Huawei Connect 2017: ‘We have never taken shortcuts and will never do,’ says CEO vowing to make it to the Top 5 global public cloud providers

Reporting from Shanghai: Chinese multinational makes strongest bid to date on becoming a public cloud provider, vowing to never take control of user data and ramping up cloud alliances.

Huawei has never taken shortcuts and will never do. The same applies to the Huawei cloud,” Huawei rotating-CEO Guo Ping told an audience of 20,000 at the company’s flagship event Connect in Shanghai, China.

Taking to the stage, Ping vowed to make the company’s cloud offering one of the top five providers worldwide.

He said: “Clouds around the world will begin to converge – becoming more and more centralised. In the future, we predict there will be five major clouds in the world.

“Huawei will work with partners to build one of those five clouds, and we have got the technology and know-how to do it.”

Public cloud services are today available in China, and the public cloud business is not seen as a “level one business group” such as the carrier, enterprise and consumer groups of Huawei, a company spokesperson has explained.

“We are truly connecting people with people, people with things and things with things,” Ping said.

“Huawei will work with partners to build one of the world’s top five clouds.”

However, despite the company’s hype around being in the top five of cloud providers, the CEO did not directly mention today’s cloud beasts Microsoft, Google, AWS, IBM and Salesforce.

The desire to place Huawei on the Top 5 will mean that one of the current large players – Salesforce being the fifth largest currently and the first on the frontline – will fall short should the Chinese technology giant succeed.

Zheng Yelai, president cloud BU and IT product line for Huawei Cloud, would later say that the company’s ‘Top 5’ idea is based on 1943 IBM president Thomas J Watson’s prediction that there would only be five computers to serve the world’s needs in the future.

“I think there is a world market for about five computers,” Watson said.

“That is the beauty of the language between English and Chinese,” Yelai said.

Huawei’s market share in the cloud space is far from today’s leading five operators, all of them publicly listed companies. At home, Huawei also faces competition from e-commerce giant Alibaba, also a listed company, and its Alibaba Cloud offering.

According to Q1 data from Canalys, AWS currently sits at the top of the market with a 31% share, with cloud revenues reaching $3.6bn in Q1 2017.

AWS grew its cloud business by 43% when compared to the same quarter in 2016, however, the growth was overshadowed by Microsoft and Google which grew 93% and 74% respectively. IBM has reportedly grown 38%.

Further research from Synergy Research has found that Microsoft, Google and Alibaba have seen their cloud business grow more than 80% between Q1 2016 and Q1 2017.

Huawei does not release figures on its cloud-business as this is not seen as a level-one business, so comparisons are hard to make. Cloud is instead included in the enterprise and carrier business segments.

In its annual report for 2016, Huawei posted a year-on-year growth of 23.6% and 47.3% for the two segments respectively, with combined revenues of CNY 331.2bn.

Cloud Alliance

In order to enter the Big 5 club and build that level of operation, CEO Ping introduced what the company has branded as the Huawei Cloud Alliance to attract more partners and customers into its ecosystem.

The company believes that, similarly to what happens in the airliner industry, which has today three main alliance bodies – Star Alliance, SkyTeam and Oneworld -, cloud alliances will be key and Ping wants his company to become the face of one.

Ping said: “We hope in the future customers will ask for the Huawei Cloud and we will reach the entire world. We expect to be able in the future to build a cloud alliance around the world.

“The cloud alliance concept comes from the alliances in the airline industry. In cloud computing it is about the mobility of data logistics.

“Because of the economy of scale, it is impossible to have many public services companies in the world, [however], because data legislation it is impossible for one or two companies to provide the service.

“So just like the airline industry, the cloud alliance will enable that [data logistics platform].”

Yelai added that the alliance does not mean Huawei is building an alliance with Microsoft and AWS, for example.

At launch, Huawei has secured global telecommunications players such as Telefonica, Orange Business Group and Deutsche Telekom into the scheme.

Through the alliance and the participation of the three carriers, Huawei will be targeting German, Spanish and French speaking markets, not just in Europe, but also in the LATAM region and Africa.

Ping said: “We have selected Deutsche Telekom, Orange and Telefonica in Europe. These three carriers have covered most of the French, German and Spanish speaking countries and regions.

“These carriers have really good coverage in those areas and experience in covering enterprise customers. These customers have chosen to partner with Huawei, not the other way around.”

According to Huawei’s annual financial report, the EMEA region is the company’s second largest operation base, with revenues having grown 22.5% in YOY 2016 to CNY 156.5bn.

In the Americas, the company saw revenues grow 13.3% to CNY 44bn. China represents Huawei’s largest market, followed by the rest of APAC.

Governments and enterprises targeted

Gearing up to bring those revenues and market share up, Ping opened up about Huawei’s main focus for the near future when it comes to cloud users, and that is a strong push for cloud business around governments and enterprises.

He said: “Cloud is the most needed technology for governments and enterprises. Huawei is very committed to build a cloud platform to support customer business needs and innovation.”

Other big providers such as AWS, Oracle and Microsoft have also all invested in government cloud offerings which have seem to have paid off.

Ping said Huawei expects to “build trust”, and building on that, he eased off concerns around data ownership and security.

“Huawei’s business model is not to monetise user data. We do not develop applications or touch the data in our public clouds.

“Huawei provides technologies and services to help users monetise their data.”

Adding to all this, is the company’s ambition to enable businesses to operate in and out of China. Huawei provides today third-party migration across AWS and Microsoft Azure.

This has enabled Western carriers such as Telefonica, Orange and T-Mobile to advance their works in China, and in exchange, Chinese carriers including China Telecom have also been able to operate outside China.

Yelai said: “Our people have an in-depth understanding of our customers’ business scenarios, whether they’re working in R&D, marketing, or sales.

“We keep a close eye on the needs of our customers, and innovate accordingly. We have developed Huawei Cloud to help enterprises go digital more smoothly, and help ensure the success of more companies who are willing to innovate.”