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Switch Orientation?

Posted: 9/13/2012 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]

Switch Orientation?

Jeopardy. The world’s biggest switching and routing company. That’s easy Alex - who is Cisco? Wrong. Err, Juniper. Is that your final answer? Okay Regis, who is Avaya? Focus, please - try again. Brocade. Come on now. The correct answer - who is Ericson? Surprised? I was. Always interesting reading the Economist.

But more interesting than Ericson’s primacy, is the number-two player - the company poised to switch places with Ericson. Huawei - pronounced wah-way, not to be confused with the Pennsylvania 711 outfit. Not only are the U.S. players smaller than I could have imagined, the North American market looks like old tins and bits of string.

Who is Huawei?

Founded by Ren Zhengfei in 1987 with about $5,000, Huawei rode the soaring dragon of China’s modernization to post $16 billion in revenue for the first half of 2012. Labeled a “pirate” for allegedly shanghaing Cisco’s IP in the early days, today Huawei ranks among the IT industry’s most prodigious registrants of patents. Headquartered in Shenzhen, the company operates in 140 countries worldwide. It employs almost 150,000. And, hold onto your rice bowl for the revenue explosion - $32 billion for 2011, 10-fold growth in a single decade.

Occidental Onus?

But what does the rising dragon mean for the West, the U.S. market, and Uncle Sam? Huawei’s strength in EMEA is not just about low-balling in Africa. Huawei has won big 4G wireless plumbing contracts in Europe. While India and Australia have blocked market entry, Canada has welcomed Huawei onto the network. The company does a lot of business with the U.K. government - it hired her majesty’s CIO to bridge the language and the trust gap. While the U.S. market’s small versus Asia Pac and EMEA, Huawei has little to no penetration - and we’re clearly on the menu for growth. And yes, that means D.C. too - Andy Purdy, former head of DHS NCSD just stepped onto Huawei’s payroll.

Confucius Confusion

“Before you embark on a journey of revenge, dig two graves…”

Rep. Frank Wolf (R-Va.) led the charge against Chinese IT in 2006 when he tilted at a State Department award to Lenovo for laptops. There are security supply chain concerns hanging over Huawei - covert connections - although no proof of any sleight of hand. Let's go back to Jeopardy for the dismount...

What if Huawei is LPTA, will Uncle Sam buy? The iPad’s made in China - and Feds are eating them like fortune cookies. What if Huawei makes its products in America? And then the bigger picture questions. What will Uncle Sam do if the technology leadership goes West - off the coast of California? Can we afford to trade Apple pie for low cost, high innovation in a budget constrained world? And, if we’re going to erect barriers to imports, what does that mean for U.S. tech exports…?

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