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Saturday, September 09, 2017

Huawei Connect: IT services, Enterprise Cellular, video analytics, AI and more

I spent most of last week in Shanghai, attending Huawei's Connect conference and trade show. It was a good chance to get a deep-dive into the company's enterprise activities, as well as get my head around China's broader trends and influences around the technology sector.

I normally engage with Huawei through its analyst relations function, but this trip was organised by a different team. The company apparently considers me a "KOL" ("key opinion leader"), which is a rather diffuse bucket used for a mix of outspoken independent analysts, public-facing academics, video/social bloggers and assorted others. I'm not sure I set out to lead opinions, but I'm certainly happy to voice my own.

(Unlike the analyst events I usually attend, the KOL group isn't really made up of direct competitors, so there's a more collegiate atmosphere - and a very lively WeChat group, partly with logistics about meeting times/locations but also sharing photos or thoughts about the event).

Connect is mostly driven by Huawei's enterprise business unit, which is growing fast (about $6bn revenues in 2016, up 47% [link]), and focuses on cloud and big "infrastructure-led" IT and networking projects. So sectors like smart cities, advanced manufacturing, oil and gas IoT, systems for transport sectors like rail and ports and so on. There's a heavy emphasis on IoT platforms and networks, cloud and storage, video/image surveillance analysis and a lot of AI. 

It clearly intends to be a very significant player in its chosen sectors, using its existing high IT profile in China, plus its global telecom footprint, as a springboard for other international ICT theatres. Unlike Europe, North America and India, China has few global-scale IT companies, especially in systems integration or outsourcing. The closest to a "Chinese version of IBM" is probably ChinaSoft, which has a deep partnership with Huawei anyway, and in which Huawei owns a significant shareholding.

Thinking more about technology-sector comparables, very few have a similar blend of infrastructure/network/telecom expertise, systems integration/services scale and cloud capabilities. Given Ericsson's recent announcements of pulling back on direct enterprise-related initiatives to focus on CSPs and its Cisco partnership as channels (a strategic error, I feel), it's only really Nokia and maybe NEC that have the scope to push the same big-infrastructure enterprise "ICT" vision, although even it doesn't have the full-scale IT services business that Huawei does. Perhaps there's yet more scope for consolidation between traditional IT companies and networks. (Ericsson+IBM? Nokia+HP? NEC+Tata? Who knows....)

One other thing stood out about the event: there was very little spoken about telco networks, Huawei's main business, or the synergies between that business unit and its faster-growing enterprise sibling. 

There was much more about robots and face-recognition than network-slicing and NFV. The main mention of IMS that I saw was in the context of critical communications for public safety, eg push-to-talk. The X-Labs group assessing possible future 5G use-cases was talking about connected drones, or cloud-integrated video-enabled helmets for the blind. There was a "carrier" section in the vertical-industries show hall, but that seemed mostly focused on cloud solutions for telcos.

Conspicuously, there was almost no reference to delivery models for network or IoT capabilities for enterprises. There was no assumption that everything would be provided "as a service", or in particular, delivered by a CSP. There was tacit recognition that some organisations want to own their own infrastructure / private clouds, some may go to a specialist integrator (eg an automation/IoT specialist like Honeywell or GE), and some might use an arm of a telco. For example, T-Systems, Deutsche Telekom's IT unit, was there talking about a Huawei-based storage cloud, deployed for CERN, the leading nuclear and particular research institution on the Swiss/French border.

Huawei also offers its own cloud services, but is quite self-effacing about it, only wishing to become "one of the top 5 clouds" (presumably along with Amazon, Google, IBM and maybe Microsoft - which it also partners) and saying that "1% is enough for us". I don't think Jeff Bezos is going to have too many sleepless nights, although Alibaba, Cisco and Oracle may have different opinions on the top tier's members, the former especially in China itself.


In terms of specific takeouts on my normal coverage areas, a few things stood out:
  • Enterprise Cellular: This was everywhere at the event, under the brand eLTE. This is a sort of pre-cursor to a MuLTEfire / CBRS model of non-carrier cellular networks. There's a quite large eLTE ecosystem, especially around public-safety networks but also manufacturing, transport and other verticals. There was a demo of a robot connected with private cellular. There are 3 variants:
    • An unlicensed LTE-U version that doesn't need a licensed "anchor" like LAA, so can be deployed by any organisation
    • A licensed-band version, where organisations (such as law-enforcement or utilities) can manage to get dedicated spectrum by one means or another
    • A narrowband version, which is essentiially NB-IoT in unlicensed bands such as ISM spectrum (which in China, is in the 500MHz range, or 900MHz in the US)
    • All of these were targeted at industry verticals. There wasn't any mention of other use-cases like neutral-host providers, hybrid MNO/MVNOs, mesh networks, or consumer-oriented plays. 
    • There wasn't any explicit mention of shared-spectrum models like CBRS, but it seems to fit under the second category.
    • This all fits nicely with the recent work I've done on private/enterprise cellular. It will be an ongoing theme as it is clearly "happening", including presentations at a few upcoming regulatory conferences, and another workshop with Caroline Gabriel in London on Dec 1 (link)
 

  •  IoT networks: There was a huge emphasis on NB-IoT around the event, as well as broadband 4.5G/5G options for drones, connected vehicles and more demanding applications. I didn't see an mention of LoRA, SigFox, or even LTE-M or Cat1 though, but WiFi and ZigBee cropped up on various slides. Some interesting examples of NB-IoT deployments, notably for cities, or specific OEM-led integrations such as China's booming shared-bicycle sector.
  • Video and facial networks/analytics: This was a huge theme, as it bridges Huawei's key domains of mobile broadband, cloud services and AI. A major focus is "safe cities", especially using networked video cameras to manage traffic, enforce public safety - and track/spot individual people, whether that is missing children, criminals, or attendees at a trade show. (I joked on Twitter that Huawei had probably been tracking people around the event itself - only for the next slide to reveal that it had been doing exactly that). Missing from most of the material was much mention of privacy - which appears to be less of a concern in China than it would be in much of Europe. That said, we may be fighting a losing battle on that front, as this week's Economist cover & feature articles on face-recognition point out (link).
 
 
 
  • AI: Beyond video-analysis, a central thrust of the event was around machine-learning, graph analysis, image-recognition and other forms of AI.  I didn't get a chance to go into too much depth on this, but it's pretty clear this is central to Huawei's cloud ambitions, and probably will link into carrier-domain services like smart-home / personal voice assistants as well as "big data" corporate applications
  • We also had a briefing with the handset unit, which discussed the new Kirin AI-oriented chip which includes a neural processing element, as well as CPU, GPU and DSP. This should enable better and more power-efficient local classification of images, without the need to send all data to the cloud. This fits into my ongoing debate on whether 5G's low-latency business case might be undermined by more edge-processing. (link)
  • WiFi: Although not as big an emphasis as 4G/5G, Huawei nevertheless had a fair bit of WiFi on display, particularly for large-scale deployments in cities or large public venues like sports stadia. It also had an interesting hybrid WiFi / IoT networking unit, which for now focuses on Bluetooth, RFID and ZigBee but I guess could incorporate NB-IoT (or its eLTE variant), or even LoRa if a client wanted.
  • UC/UCaaS: Although not a major focus of the event (itself quite telling) there was a fair bit of unified communications, conferencing and even cPaaS around the show. There was a Broadsoft-style UC platform for operators, and various tools for multi-party meetings. It's not obvious that Huawei is aiming to be a Twilio / Tokbox-style platform provider though, although it does have APIs (including WebRTC) for embedding communications in apps and websites. I didn't see any signs of a Slack/Spark/HipChat rival. Notably, Huawei is partnering Microsoft on Office365, so may not launch its own full UcaaS direct-to-enterprise product. 
  • I liked one partner booth in particular "Call Cloud", which uses a crowd-style / sharing economy approach to sourcing customer-service reps, with in-app video. It apparently has 7 million (!) people signed up as potential providers of informal information or support.

Overall, an interesting few days for me, exploring a side to Huawei I hadn't seen before. It's always hard to get a full perspective from a single-vendor event, but it struck me as one of the only real, fully-encompassing examples I've seen of an acronym I normally dislike - ICT. That said, some more candour about positioning vs. competitors would have been welcome. We all know who they are - so descriptions of differentiation would have been useful, even if rose-tinted.

It's also brought home to me how important it is to have a captive market to drive scale, which can then improve adoption rates (and prices) elsewhere. Amazon does it with AWS - its own huge retail business is an "anchor tenant" which helps create traffic volumes that then became reinforced by third parties' cloud usage. Huawei appears to do something similar with domestic government and enterprise business - millions of CCTV cameras, or large-scale city networks, or local IoT uses are helping it exploit pre-existing scale and experience, and then apply elsewhere. There is also a sensible approach to partnering, for example around IoT, with the likes of GE collaborating on distinct parts of the market.

One final comment: the layout of the trade show was excellent. One hall was organised per-vertical, with sections on Manufacturing, Public Safety, Oil & Gas, Finance etc. The other hall was per-technology, with sections on Cloud, eLTE, WiFi, NB-IoT, Developers and so on. I wish other events were similarly well-structured.

5 comments:

Freddy said...

Excellent report as usual, Dean. A number of valuable thoughts and considerations around technology and vertical solutions for Enterprises and Smart Cities. I will keep this post in mind during my visit at TM Forum's Smart City InFocus, taking place shortly in Yinchuan, China.
The event is sponsored by the municipality of Yinchuan and ZTE.

Junaid Ahmed Siddiquee said...

Well captured report. Now that the market is expanding beyond the traditional service provider space, it will be interesting to see how policy and regulations handle it. Will we see new licenses for enterprises and IOT?

Walter Jennings said...

Thank you for your thorough analysis. It was a pleasure to have you at Huawei Connect as an International KOL or analyst!

Sarita Kincaid, Director Global Analyst & Influencer Relations, Huawei said...

Thanks Dean for your well-captured overview and appreciate your participation at our event. We also had some WiFi news at the show; we launched a new 10G WiFi solution proving 3X bandwidth increase and 4X increase in the number of concurrent access users. The solution allows hybrid access through WiFi and Bluetooth, Zigbee and RFID. High level information here bit.ly/2wZ46jL Let me know if you're interested in a briefing or follow-up as we begin to deploy this globally.

InfoStack said...

Reading between the lines: The MNOs/MSOs are passe. Enterprise demand exceeds the ability of the edge access providers to provision end-to-end services cost effectively with their vertically integrated stacks and balkanized business models. Its like the 1970s-90s which was the heyday of insourced F5000 communication and IT stacks. Now a new breed of SaaS and PaaS providers represent more of an existential threat to the edge access providers than even the consumer OTT apps. The public to private pendulum is just picking up speed and most won't realize it until it is well past the equilibrium point.