When investors, media and analysts flocked to the annual Consumer Electronics Show in Las Vegas in January 2013, the talk of the town was TVs that were smarter and higher definition. The largest auditoriums at the conference were reserved for the likes of Sony and Samsung, with many attendees struggling to find a seat.
Outside a much smaller auditorium at the Mandalay Bay resort, attendees struggled to pronounce the name of the company they were queuing to see. Was it "Hu-wa" or "Hu-a-way"? Or perhaps "Wa-way"?
The company is Huawei, pronounced "Hwa-way," and it's become one of the world's biggest communications equipment providers.
Back when people grappled with the name and its consumer devices chief was pouring jugs of water over phones to show off their hardiness, Huawei ranked sixth in the global smartphone market. In the more lucrative equipment business, it stood fifth in switches and fourth in routers behind companies such as Juniper and Alcatel-Lucent.
Today, Huawei is third globally in all three businesses, and posted a 33 percent increase in profit for 2015. Its $5.7 billion of net income last year puts the Shenzhen-based company behind only seven U.S. and one Taiwanese technology company.
Unlike most of its competitors, Huawei isn't publicly traded. As a result, the company founded by former Chinese army engineer Ren Zhengfei has no requirement to release financial results or open up to the investor community. It does anyway. Huawei began its 13th annual global summit Monday, with hundreds of reporters, analysts and investors attending.
Despite its size and relative openness, Huawei gets less media or industry coverage than companies of similar size. That may be because its smartphone business in the U.S. still struggles behind even Chinese rival ZTE. In the equipment sector, Bloomberg Intelligence analyst John Butler notes that Huawei has been ``largely shut out of the U.S. market due to security concerns with its communications gear."
The company rarely appears at the top of news searches or industry websites. When people think of smartphones, it's not the first to come to mind. When they think of equipment, Cisco, Ericsson or Alcatel-Lucent are quicker to the lips.
This quiet achiever status suits Huawei well. While the investment world was agog over a startup smartphone maker with a $45 billion valuation (Xiaomi), its local competitor was busy selling 70 percent more phones at a 40 percent higher price by growing in Asia outside of China.
Meanwhile, in the Middle East and Africa market -- larger by shipments than the U.S. -- Huawei has doubled its smartphone share in the past five years to be only a whisker away from overtaking Apple for third. It's also bidding heavily to win contracts from telecom carriers in markets from Asia to Africa.
This growth doesn't look like it'll wane. While leaders of listed companies need to worry about controlling costs to boost the bottom line, Huawei had no such concerns last year, spending 15 percent of its revenue on research and development. By contrast, Cisco spent less than 14 percent for the past six years. Huawei's revenue was also higher last year at $61.3 billion versus Cisco's $49.2 billion for fiscal 2015.
Emerging markets are now driving global industry growth. While investors can't buy Huawei, they should pay growing attention to its impact on competitors from Cisco to Samsung. And learn how to pronounce it.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To tackle the U.S. equipment business, a market too lucrative to ignore, Huawei has hooked up with companies such as AT&T as they develop an open source operating system for the industry.
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