with William Plummer, Huawei's vice president of external affairs
Huawei is now the second largest network infrastructure provider in the world, after Ericsson (NASDAQ:ERIC), and is building a strong reputation with carriers all over the world. But Huawei has yet to gain inroads with operators in the United States, where it has failed to secure any major network contracts, most notably Sprint Nextel's (NYSE:S) multi-billion-dollar Network Vision network modernization project. Huawei has been battling perceptions (which it terms misperceptions and falsehoods) that because it is a Chinese company, it presents a threat to national security. Nevertheless, the company has found some success in the U.S. market via its mobile devices business, and Huawei currently employs close to 1,800 people overall across the United States. Recently, FierceWireless Editor Phil Goldstein spoke with William Plummer, Huawei's vice president of external affairs, about the company's attempts to crack the U.S market, network security, its handset business and what it is doing to overcome negative perceptions. Below is an edited version of the conversation.
FierceWireless: Can you address concerns about Huawei's ties to the Chinese military and the security of Huawei's products?
Plummer: Roughly 75 percent of our revenue is outside of China now. We're present in 140+ markets, serving over 500 operators, connecting almost one-third of the world's population. Among the 500 operators, [are] 45 of the world's top 50. So the AT&T's and Verizon's of every OECD country--British Telecom, Deutsche Telekom, France Telecom, Telecom Italia, Telefónica, Vodafone, Bell and Telus in Canada, América Móvil in Mexico--all of these operators have validated the quality, and the integrity and the security of our networks. It's world-proven. The difference in this market was a lot of misinformation and disinformation circulating around about the company. And that has to be corrected with the facts.
And it's not just the facts about Huawei, about who we are and what we are, but it's also the facts about our industry. For instance, from a cyber-activity perspective, we read every day about Chinese hacking of U.S. networks. And presumably if we were in China we would be reading about U.S. hacking of Chinese networks. And there's probably Russian hacking of both networks or Israeli hacking of all the networks. I don't know. But we know it's all going on. And that hacking is agnostic to the network and it's agnostic to the plumbing. It doesn't matter who built the equipment, it doesn't matter what network operator is operating the equipment. That's a reality. The other reality is that to the extent there might be concerns about nefarious input into the network gear--the hardware, the software, the firmware--those concerns are real and they are universal. Huawei, Nokia Siemens, Alcatel-Lucent, Ericsson, Cisco, are all transnational companies leveraging global operations, sharing common supply chains, conducting R&D globally, coding software globally and manufacturing solutions globally. All of us [are] in China, all of us [are] in the U.S., all of us [are] in a variety of markets, all of us sharing the same vulnerabilities. It cannot be done to address any security concerns on a geographic basis or a company-specific basis. It's intellectually dishonest to suggest that.
What is required is a universal solution that would raise the security bar for everyone and consistently. Because, strangely enough, in part, Huawei has a long-term commitment to security, including our own networks--we get hacked, too. In addition to the long-term commitment to security, because of the political spotlight on China--and we unfortunately get caught up as a proxy--the end-to-end security assurance, procedures and disciplines that we've put into place from concept, through coding and sub-assembly, assembly and production, and deployment and after-market, are benchmarks. They are industry leading. But that's not enough. Because all of us in this industry are building to the same global standards. Because our customers want to have a competitive environment where they can get plug-and-play from different vendors and optimize their networks based upon their capital expenditure. We're all building to the same standards, and that implies a definite possibility of interoperability and interconnection. When you connect a Huawei network element that's been through this rigorous end-to-end security assurance process to a competitor's element that hasn't experienced the same rigor, your network's vulnerable again.
FierceWireless: Switching gears a little bit, in May 2011, Huawei said that by the end of 2011 it was going to launch an advertising campaign here in the U.S. to highlight its brand. Was that ever launched and what is the company doing now to increase its brand awareness in the U.S.?
Plummer: There was a brief flurry of advertisements that went out just before we reorganized [in the fall of 2011]. You've seen this happen in the industry before--we created distinct business groups within the organization. So there is now a Huawei Devices business group, a Huawei Infrastructure business group, a Huawei Enterprise business group and then there's something else we call "other," which is an incubator, a catch all, etc. And with that evolution, it's not that the Huawei umbrella brand is going away, but that while the business groups are busy defining their own brand strategies, there's been to some extent a waiting period. From an infrastructure perspective, there's a very defined universe of customers, and we are indeed world-proven in terms of quality, integrity and security, so there's only so much branding you need to do on the infrastructure side. As the devices business has grown globally, and exceeded $1 billion in the U.S. last year, there's an obligation that comes with that when you're dealing with consumer-oriented solutions to approach branding in a way we haven't in the past. And that will happen.
FierceWireless: In tandem with that, are we going to see one of the company's flagship devices, like the Ascend D quad or Ascend P1, from a Tier 1 U.S. carrier this year?
Plummer: The answer to that would to watch this space. Huawei recognizes that we are first and foremost committed to our customers, the carriers. And the carriers are going to want to balance their portfolios of devices. And we are in the business of helping the carriers meet their needs from a portfolio perspective, whatever those may be. And in so doing, we earn trust, we build credibility, [and] we slowly build trust and credibility in the consumer space. And as we bring a richer range of devices to the market on a global basis, that creates an opportunity for the U.S. carriers that are looking for a broader range to add those to their portfolios. So it's a collaborative thing.
FierceWireless: Can Huawei realistically use its devices business to gain traction for the infrastructure business here?
Plummer: It's an interesting question. They're different business groups. And so they operate in parallel. Back in the day, back in the 90's, I think you saw a lot more of, whether it was an Ericsson or a Motorola, or a Nokia, that in their relationships with carriers they were leveraging their infrastructure business against their device business. You would see deals that were struck where there was a blend--going after an infrastructure business and there would be a deal on devices in volume. I don't think you see as much of that today.
Now I think that, yes, to the extent that we're demonstrating that we're having a good working relationship with a customer in one element of our business, yes, that helps to build trust in other elements of our business. But that's just a building a relationship, it's not leveraging one against the other.
FierceWireless: What will it take overcome these perception or misperceptions about Huawei? Can they be overcome?
Plummer: We're catching up. When disinformation festers for a decade it takes some time to undo it. And the way we're undoing it is putting the facts on the table and suggesting to anyone who might purport an alternative fact--well, let's see it. We're cleaning up the unfortunate misinformation.
The second thing is, it's not necessarily a result of anything we're doing, although we're contributing, I think it's become very clear on the security front to policy makers and regulators and those that are not purely politically minded that, maybe two or three years ago it was easy to say that everything was black and white, because it wasn't as well understood just how transnational and interdependent this industry is. But I think that's better understood now. I think that those who are looking for realistic and rational solutions recognize that this isn't working out by saying that everything is black and white. And that's an opportunity for us to cooperate.