Chinese telecommunications equipment vendor Huawei has plans to invade the enterprise IT market, according to a research note out this morning from Deutsche Bank. An analyst at the firm expects the company to introduce a line of servers, low-end switches, security, VoIP and storage products designed for the enterprise before the end of this year. Huawei recently reported $2 billion in revenue from the enterprise and organized the company into three operating segments: carrier, enterprise and devices.
The shift to enterprise sales isn’t as tremendous as it may seem, given Huawei already makes much of this type of gear for service providers to support their networks. Deutsche Bank says it’s one of the largest customers of Intel already, and it’s a huge storage player thanks to its telecom contracts. It plans to release a lighter, scaled-down version of the gear would be appropriate for the enterprise which could cause problems for Netgear, Cicso’s low-end switching business and perhaps even Dell or Hewlett-Packard. From the note:
In our conversations with the industry, we have found that most companies seem to be dismissing this opportunity, seeing Huawei as low-end gear, or an emerging market phenomenon with no footprint in enterprise hardware. We think this is the same attitude many telecom equipment makers had ten years ago, and that it would be a mistake to take Huawei’s initiatives lightly. At the very least, their entry into enterprise hardware market could bring increased pricing pressure. However, it will likely take two to three years before they can fully deliver their planned product line.
We’ve paid attention to Huawei’s rise for years, and the company has certainly made important hires and built a big enough business that it could become a credible threat in the enterprise IT industry, causing pricing competition as well as providing new innovations. Huawei’s gear in the telecom side may have started out as low-cost, but it’s currently delivering some advanced technology such as 1.2 Gbps wireless for Verizon. To count it out as it enters the enterprise seems like hubris.
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