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Expanding into consulting: Huawei’s next strategic step

Clients’ technology uncertainties lead Huawei to expand consulting services

In discussing clients and their shifting needs and demands, Huawei leaders told TBR that while previous conversations typically started with a client’s immediate plans and end goals, Huawei’s clients now come to it with uncertainty around technologies, business changes and digital transformations. This shifting client mindset has compelled Huawei to invest more aggressively in consulting-oriented skills.

For Huawei, consulting includes helping customers transform their IT organizations and define their own values around digital transformation, with Huawei providing the foundational technology. In TBR’s view, this more technology-centric approach to consulting fits Huawei’s traditional strengths and does not require brand permission around strategy or high-level business consulting. Huawei’s leaders also noted to TBR that they believe digital transformation encompasses both business and technology changes, but the exact mix depends entirely on each client’s specific needs. By continually circling back to the vendor’s emphasis on individual clients, Huawei’s leaders reinforced their overall messaging on value, including consulting as value definition, implementation as value creation and operations as value optimization.

Previously, during TBR’s in-person visits to Shenzhen, China, and virtual meetings over the last two years, Huawei made passing mention of training, rarely singling out consulting and digital skills, except in the context of the vendor’s overall human resource management strategy.

During this year’s summit and in the follow-on discussions with TBR, Huawei’s leaders emphasized the criticality of training around digital transformation, including formal mentoring programs, enhanced client interactions, and what Huawei describes as “the Digital 9” — nine roles identified in nearly every engagement that increasingly need elevation from traditional IT to digital transformation.

Training at Huawei, like many of its technology-centric peers, includes both upskilling employees internally and certifying partners on its technology solutions. In TBR’s view, every leading vendor in the IT services space has adopted a similar ecosystemwide perspective on training. This means Huawei is aligned with prevailing industry trends, which is a critical step for a vendor with more than 30,000 reselling partners worldwide and 6,200 certified service and solutions partners that are capable of implementing solutions, according to Huawei leaders who spoke with TBR.

Huawei seeks growth outside China, even as its home country remains paramount

According to information shared during the event, Huawei’s Digitization and Technical Services revenue increased by 20% over 2021 as the vendor expanded “consulting services and vertical industry services.” In addition, the vendor noted, “Significant demand is coming from government and financial services and insurance markets, typically for supercomputing and modular data center scenarios. [Huawei’s] value proposition is based around our ability to plan, design and build data centers with low energy consumption, IT integration, data replication and disaster recovery, as well as our strong operation and maintenance capabilities.”

In discussing plans for 2022 and beyond, Huawei’s leaders explained to TBR that the vendor anticipates new growth opportunities in Eastern Europe, Southeast Asia, the Middle East and South America. As an example of the latter, Huawei’s leaders described engagements with electricity utilities outside of China. Huawei has developed expertise around digitalizing utilities’ operations, including generation, distribution and consumption, and during the summit the vendor described the Intelligent Electric Power offering as tightly interwoven with consulting partners, including Deloitte, PwC and Accenture. Notably, in June 2020, a Chinese state-owned enterprise, State Grid International Development Limited, bought one of the top four electricity distribution companies in Chile. In TBR’s view, Huawei adeptly leverages its home country’s strategic investments to further the vendor’s success abroad.

Smart Ports provide a test bed for Huawei and a massive opportunity for growth

During the summit, one particular use case stood out for TBR: Huawei’s Smart Ports solution. The Huawei executive presenting the solution noted that reducing on-site manpower demands through increased automation has proved to be both popular with clients and challenging to implement. Crane operators face long days in harsh and cramped environments, which can lead to long-term health problems. The Huawei solution, already in use in Shanghai, includes deploying remote-controlled cranes, with operators as much as 100 kilometers away from the port and, presumably, sitting in more comfortable surroundings.

Trucks, according to Huawei, present additional problems: Drivers do not get adequate rest and the work can be monotonous and boring, leading some drivers to leave for more exciting and lucrative opportunities. Working with various Chinese ports, Huawei developed an intelligent dispatching system and autonomous trucks, which stay within a port’s confines. As the first live test case, Huawei operates over 70 autonomous trucks in Shenzhen’s port. Lastly, Huawei leaders noted that port planning can also prove critical to reducing operational costs and enhancing overall port safety, leading the vendor to develop a cloud-based AI tool for planning and optimizing traffic within the port. Reduced planning time, according to Huawei, equals reduced operations costs.

TBR has tracked smart ports for years with the appreciation that these facilities can serve as test beds for integrating emerging technologies, such as 5G, IoT, edge compute and AI, while forcing IT and digital solutions to work seamlessly with real-world physical challenges, such as moving containers and ensuring ships do not collide. With China boasting four of the world’s five largest ports — and two of those currently serving as use cases for Huawei’s new solutions — Huawei will likely continue to be a leader in this field. In TBR’s view, supply chain challenges over the last two years have only heightened the need for highly integrated smart port solutions, and vendors that are able to capture the full breadth of ports’ needs will see an explosion of opportunity over the next few years. Huawei should be well positioned to take full advantage of this growth.

Sustained investment in building Huawei’s consulting capabilities presents a strategic challenge

The Huawei Global Analyst Summit reinforced many of the vendor’s strengths, including its ability to test and prove solutions in China, the advantages it gains from employing a technology-centric approach backed by hardware and software solutions, and its sheer scale. A new emphasis on consulting — if it is matched with sustained investments in training, selective hiring and concurrent upskilling around digital transformation — could enhance Huawei’s competitive advantages for engagements that extend beyond essential technology needs. Currently, TBR observes consultancies solidifying their relationships with the C-Suite, IT services vendors seeking deeper partnerships and technology vendors building professional services capabilities. Huawei can be part of all three of those trends, and the vendor’s near-term success may depend on how skillfully leadership manages any expansion into consulting.

Russia-Ukraine war: Is Saudi Arabia’s consideration of the yuan the camel’s nose under the tent of U.S. economic sanctions policy?

As Russia continues its invasion of Ukraine, analysts monitoring the war’s global repercussions have also noted Saudi Arabia intriguingly stating the kingdom would consider accepting yuan payments for oil sold to China.

Limited set of vendors to continue benefiting from China’s 5G rollout

China’s 5G deployment was the driving force behind TIS market growth in 2020

Following the temporary shutdown associated with China’s initial battle with COVID-19 in 1Q20, China’s CSPs accelerated the rollout of 5G RAN, deploying over 700,000 5G base stations in 2020, in addition to the 100,000 base stations that were rolled out in 2019. TBR believes the country is nearing peak 5G RAN deployment levels after growth for Huawei, ZTE and China Communications Services (CCS) slowed in 4Q20, but China’s investment in 5G will remain elevated in 2021, with between 600,000 and 1 million base stations set for deployment as the government makes 5G a centerpiece technology of its newest national infrastructure development initiative.

A significant and growing portion of China’s government stimulus is being allocated to enable the ICT sector to accelerate infrastructure and ecosystem development. China has earmarked over $1.4 trillion for ICT initiatives over the next five years. These investments will primarily benefit CCS, Huawei and ZTE, though Ericsson and smaller China-based vendor CICT are also taking part in 5G RAN builds. China’s government heavily influences CSPs’ contract allocation and prioritizes business for domestic firms. Huawei was allocated the bulk of business in the 5G cycle, increasing its share from the LTE cycle, and TBR expects Huawei will maintain its leading market share, despite supply chain disruptions.

TBR believes that due to stockpiling, China’s ICT ecosystem has sufficient chipsets to meet the country’s 5G RAN deployment targets in 2021, which suggests the supply chain encumbrances instituted by the U.S. government are not having a significant impact on China’s original 5G deployment timelines.

Register today for an exclusive TBR webinar examining TBR’s Telecom Infrastructure Services (TIS) Global Market Forecast for 2020-2025, including the expected market impact of unprecedented government support in telecom over at least the next five years and increasing support, and mandate, from Western-aligned governments for CSPs to swap out gear from Huawei and ZTE.

EY Blockchain Asia: The revolution starts now

EY’s blockchain world

EY’s Asia-Pacific Blockchain Summit started with the firm’s Global Blockchain leader, Paul Brody, making three clear points. First, EY is committed to China and to the region, seeing huge potential for blockchain growth. Second, EY is committed to public blockchain as the long-term solution for most business and governments. Third, Brody’s concept of blockchain as the bridge between enterprises — as the tool to tackle the previously uncrossable chasm between different enterprises’ data and business processes — remains a driving force behind how EY sees the future of blockchain, in Asia and the rest of the world.

TBR’s December 2020 special report EY 2021: Hybrid and omnipresent discussed these latter two points: “Public blockchain, in Brody’s words, ‘will do for networks of enterprises and business ecosystems what ERP did for the single company.’ Brody added that conducting B2B [business-to-business] transactions over a public blockchain increases transparency and compliance with commercial terms.” The February event carried that discussion further, and specifically into Asia. 

EY and public blockchain in China  

Brody outlined a few major developments for EY in China, with all his comments reinforced by the subsequent panel speakers and EY professionals who provided additional color, both for the China-specific elements and developments impacting the entire region. In short:

  • EY has formerly joined the Financial Blockchain Shenzhen Consortium (FISCO) and made the firm’s EY OpsChain solution available on the FISCO BCOS (Be Credible, Open & Secure) platform.
  • EY intends to deploy its entire Ethereum suite of solutions to users in China.
  • EY has fully localized its blockchain entrée — blockchain.ey.com — for the Chinese market.

In addition, Brody touched on the opportunity blockchain presents in Asia, highlighting China and the Chinese market’s emphasis on digital payments as a precursor to blockchain adoption as well as a robust startup scene. He also highlighted three sectors where EY has been “making exceptionally large” investments: financial services, supply chain and the public sector, which underscored one of Brody’s main points around the importance of public blockchain as the core, foundational building block. He noted that “money and stuff are tokens … contracts are a mix of legal agreements and business processes,” so all business could be conducted on the public blockchain, which is EY’s focus on enterprise solutions. 

On Feb. 2, EY hosted an Asia-Pacific Blockchain Summit, a virtual event run by the EY Blockchain practice based in Singapore that included EY professionals and clients, startup executives, and industry experts who are primarily, but not exclusively, based in Asia. The three-hour event included a keynote from EY Global Blockchain Leader Paul Brody, a blockchain solution demonstration, and panel discussions covering the technology, including the challenges and opportunities associated with blockchain and the broader emerging technology space. The following is TBR’s commentary on noteworthy announcements and participants’ assertions made during the event as well as EY’s overall blockchain strategy.

Government stimulus and enterprise digital transformation will accelerate 5G deployments

Government stimulus will accelerate 5G rollouts

An increasing number of governments worldwide are becoming directly and/or indirectly involved in ensuring new technologies, such as 5G, are widely deployed in their respective countries. This spend is, in many cases, tied to economic recovery packages to counter the impact of the COVID-19 crisis and is being justified based on economic, national security and public health grounds.

TBR’s research indicates governments worldwide will invest in excess of $2 trillion in the ICT sector over the next five years, starting in earnest in 2021. Of that $2 trillion, several hundred billion dollars will flow directly into the 5G market, primarily for the purposes of providing internet access to underserved and unserved people around the world as well as ensuring respective economies are able to transform to be relevant and competitive in the digital era.

China’s CSPs will maintain an accelerated 5G rollout in 2021; domestic vendors will be primary beneficiaries

Following the temporary shutdown associated with China’s initial battle with COVID-19 in 1Q20, China’s CSPs accelerated rollout of 5G RAN, deploying 700,000 5G base stations in 2020, in addition to the 100,000 base stations that were rolled out in 2019. China’s investment in 5G will remain elevated in 2021, with between 600,000 and 1,000,000 base stations set for deployment as the government makes 5G a centerpiece technology of its newest infrastructure development initiative.

These investments will primarily benefit China Communications Services (CCS), Huawei and ZTE, though Ericsson and smaller China-based vendor CICT are also taking part in 5G RAN builds. China’s government heavily influences CSPs’ contract allocation and prioritizes business for domestic firms. Huawei was allocated the bulk of business in the 5G cycle, increasing its share from the LTE cycle.

TBR believes China’s ICT ecosystem has sufficient chipsets to meet the country’s 5G RAN deployment targets in 2021, which suggests the supply chain encumbrances instituted by the U.S. government are not having a significant impact on China’s original deployment timelines.

CSP 5G Capex Spend 2019-2024E

The 5G Telecom Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

CSPs accelerate 5G deployments to realize the significant cost efficiencies that are inherent in the technology

According to TBR’s 1Q19 5G Telecom Market Landscape, though a viable business case for operators to grow revenue from 5G has yet to materialize (with the exception of fixed wireless broadband), the main driver for operators to deploy 5G is realizing the efficiency gains the technology provides over LTE.

Operators in developed markets worldwide have accelerated their 5G deployment timetables over the past year, primarily because 5G is a significantly more cost-effective solution to handle rising data traffic in their traditional connectivity businesses but also to remain competitive in their respective markets.

TBR estimates over 80% of 5G capex spend through 2020 will be driven by operators in four countries: the U.S., China, Japan and South Korea, with the remaining 20% of spend through 2020 predominantly stemming from Europe and developed countries in the Middle East and APAC that have relatively small populations. Most Tier 1 operators in these countries have aggressive 5G rollout timetables and intend to leverage the technology for fixed wireless broadband and/or to support their mobile broadband densification initiatives. The seamless software upgradability of new RAN platforms to 5G will facilitate deployment at incremental cost, keeping overall spend scaling quickly but at a relatively low level compared to prior RAN generation upgrades.

TBR’s 5G Telecom Market Landscape tracks the 5G-related initiatives of leading operators and vendors worldwide. The report provides a comprehensive overview of the global 5G ecosystem and includes insights pertaining to market development, market sizing, use cases, adoption, regional trends, and operator and vendor positioning and strategies.

1Q18 device revenue results were boosted by market shifts and increasing ASPs in PCs and smartphones compared to a weaker 1Q17

HAMPTON, N.H. (July 13, 2018) — Technology Business Research, Inc.’s (TBR) 1Q18 Devices and Platforms Benchmark finds that there is ongoing revenue opportunity in both the PC and smartphone markets. Total benchmarked revenue increased 15.9% year-to-year to $112 billion despite indications of saturation in the high end of the PC market.

Total PC benchmarked revenue increased 12% year-to-year to $32 billion. Total PC benchmarked gross profit increased 10.4% year-to-year to $5 billion despite increasing component costs. “Despite speculation that the PC market is dead, major device OEMs have been able to successfully navigate the shifting market and generate healthy profits,” said TBR Analyst Dan Callahan. “Renewed appetite for premium PCs in enterprise — and PC OEMs shifting their go-to-market strategies to respond — has been the primary driver.”

Total benchmarked smartphone revenue increased 11% year-to-year to $72 billion. Total smartphone benchmarked gross profit increased 14.8% year-to-year to $23 billion. Smartphone OEMs are combating worldwide saturation by increasing average selling prices (ASPs). Apple’s gamble with a $1,000 smartphone paid off, as customers responded with demand, and Android peers are following suit.

Device as Service (DaaS), an expansion of the former PC as a Service market, is transforming into an offering aimed at supplanting traditional PC financing. The benchmark explores how HP Inc. was the first of the big three PC OEMs to capitalize on the emerging opportunity and has been the first with concrete outbound messaging to partners and customers. This has afforded the company a lead, but it is not cemented. Dell Technologies and Lenovo will use the path HP Inc. paved to introduce DaaS to the market and quickly solidify their own unique solutions. Lenovo and HP Inc. see opportunity beyond the PC in PC as a Service, thus the introduction of DaaS.

The DaaS opportunity remains mostly untapped. Customers and partners are still trying to understand how this service differs from traditional financing and are still kicking the tires on the analytics often attached by OEMs as the main selling point of DaaS.

TBR’s Devices and Platforms Benchmark provides insight on interrelated ecosystems, including device vendors, platform providers, supplier relations, and technology partners across the consumer and commercial spaces. TBR’s vendor-centric analysis speaks to industry trends, while market sizing illustrates opportunity. Our Devices and Platforms research includes PC, tablet and smartphone vendors; platform providers; and technology partners.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

The tech is ready; geopolitics is hindering a global 5G rollout

Since ZTE (and Huawei) are major equipment providers globally, especially in India, the ban will impact network infrastructure and device ecosystems. — Chris Antlitz, Senior Analyst

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