Shenzen, China-based Huawei has until now been active only in the telecom equipment market in Europe, its biggest customer win to date being at BT Group, where it is an appointed supplier for two of the UK incumbent’s five sectors for its $20 billion 21st Century Network (21CN) project.
As for corporate data networking, it is of course a major player in China, and has an operation in the US where, chastened by a lawsuit from Cisco, it has rather pulled in its horns, as well as renamed as FutureWei. In any case, as Darragh Richardson, channel consultant for Huawei, explains, the out-of-court settlement with Cisco means the Chinese company is concentrating its networking efforts on Europe, South America and Asia.
The deal with Zycko, which should result in Huawei signing up between 15 and 20 resellers, is also the first time the manufacturer has adopted a two-tier strategy and, if successful, will be considered for extension into other countries. We have offices in Germany, Russia, Norway and South Africa and, from the UK, we ship product to 60 countries, said David Galton-Senzi, group sales manager for the Cirencester-based distributor.
As for the portfolio on offer from Huawei, it is an extensive one, covering switches, routers and firewalls and matched in its breadth only by market leader Cisco itself. Mr Galton-Senzi made no bones about the fact that Cisco is the prime target for grabbing market share, even explaining what products will be on offer by citing the equivalent Cisco box numbers rather than the Huawei ones.
In routers, the range covers everything from Cisco’s 800 to 7500; in switches it goes from the Catalyst 2900 to 6500 Series, and we have firewalls too, he said.
Of course, Huawei currently has a joint venture with 3Com in China producing corporate networking gear, the agreement being that Huawei sells the resulting products in China, while 3Com, which is currently trying to gain control of the venture, takes them to the international market.
The products from the joint venture are pushed by 3Com in Western markets, Mr Richardson acknowledged, but they are big in the ‘S’ of SME, education and local government, but at the upper end of the enterprise market they have no traction.
The announcement is clearly bad news for Cisco, the UK being a historically strong market for it and the first that it came to when it went international. Zycko’s management founded and ran the UK’s biggest distributor and clearly know the business, and they are readying seminars and training sessions to underscore their message that they are prepared to rival Cisco on functionality while beating it on price.
Of course, as used to be said about IBM, nobody ever got fired for buying Cisco. The San Jose, California-based heavyweight has such a commanding position in most of the markets in which it operates that competitors have often tended to look like also-rans nibbling away at the edges of its vast empire.
Still, as Mr Richardson put it, nobody ever got promoted for buying Cisco either, the implication being that if Huawei can convince enough enterprises that it makes boxes with the same quality and functionality as competing Cisco offerings, but at significantly lower prices, buying its products may start to become a feather in the cap of budget-constrained network admins.
Whether or not Huawei takes significant market share away from a well entrenched Cisco remains to be seen, but if it comes down to competing on price, the US networking giant may well have to shave the margins which its financials for 2004 indicated were already starting to come under pressure globally.
