Huawei sharpens focus for the future

Acting CEO Eric Xu speaks at Huawei’s annual summit yesterday in Shenzhen, China. Provided by the company

SHENZHEN, China - Acting CEO Eric Xu says that as a company with both B2B and B2C businesses, Huawei will focus on becoming a comprehensive global ICT solution company.

“The ICT industry is broad, and we cannot do everything well in such a huge industry. It is important that we decide which sectors we will focus on, as our capacity is quite limited, and we believe software and applications are not those sectors.”

Huawei unveiled its ambition to enable better connectivity and become an ICT solutions leader industry by strengthening its carrier network businesses, continuing to provide competitive ICT solutions to enterprises and manufacturing quality smartphones for consumers.

“Instead of focusing on software and creating apps, we will concentrate on providing bigger, wider and faster pipe to support rapidly growing massive data traffic and offer products, services, and solutions for information transmission, processing and storage,” Xu said.

“This is what we call ‘pipe strategy’ and it is a core Huawei strategy. It will guide all of our operations.”

The acting CEO also said that while carrier networks account for nearly 70 percent of Huawei’s business, the company will expand its smartphone presence.

“In order to provide better services for our clients, we need to know about consumer needs. To better understand consumer needs, we will have to increase our consumer business sector as well,” Xu said.

Smart devices are another key area for the company, Xu said.

In 2014, Huawei sees the growing penetration of ultra broadband and mobile broadband, particularly LTE, as an important strategic opportunity.

“We will strengthen our capacity as the leader of the LTE business and through better user experience; we will concentrate on the network pipe strategy to boost data transmission.”

In 2013, Huawei’s carrier network business delivered a solid performance, achieving 166.5 billion yuan ($26.7 billion) in sales revenue, up 4 percent year-on-year.

“We will continue to dedicate more efforts and resources to our strategic areas, core technologies, strategic customers and strategic markets. We must dare to make strategic investments to lay a solid foundation for our company’s future development.”

Xu emphasized continuous innovation as essential for executing Huawei’s strategy.

“In 2013, Huawei invested 30.7 billion yuan in research and development, which is about 12.8 percent of its sales revenue,” he said.

“Huawei’s total R&D investment over the past 10 years exceeded 151 billion yuan. Huawei innovates based on customer needs and will increase its investment in basic scientific and engineering technologies as necessary to maintain its leadership position in core ICT technologies.

Xu forecast that in the next five years, Huawei’s sales revenue will grow at annual compound average growth rate of 10 percent, and Huawei will be a $70 billion company by 2018.

Huawei performed well across the board in 2013, achieving steady growth and sales revenue of 230 billion yuan, up 0.5 percent year-on-year and net profit of 21 billion yuan.

“Thanks to the favorable global macroeconomic and industry environment, as well as effective execution of our company strategy, Huawei basically achieved our business targets for 2013,” said Xu.

Chief Marketing Strategy Officer William Xu underscored Huawei’s commitment to continue working closely with partners from business, industry and academia to promote greater convenience and freedom in communications and the sharing of ideas.

“As connectivity becomes increasingly important and a way of life globally, ICT technologies, represented by mobile broadband, cloud computing, Big Data analytics, the Internet of Things and social networking will continue to reshape the world and introduce a new wave of technological development,” Xu, who is also executive director of the board, said.

“Ultimately, Huawei will help to build a better-connected world,” said Xu.

“Against the backdrop of ICT convergence, Huawei has transformed and optimized our organizational structure to establish a new, more complete and well-rounded Products and Solutions Group to develop innovative ICT products and solutions that will fully realize and leverage the competitive advantage Huawei has gained with our comprehensive solution offerings.”

Huawei forecasts that, by 2025, the world will have eight billion smartphone users and 100 billion terminals interconnected by the Internet.

With the trend of ICT convergence, Huawei believes the digital transformation of the information society presents immense opportunities for the ICT industry, and that the convergence of the digital and physical worlds will usher in an era of Big Data.

“As globalization enters a new age of ICT convergence, the world has never been so closely interconnected. Internationally successful products are backed by a global ecosystem and collaboration across an industry chain characterized by technology and industry integration,” Xu added.

About 400 members of the press, business leaders and analysts attended Huawei’s annual summit.

Its products and solutions have been deployed in over 170 countries, serving more than one third of the world’s population.

BY KIM JUNG-YOON [kjy@joongang.co.kr]