Huawei squares up to Ericsson in battle for customers

Huawei intends to spend more on research and development this year in a bid to win over clients from rivals such as Ericsson by offering more than just cheaper products, according to Huawei's head of R&D.

The Chinese telecoms manufacturer spent around $4.9 billion (€3.77 billion) on R&D last year and plans to increase its budget this year in order to show operators that it is more than capable of building the mobile networks they want and need.

"The bottom line when you talk to customers about building a network is that they will ask: 'Can you do it or not?'" Li Yingtao told Bloomberg. "That ability depends mostly on innovation capacity. That's why we will continue to increase our investments."

Net R&D spending by technology companies such as Ericsson, the largest supplier of wireless networks, and Nokia grew last year at the slowest pace in three years, according to Bloomberg data. Bloomberg noted that Ericsson's R&D spending last year was almost the same size as Huawei's and is set to decrease this year, while the smaller Alcatel-Lucent has an R&D budget of €2 billion ($2.6 billion) for 2013.

Bloomberg also commented that Alcatel-Lucent and Nokia Siemens Networks, which has  Nokia intends to fully acquire, will be distracted by reorganisation efforts this year, and Huawei could benefit from this as operators look to rollout their LTE networks.

Despite ongoing security concerns at European Union level and in the UK, the Chinese manufacturer has generally been extremely bullish in Europe of late, also hiring a former Nokia executive to push forward its smartphone business in the region. Huawei named Colin Giles, Nokia's former executive vice president of sales, as its executive vice president for Huawei Consumer Business Group, and he will have a key role in developing Huawei's global marketing and branding.

For more:
- see this Bloomberg article
- see this WSJ article (sub. req.)

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