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Huawei looks to cloud services in 2021 as US sanctions strangle smartphone business

Firm’s founder Ren Zhengfei says the Chinese giant should benefit from Amazon and Microsoft’s global leaders.

Staff said they will rely on some facets of cloud computing and scale down to survive rather than attempt to follow the U.S. giants or Alibaba.

With US sanctions stifling Huawei Technologies Co’s 5G and smartphone market, company founder Ren Zhengfei said the Chinese tech giant would make cloud computing its top priority.

In an internal speech delivered in November and posted on a workers website two days before the new year, Ren admitted that cloud computing had not been a force and that the company wanted to make a “breakthrough.”

“It is impossible for us to simply follow the same path as Alibaba and Amazon … they have access to unlimited money on the US stock market,” he said, alluding to Huawei’s position as a non-publicly trading firm.

“Our business needs to scale back its battle front … If our strategy is too broad, we will lose our fighting strength.”

New York-listed Alibaba, which controls the South China Morning Post, and Amazon are also tech conglomerates whose large industries include e-commerce, online streaming and cloud computing, among others. Huawei, on the other hand, concentrated mainly on telecommunications and smartphones.

Ren argued that Huawei should benefit from the performance of Amazon and Microsoft, the world’s leading cloud services provider, by focusing on infrastructure as a service (IaaS) and web as a service (PaaS).

In IaaS, consumers typically pay a premium for the use of computer services such as networking and data storage.

PaaS accounts for a mix of computer power and an infrastructure for coding and distributing applications over the Internet.

As its cloud customers, Ren said, the organisation should concentrate on securing large businesses and companies in major industries.

Though Amazon and Microsoft are leading the IaaS industry worldwide, Huawei is also one of China’s leading providers along with Alibaba and Tencent.

According to the polling company Canalys, Alibaba accounted for more than 40% of China’s market share in the third quarter of 2020. Huawei and Tencent owned nearly 16% each.

Cloud computing saw a dramatic rise in demand last year when companies migrated online to deal with the coronavirus pandemic. Cloud investment in China has been driven by the government’s “new infrastructure” programme designed to accelerate expenditure on areas such as 5G networks and data centres.

Huawei has been trying to reinvent its market since being declared a security risk by the US government in the wake of escalating tensions with China.

The purchasing of American items and services without Washington’s permission has been illegal since mid-1919. US sanctions also force international chip makers using US technologies to apply for a licence to sell to Huawei.

Huawei’s revolving president said in September that the firm still had enough chips to operate its business. In the other hand, its supply of mobile chips has dwindled to the extent that it has been forced to avoid shipping handsets with its high-end chips.

At the end of last year, the group agreed to sell its budget smartphone brand Honor in the hope that the “divorce” will encourage Honor to shake off US sanctions.

It seems, though, that Huawei has not fully given up on its customer business. It recently said it plans to roll out HarmonyOS, its self-made counterpart to Google’s Android operating system, to all of its smartphones and many other platforms this year.

Khushbu Soni
Chief Editor - CIO News | Founder & CEO - Mercadeo


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