Will Huawei's new security plan calm U.S. carriers' concerns?
SHENZHEN, China--During a media junket hosted by Huawei ealier this week, Kevin Zhang, Huawei's vice president of its global marketing department, outlined a three-pronged security plan that the firm hopes will alleviate concerns by operators and regulators, and help it win more business in the U.S. market.
The plan includes establishing a national security committee headed by Huawei CTO Matt Bross, using an accredited independent test lab to check Huawei's proprietary software, and ensuring trusted delivery of all products by using U.S. citizens to deliver product in the U.S.
This is just the latest in a series of steps Huawei has taken to address concerns over national security. Besides the three-pronged security plan, Huawei also is working with a slew of partners--from D.C. law firms to Kansas City, Mo., startups like Amerlink Telecom, which is headed by former Sprint Nextel (NYSE:S) executive Kevin Packingham, to help it get its gear in Tier 1 operators' hands.
Will this aggressive strategy work? I think Huawei is laying the groundwork for what may eventually be a successful strategy. After speaking this week with executives at the company's headquarters in Shenzhen, and also in its R&D center in Shanghai, it's clear that Huawei has set its sights on the U.S. market, and is intent on whittling marketshare away from competitors Ericsson (NASDAQ:ERIC) and Alcatel Lucent (NYSE:ALU).
In fact, if you look at Huawei's strategy in the U.S., it's similar to that of Swedish vendor Ericsson, which is currently the No. 1 global infrastructure vendor.
In November 2009, Ericsson relocated its CTO Hakan Eriksson to Silicon Valley to oversee the company's IP business. The move reflected Ericsson's growing momentum in the U.S. market and the significance if its deals with U.S. operators. Likewise, Huawei in September 2009 hired Matt Bross, formerly of BT, as its CTO, and located Bross in the United States rather than China.
Ericsson also recently expanded its presence in the U.S. by opening an R&D center in San Jose, Calif., focusing on mobile broadband, and debuting an "Experience Center" at its Plano, Texas, headquarters to house working demonstrations of LTE and other technologies. Huawei, meanwhile, has an LTE laboratory in Richardson, Texas, and has eight R&D centers in North America. The Chinese company invested more than $62 million in research and development in the U.S. last year alone. And earlier this year it announced it would add 600 jobs in North American in 2010.
Huawei is slowly making progress--the firm currently has deals with Leap Wireless (NASDAQ:LEAP), Clearwire (NASDAQ:CLWR), Cox Communications, Alltel, Cleartalk and MetroPCS (NYSE:PCS). And this slow but steady strategy is fine with Huawei executives. Zhang said in an interview (while speaking through an interpretor) that he believes the U.S. will follow Europe's path: In Europe it took Huawei 10 years to progress from its first Tier 1 contract to market leadership, and he expects a similar timeframe for the U.S. --Sue
P.S. Check out this slideshow from my tour of Huawei's headquarters.