Huawei’s hold on half of world’s telecoms gear gives it a shoo-in seat at the top table of cloud services

Research firm Gartner estimates worldwide public-cloud services have grown 18 per cent this year alone, and are now worth US$246.8 billion

PUBLISHED : Wednesday, 06 September, 2017, 12:00am
UPDATED : Thursday, 07 September, 2017, 5:38pm

Huawei Technologies, the world’s largest telecommunications equipment supplier, is targeting a place among the world’s top five public cloud service providers, despite its relatively weak market share in the domestic public cloud market.

Guo Ping, Huawei's deputy chairman and rotating chief executive, said the Shenzhen-based company is confident of overtaking the country’s recognised leaders in the field, and is already touting the abilities of its extensive networks with telecommunications network operators around the world.

He pointed out that half of the world’s population is already using networks supported by Huawei’s equipment or technologies.

Huawei plans to set up cloud alliances via its global telecommunications networks to tap companies owning operations at home and overseas, to provide seamless cloud services support.

It already has long-standing partners that include Deutsche Telekom, Orange and Telefonica – the three major telecommunications network operators in Europe – to unify their cloud standards.

“Huawei is determined to develop public cloud services as a long-term and strategic investment priority,” said Guo at the company’s annual gathering in Shanghai on Tuesday. he added that the strategu is a natural move for the company, which is widely considered to be a world leader in information and communications technology.

“Our business model is now to make money from technologies and services rather than from customer data – that’s a fundamental difference from the traditional internet-based, over-the-top players that work to monetise data,” Guo said.

Unlike private clouds, single-tenant environments where hardware, storage and networks are bought by and tailored specifically for clients, public clouds are typically shared data infrastructure made available on the internet, which serve many companies but at lower cost.

They are now being widely deployed by the Chinese government and public and private firms nationwide.

Zheng Yelai, Huawei’s cloud business segment and IT product line president, said the company’s core priorities are threefold: having highly advanced technology that guarantees the security of the data, its system is stable and reliable, and that it is regarded as a trusted partner by the industry – all of which enable Huawei to enjoy fast growth in the public-cloud sector.

Public-cloud services are proving extremely lucrative, according to research firm Gartner, which estimates worldwide they have grown 18 per cent this year alone, and are now worth US$246.8 billion.

Separate figures from International Data Corporation (IDC) suggest that Alibaba Cloud, the cloud computing arm and business unit of Alibaba Group – which also owns the South China Morning Post – accounted for over 40 per cent of public cloud market share in China last year, followed by China Telecom, Tencent Cloud, and Kingsoft Cloud, owning shares of 8.51 per cent, 7.34 per cent, and 6.02 per cent, respectively.

Huawei’s public cloud business was among a pile of “others” that shared the remaining 37.46 per cent in China, said IDC.

“Aside from Alibaba Cloud, all the other players have market shares well below 10 per cent, which leaves a good opportunity for Huawei to become a top-five public cloud operator in China within the next two to three years,” said Thomas Zhou, IDC’s research director.

“We estimate the top five cloud players in the world will control at least 75 per cent of combined share by 2020, which means players outside the top five will be further edged out.

“That’s the reason Huawei is determined to become a top-five cloud service provider, but it will be challenging to achieve this goal,” said Zhou.

AWS, Microsoft, Google, IBM and Salesforce currently lead in the global rankings in terms of cloud infrastructure, followed by Alibaba, which ranks sixth, according to Synergy Research Group.

Charlie Dai, principal analyst with Forrester, added that Huawei’s plans to cooperate with international telecom operators, especially European telcos, is likely to help lift its global share, if revenues generated from building services for multinational operators prove successful.

“Huawei is rich in software and hardware development experience and owns high-standard service teams,” said Dai.

“But as the newcomer to the market, it will also need to consider how to balance its relations with its business partners in the cloud market.”