Why Huawei’s Failed AT&T Deal In The U.S. Won’t Stop The Chinese Tech Giant’s Growth


Source: Forbes Technology

Huawei’s consumer business group head Richard Yu introducing the Huawei Mate 10 Pro in Munich last November. Photo: Christof Stache/AFP/Getty

Living abroad as an American can be an eye opening experience, because let’s face it, America is a relatively insular country. This is partly due to America having been such a global power for so long (it’s easier to have a “our way or the highway attitude” when you’re a big dog than a developing country); and partly because America is relatively isolated and far from other countries (in Asia and Europe, you fly or drive for a couple of hours and you’re in a different country with a completely foreign culture; in America you can drive 10 hours and still be in the same state). But simply put, there are just so many things Americans do or believe in that nobody else in the rest of the world do.

Case in point: tipping. In Europe, Asia, or anywhere else in the world really, you pay what’s on your bill. Good service is expected. But in the states, even sitting down for a cup of coffee at a run down diner requires you to add 15 to 18% on top of the bill.

There’s also calling a sport soccer when the rest of the world calls it football; using the Imperial system when everyone else uses the Metric system, and of course, this insane thing where anyone can buy guns…

Which brings me to Huawei. The company made headlines recently for having its long awaited U.S. market entry plan fall apart when carrier AT&T backed out of an agreed deal at the last minute. Juro Osawa of The Information reported that the deal was likely killed due to “political pressures” by the U.S. government because it feared Huawei would spy on Americans.

Never mind that the U.S. government sitting on a high horse pointing fingers about cyber-espionage is eyeroll-inducing considering what Edward Snowden revealed back in 2014, or that the government has never shown proof or explained just why it’s singling out Huawei. But whatever — America will do what America wants to do, even if the rest of the world do things the other way. The U.S. government is weary of Huawei’s tech? Europe and Asia don’t seem to mind.

Huawei’s consumer business group chief Richard Yu addressed the issue head on at CES yesterday, going off-script with an impassioned speech about how Huawei faced doubters in China when it first started, and later in Japan and Europe when it expanded there. But eventually, Huawei won the trust of those markets.

“We are serving over 70 million people worldwide,” Yu said during his speech. “We’ve proven our quality, and we’ve proven our privacy and security protection.”

Inside Huawei, execs are not exactly losing sleep.

“We have a longterm view on the U.S. and will continue to work on carrier options later,” says a Huawei employee who spoke on the condition of anonymity. “We’re not too worried. We will keep at it.”

Of course, Huawei has reasons to be confident. It managed to rise all the way to become the number three phonemaker in the world (in terms of market share and handset shipment) in a relatively short six years. The company has set lofty goals from the start and so far they’ve been able to reach every goal so far, save for establishing a strong presence in the states.

Huawei’s phone was still at CES despite the AT&T deal falling apart. Photo: David Becker/Getty Images

In 2011, Huawei set a goal to become a US$100 billion company in ten years. The company hit the $92 billion mark after reaching $75 billion in 2016. It is on pace to hit that $100 billion goal early.

In an internal memo sent to employees which was then forwarded to me by a source, consumer business group chief Yu further detailed his plans to drive further growth for Huawei in 2018.

It’s a long, long memo — Yu is a verbose man — but the gist is that Huawei will make further push towards artificial intelligence development. Previously, Huawei had stated its goals was to help create a connected world. But for 2018, Yu is emphasizing on building a connected “intelligent” world.

We saw part of that first hand with the recent release of the Huawei Mate 1o Pro, which was mostly critically acclaimed and named the best Android smartphone of the year by Android Authority. At CES, Huawei pulled the curtains on its smart router, which allows users to pair the main box with up to sixteen satellites to cover a large area. (I tested a prototype of it, released under the Honor branding, a few months ago).

In another internal memo sent by CEO Ken Hu, it announced that consumer business revenue grew 30% in 2017, which is on top of the 44% growth in 2016. But Hu isn’t just banking on phone sales for continued revenue growth. It’s banking on its original bread and butter — networking.

Huawei builds network equipment for more than 170 countries in the world, and its currently one of the leaders in 5G development. Over the past year, Huawei and other carriers have been giving 2020 as a launch date for 5G networks. But telcos and Huawei are now quietly confident 5G rollout can begin in 2019.

If we analyze Huawei’s growth spurts, we can see that the company enjoyed growth during early introduction of 4G, and suffered slowdown in 2011 when 3G was dropping off. That means when 5G arrives, Huawei is likely set for a flood of telco investment and deals that will push growth.

So the U.S. government may never trust Huawei. So what? Considering who’s running things right now, I think more people worldwide are rolling their eyes at the American government than Huawei.









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Source: Forbes Technology