Huawei Aims High, Willing to Outspend Rivals in R&D

by Istvan Fekete on July 3, 2013

Huawei has set its target very high: China’s largest marketer of networking equipment is ready to outspend its Swedish rival Ericcson in research and development, in a race for customers. Furthermore, it targets the high-end smartphone market and aims to retain a place among the top three biggest names. So in the Huawei scenario, the high-end smartphone market will be dominated by three names by 2015: Apple, Samsung and Huawei.

Although it cannot spend as much on advertising as Samsung or Apple, the Chinese company aims to balance its lack of branding budget with great products, and investment in research and development.

As a first step it has launched the world’s slimmest smartphone, which unfortunately for the company received mixed reviews, pointing to some missing features high-end users expect to receive. Putting its selling feature — the world’s slimmest smartphone — aside, the Huawei smartphone tech specs are more typical of last year’s kit. Also, it seems to be overheating, which also doesn’t look good if the company is after the top position.

The research and development budget, however, looks totally different when compared to the branding budget. The company has already invested roughly $4.9 billion in R&D last year, but is ready to invest much more in 2013 to boost its research, improving mobile and fixed network performance, as well as audio and video transmissions.

The question that remains, though, is whether or not Huawei will be able to overcome the impact of national security threat allegations.

You may recall that a US congressional report fingered the world’s second-largest supplier of network gear by revenue as a threat to national security, calling on the US government and private companies to avoid Huawei equipment purchases. As a result, Huawei (and its rival, ZTE) have faced major setbacks, which ultimately forced the company to withdraw its business from the US market.

But the US isn’t the only country in which the Huawei gear raised concern: Ottawa cited national security concerns over the Wind–VimpelCom merger, as Wind has built its core network by using Huawei telecom gear.

Now it remains to be seen whether the company’s efforts will be rewarded. The targets are high, as is the demand for answers to network problems. Carriers don’t need technological disruption, they need the right solution. And that ability depends on innovation capacity.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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