Huawei is investing US $2 billion in India over five years, this was the headline that triggered me to write this post. 4-5 years ago Huawie’s name was not repeated much in the field of IP networking in comparison to other big names. Lately Huawei’s name is being used everywhere around us, the Chinese company is really growing and expanding. I think they capitalized well on the economic recessionary environment in the last two years.
I do not know how good they are in the field of IP communication; I am not familiar with Huawie devices myself so I can not give my feedback about them, but I am always hearing about their Pros and Cons.
I got really interested in their strategy and their approach to the IP market penetration. I think there are some clear factors behind this growth. The first factor I can notice is pricing and the flexible payment terms they provide. The second factor is that they are providing full and complete solutions and they have their own products for almost every part of the network and finally their customer focused R&D.
Huawei has what they call the ABC strategy, A = ARPU, B = Bandwidth and C = Cost. In short they are focusing on increasing ARPU, increasing Bandwidth capacity while decreasing Cost of ownership for their customers.
Their financial performance over the past five years shows decent growth rates and good financial highlights. In 2009, their bottom line increased significantly meaning that they were able to sail efficiently in 2008-2009 global business and financial conditions. 2009 Net profit increased by 132.8% (26.5% excluding exchange gains and losses) compared to 2008, while revenue increased only by 19%. This means that they managed to improve operations and to control expenses more effectively in 2009 in comparison to the previous year.
Huawie is leading in mobile/radio and optical technologies with very good reputation, they also have their growing share in IP products specially broadband services in the last two years.
I don’t know about the quality of their products or services but I know that Huawei has a great pricing competitive advantage over other competitors. I am not aware of other competitive advantages; however, the competitive pricing allowed them to increase their market shares significantly and to penetrate different new telecommunication markets.
Having competition is sometimes good for end users, but not always good, as it depends on the type of the competition in a certain market. I don’t think that aggressive pricing competition is always good but I am really interested to see how other big names are approaching this type of competition and what strategies they are using and going to use.
Reference: Huawei Corporate Information.