New Huawei CTO Matt Bross is famous for having guided British Telecom into the future. Now Huawei wants Bross to help it master the telecom industry
Huawei Technologies has brought in telecom industry veteran Matt Bross as its chief technology officer, a position that until now he'd held at British Telecom. With this move, it's clearer than ever that Huawei wants to shed its image as an upstart Chinese maker of cheap telecom equipment rip offs. That's bad news for Western equipment suppliers—players from Alcatel-Lucent to Ciena should be worried.
I've been following the rise of Huawei (ZTE, too) for some time. Huawei used its Chinese government connections to build a sizable business in its local market, which it then leveraged to scale up in emerging telecom markets. The company that started out selling cheap DSL gear is now a major supplier of everything from routers to fiber systems. It has also become a significant player in the wireless industry, where it's been making big bets on LTE and WiMAX technologies.
In fact, Huawei is the world's third-largest mobile equipment supplier, according to research from Dell'Oro, with 17% of the market. Just as the Japanese automakers' success came at the expense of U.S. car companies, Huawei, which took in roughly $18.3 billion in sales in its most recent fiscal year, is causing problems for equipment makers in the west. (From the archives: The New [Telecom] World Order.)
Huawei's hiring of Bross shows just how grand its ambitions are, especially in the U.S. market. The Dallas Business Journal reports that Huawei plans to double the number of its U.S. employees over the next 12 months, to 1,100. According to Stacey's sources, many are defecting from the likes of Nortel and Cisco, among other companies. But while Huawei's current U.S. presence is miniscule, it has room to grow.
Goal: Most important equipment maker
As the Dallas Business Journal notes: "Huawei opened its North American operation in 2001, and the company has gradually started to win acceptance on this side of the globe. The company, which maintains that three-quarters of its $18.3 billion in 2008 revenue came from outside China, has won contracts with the likes of Richardson-based MetroPCS and the Atlanta cable company Cox Communications Inc., along with Bell Canada. Huawei declined to report North American sales figures, but revenue for the privately held company totaled $18.3 billion. It closed contracts worth $23.3 billion during that time. Using that ratio, the $250 million in new North American contracts last year would translate to $196.75 million in 2008 revenue from North American operations."
Huawei has been spending money on research and development like crazy, and in 2008 filed 1,737 patents, revealing its true intentions: It wants to become the most important equipment player in the telecom business. Now it's hired a high-profile foreigner to help it reach that goal.
Bross, whom I've met on a number of occasions, is an interesting guy. During the last bubble he worked at Williams Communications, which landed him in the pages of my book, Broadbandits: Inside the $750 Billion Telecom Heist. The last time I saw Bross was when I visited British Telecom in London while working on a story about the company for Business 2.0. Bross was working on BT's 21st CN, a next-generation broadband network that would enable BT to make the transition to an all-IP infrastructure. Incidentally, Huawei has been one of BT's major suppliers.
I'm not surprised that Bross is leaving the telecom giant. He was recruited by Ben Verwaayen in a New Jersey cafe in 2002 after Verwaayen drew his vision of BT on a napkin. Verwaayen left BT last year and now runs Alcatel-Lucent—the company most likely to be put to pasture if Huawei maintains its forward march.