Sometimes, often in fact, really important events go unrecognized when they happen but loom large in retrospect. I think we have one this week, and it’s Huawei’s U2Net vision. Yes, to an extent, this is a marketecture, but it’s a marketecture from a company that is first a skyrocket in terms of strategic influence and second a company whose messaging hasn’t always been the equal to its capabilities.
U2Net means “Ubiquitous Ultra-Broadband Network”, and it includes an edge-to-core vision of a network that’s designed to support the enormous elasticity in connectivity and traffic that will characterize the future needs of consumer broadband. In itself, you may think that’s hardly new; Alcatel-Lucent has had its “High-Leverage Network” for some time and NSN has just been promoting its “Liquid” concept of elasticity and flexibility. But what U2Net does is mark a transition for Huawei, a transition from point-product competition on price to systemic competition on vision.
I’ve noted before that Huawei has come a long way, both in terms of objective capabilities and in terms of customer perception. In emerging markets in particular, they have created teams that stand with the very best in the industry and that offer not only attractive pricing but strong support and insightful commentary. In fact, operators in emerging markets rate Huawei sales as number one or number two in quality of insight in nearly three-quarters of all the places we survey. That is a big jump from a year ago.
The reason this is all important for the market and not just (obviously) for Huawei is that issues and features are the only defense against price-based competition, and you lose them when you lose the issues to the price leader. It’s very obvious that within a year, Huawei will be able to articulate its story at the strategy level with at least the refinement of the market leaders in strategic influence. Alcatel-Lucent has held the top spot in that particular race for the last five years, but we think that they’ll be nearly tied with Huawei in our fall results and that Huawei will pull ahead in some areas in the spring of next year at the current pace of advance.
What has happened here is that all the major network players have wasted five years, pure and simple. With buyers demanding more support for their monetization goals, the classic vendors have simply ignored the pressure and pushed boxes, and box-pushing cedes strategic differentiation because it cedes any sense of context in the sale. There’s no such thing as a strategic box, and box-level features are hard to argue when networking is a cooperative ecosystem.
We’re also seeing signs of enterprise movement for Huawei. While they’re not in our survey results there at any statistically significant level yet, they have appeared for the first time outside of China in (you guessed it) an emerging market. The focus of the enterprise pitch is the cloud, and I think Huawei has picked that focus because emerging markets are disproportionately likely to be consumers of public cloud services and so it’s likely that larger businesses with current IT deployments will need to hybridize. The cloud is a bridge between an established position with network operators and an emerging one with the enterprise.
For five years now, Huawei’s competitors have wallowed in complacency. Now it’s time to be afraid.