Why Huawei Is Staying Out Of The Public Cloud Business

The theme of Huawei’s Connect 2016 conference in Shanghai, China, is ‘Shape the cloud’. Certainly Huawei, an IT and communications technology provider, is becoming a serious player in the cloud space. But despite having the capabilities to launch its own public cloud service, it has chosen to stay behind the scenes, providing technology to power other people’s clouds instead. Huawei explains why it’s not interested in becoming the next Amazon Web Service (AWS).

If there’s one thing that’s evident from the Huawei Connect conference, it’s that the company is heavily invested in cloud. Executives and customers took to the stage, extolling the transformative powers of the cloud and how that would affect all enterprises.

This story isn’t particularly new. Cloud has been around for long enough and we’ve heard all the spiel about it. What was of interest was learning about the suite of cloud technologies Huawei possesses and how intimately it has worked with telcos around the world to build their own public and private cloud services. Huawei is fervent in acquiring partners and customers, enabling them to build their very own cloud.

That’s part of Huawei’s strategy outside of its China, its home turf; to partner with telco providers that want to get into the public cloud business. It makes sense given that telco providers have infrastructure already in place across their respective countries to move data around. However, in China, Huawei launched its own enterprise public cloud service, proving it has the capabilities to be an operator in this space on its own.

So the question on many people’s minds, including myself, was whether Huawei has any ambitions to expand its public cloud operations globally. I asked Huawei acting CEO Ken Hu about this at a press conference at Huawei Connect.

“The cloud era has a couple of characteristics; one is the market size is enormous. Secondly, there are many ways of entering this market,” he said through an interpreter. “… I think Huawei has some unique advantages, which is we can work together with our partners, leveraging Huawei’s innovation capabilities and technical expertise, to realise value in business strategies and processes for industry verticals and enterprises to come up with the best solutions for them.

This is something that Huawei has not seen other companies do, Hu added.

“It’s not a challenge to build cloud itself; the bigger challenge lies in operation and service.” Huawei Carrier Business Group president said in his presentation at Huawei Connect. “The cloud business is not just about building cloud but also translating cloud into business value.”

Cost is likely to be a factor against Huawei if it ever had ambitions to become a public cloud juggernaut like Amazon Web Services (AWS) or, closer to home, Alibaba. Datacentres will need to be built, fibre will need to be laid and it will need to pay for internet transit (which doesn’t come cheap, especially Down Under). Huawei is a rich company, but it’s not Amazon-level rich.

There’s also the matter of trust. Data sovereignty is still a big issue for many enterprises and there is an increasing level of mistrust in Governments across the globe trying to access data stored by cloud providers. Huawei, which had been suspected of having close ties with the Chinese Government, has experienced mistrust from the US and the Australian Government. But with its rapid growth in the past few years and its push into the consumer handset market, Huawei’s image has softened up quite a bit in recent times.

Regardless of whether Huawei can or cannot do it, for now, the company is staying out of the public cloud game in foreign markets.

“Our strength lies very much in industry cloud — deep understanding about industry. Without that deep knowledge, it’s going to be impossible to develop very relevant industry clouds,” Huawei deputy chairman and rotating CEO Eric Xu said at a press conference. “From the time we stepped into the enterprise business several years ago… we have been engaging with enterprises to provide products and services to them. Over many years, we have developed deep understanding of industry verticals and enterprises.

“I believe that knowledge is deeper on our side versus international companies. The effort is still ongoing. Therefore, we want to focus on the areas we are good at and we will focus on industry clouds, how we help industries to embark on this journey of digital transformation.”

Spandas Lui travelled to Shanghai, China, as a guest of Huawei.

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