Company targets $100 billion annual revenue in 10 years
Leading Chinese telecom solutions provider Huawei Technologies Co. Ltd. is undergoing a major restructuring designed to allow the company to nearly quadruple its revenue during a 10-year period and reach $100 billion in revenue by 2020.
The company must expand its revenue at a rapid clip during the next few years to achieve this ambitious goal. Huawei in 2010 generated $27.4 billion in revenue， a figure expected to rise this year to $31 billion.
Huawei is already in a strong position， with overseas sales as well as a strong domestic position in China growing rapidly. Company revenue has more than tripled during the last four years， climbing from $8.5 billion in 2006 to $27.4 billion in 2010.
To achieve the next level of growth， Huawei will focus on new opportunities in the enterprise， devices and
cloud computing segments. By 2020， each of these segments will account for 20 percent of company revenue for a total of 60 percent of sales. The remaining 40 percent of revenue will be generated by the company’s traditional telecom equipment business.
New Structure for Huawei
To align with its new business strategy， the company already is restructuring itself into four major units： carrier， enterprise， devices and other.
After years of more than 20 percent growth， Huawei is redefining its telecom driven strategy to address broader opportunities in the information， communication and technology （ICT） market in both the enterprise and devices segments. The ICT space represents billions of dollars of new market opportunity， primarily driven by enterprise IT spending.
Expanding sales in the ICT， cloud and device segments are necessary to keep the company growing at its accustomed pace. To create value for customers in these new business segments， Huawei can also expand to new market spaces and gain new income sources.
The former Global Services and Telecom Networks division of Huawei now has been formed into a new organization called Carrier Networks. Its primary focus will be delivering product-attached technical services that deliver “value-chain-driven solutions，” total value optimization （TVO） enhancement and engagement models driven by end-user experience.
Overseas Growth
Huawei in 2010 enjoyed a 25 percent increase in revenue to $27.4 billion， up from $21.8 billion in 2009， with a net profit of $3.5 billion. Of this， the company booked 65 percent of its revenues from overseas， up from 61 percent in 2009.
For the North American market， Huawei’s revenue in 2010 reached $820.7 million， amounting to 3 percent of global sales and representing an increase of 100.9 percent from 2009. Currently， Canada is the main growth driver for Huawei in North America， while prospects of a deal in the United States remain weak due to government roadblocks.
Huawei could be trying another approach to gain a foothold in United States via enterprise vertical solutions. In February， Huawei Symantec Technologies Co. Ltd.， a joint venture between Huawei and Symantec， partnered with Force 10 Networks to combine security， storage and networking expertise to address U.S. vertical markets. There are signs， too， that Huawei has softened its attack on Tier 1 telecom operators as it shifts its strategy to enterprises in order to achieve greater profitability.
IHS believes that Huawei will address the U.S. market through its cloud and enterprise strategy， targeting entities ranging from private clouds to small-medium enterprises， as well as hosting cloud solutions to Tier 2 or Tier 3 service providers.
