered behind the scenes into th 
> eir R & D efforts were pretty exciting, particularly against those p 
> reviews I’d had from other vendors.
>
> In the current US tech economy, we suffer greatly from tax changes  
> made in the 80s which make it un-economic to fund basic R & D on a  
> large scale. There will never be another “Bell Labs” because of  
> the tax consequences. Instead, the only reasonable way to fund R & D 
>  is via acquisition – which is why you see so many early-stage tech  
> companies being snapped up by “giants” such as Cisco, Microsoft,  
> etc. Which, in effect, means that our VC communities are funding our 
>  future, and since they themselves have succumbed to “herd mentality 
> ” the odds of true break-away developments are in fact slim.
>
> That’s where I see companies like Huawei as a “threat” – they  
> don’t have those constraints, and are fully funding basic research a 
> nd application research at an aggressive pace. We, simply put, aren’ 
> t. Which means, sooner or later, we’ll likely be licensing stuff fro 
> m them instead of the other way around…
>
> I would also point out this article from 2006, where a lot of the  
> same issues are raised in a quote from the International Edition of  
> Newsweek, 1/16/2006: http://mountainrunner.us/2006/06/the_huawei_way_.html
>
> People have been bashing on them for a long time, and they’re still  
> keeping pace with the best we have to offer. Maybe even outpacing us 
>  in the labs, where we won’t know until it’s too late.
>
> Stan
>
> From: David Farber [mailto:dave () farber net]
> Sent: Monday, November 30, 2009 11:26 PM
> To: ip
> Subject: [IP] Huawei now #2 telecom supplier in the world
>
>
>
> Begin forwarded message:
>
> From: Rahul Tongia <tongia () cmu edu>
> Date: November 30, 2009 11:31:30 PM EST
> To: dave () farber net
> Subject: Re: [IP] Huawei now #2 telecom supplier in the world
> Reply-To: tongia () cmu edu
>
> Dave,
>
> I write as an "outsider" not selling any products, but with some  
> industry knowledge and, some years back, extensive dealings with N.  
> American industry.
>
> If Huawei is now so big/dominant, then why is that, a priori,   
> something "to worry about"? Is it not creative destruction, and  
> something that benefits consumers?  The SingleRAN appears to be  
> technologically advanced, or at least meeting consumer needs.
>
> Why it might be an issue would be (and I would like to know more on):
>
> 1) Are they inappropriately reverse engineering or otherwise using  
> technology they shouldn't?
> 2) Are the govt. ties to the level that it is unfair business  
> practices?  Many European companies have strong govt. ties - one has  
> to remember the Air France first class bugging to remember how bad  
> things have been.
> 3) Are there hidden costs (lifecycle) that are unknown? The article  
> claims the operating costs are lower, as opposed to just winning on  
> upfront (bid) costs.
> 4) Are they selling at a loss to create market share?
>
> If they are private, and not public (needing "regular dividends")  
> then that is a financing option available to any company. OK, maybe  
> not without some high-level "support" but that in and of itself is  
> highly unlikely to account for 40-50% discounts.
>
> I get asked by a lot of developing country professionals/govt.  
> officials about Huawei - "how come they are so cheap"? I don't have  
> a good answer, and would like to understand better.  The two answer  
> (private ownership and cheap labor) don't seem to be enough.  If it  
> is "commodity" products, then the SingleRAN doesn't fit the bill.
>
> Rahul
>
> p.s. I won't bore folks with details, but I spent almost 3 years a  
> "long" while back (10 yrs ago) during the boom designing a national- 
> scale backbone - US entities didn't behave any "better" than what  
> they would complain newbies behave like.  The periods of non- 
> disclosure are over, but it's all academic at this point...
>
> On Tue, Dec 1, 2009 at 3:01 AM, Dave Farber <dave () farber net> wrote:
>
>
>
>
> Begin forwarded message:
>
> > From: Richard Shockey <richard () SHOCKEY US>
> > Date: November 30, 2009 2:47:18 PM EST
> > To: CYBERTELECOM-L () LISTSERV AOL COM
> > Subject: Huawei now #2 telecom supplier in the world
> > Reply-To: Telecom Regulation & the Internet <CYBERTELECOM-L () LISTSERV AOL COM 
> > >
>
> > Well here is something else to worry about.
> >
> > http://www.nytimes.com/2009/11/30/business/global/30telecom.html?ref=busines
> > s
> Archives
>
>
>
> Archives



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