Huawei promotes cloud with new products as carrier segment stumbles

3 min read
Wang Tao, president of ICT Strategy & Marketing, introduces new cloud database and storage products in Beijing on May 15, 2019. (Image credit: TechNode/Wei Sheng)

Huawei moved to grow its enterprise business by launching new cloud database and storage products on Wednesday, after announcing last month that it would expand its presence in the global cloud arena.

The Shenzhen-based firm, best known for its smartphones and telecom equipment, said in a statement that the new cloud-computing products would help the company build a data industry ecosystem. The two new products include an artificial intelligence-backed database called GaussDB and a distributed storage system, the FusionStorage 8.0.

Huawei announced last month that it would partner with Spanish telecom carrier, Telefonica, to operate cloud services in Brazil and Chile as it expands the business globally.

The release of its cloud-computing products come as the company’s carrier business falters amid intensifying global scrutiny over the security of its equipment for next-generation wireless networks, known as 5G. The company is growing its enterprise business, which contributed 10.3% of company revenue last year.

As a result of the US-led backlash against its telecom equipment, Huawei’s carrier business declined 1.9% last year compared with an increase of 23.8% in its enterprise business.

Challenging US giants

The global cloud infrastructure market is currently dominated by US giants such as Amazon’s AWS, Microsoft Azure, and Google Cloud, with respective market share of 32.3%, 16.5%, and 9.5% in the last quarter of 2018, according to researching firm Canalys.

Meanwhile, a report by industry consultancy IDC shows that China’s cloud system and management software market is expected to grow to $650 million in 2023 from $105 million in 2018 driven by increasing demand.

In five years, “China’s spending on private cloud infrastructure will surpass that of the US and become the world’s largest market,” said the report.

China’s cloud services market has also been a crucial part of the on-again-off-again trade talks with the US. As it stands, foreign cloud service provider operations are largely hampered by local regulations. The country’s cloud market is dominated by Alibaba Group with 43% of the market in the first half of 2018, followed by Tencent Cloud with 11.2% market share, according to IDC.

Earlier this month, it was reported that Huawei’s database rival Oracle is planning to lay off hundreds of staff in China as it restructures to focus on cloud computing. There is also speculation that Oracle’s China Research and Development Center will be closed soon.

Huawei denied that the company’s new database and storage products were the company’s attempt to fill the market gap left by Oracle.

“The strategic purpose of Huawei’s releasing of the database product is to boost the whole industry ecosystem, rather than to replace any competitor’s products,” (our translation) said Wang Tao, Huawei’s president of ICT Strategy & Marketing in a press conference held in Huawei’s Beijing research and development center on Wednesday.

“The arrangement [to release the database product] was made before the Oracle layoff,” Wang added.

Security concerns linger

The same day as Huawei released its two cloud products, it was reported that the US president Donald Trump is expected to sign an executive order this week that would ban US companies from purchasing telecom equipment from manufacturers regarded as a threat to national security. Huawei is thought to be at the top of that list.

Wang responded to the potential US ban in the press release by saying that Huawei was a global company and it would barely be affected given the company’s limited amount of business in the US.

“Cybersecurity is primarily a technical issue,” said Wang. “But we have seen some governments mislead the public by turning cybersecurity into a political and ideological issue, which won’t be beneficial to cybersecurity. Declaring products from specific countries and companies are unsafe won’t ensure cybersecurity.”

Security concern over Huawei’s products has extended beyond telecom equipment. Addressing a question about the security of Huawei’s new database product, Wang responded that Huawei always followed local regulations and laws about data protection in all countries and regions in which it operates.

“Huawei’s products, including the new database product, have higher safety standards than any other products of other suppliers in the industry,” Wang said. “Please trust us!”

The question, which was raised by a US television journalist, triggered an uproar from the Chinese reporters in the meeting room.

“Why do they always ask about this? That’s a typical American stereotype,” one reporter asked another seated nearby.

Additional reporting by Nicole Jao.