Huawei looks to amp up cloud business in fight for survival
The market-leading telecoms equipment maker is facing one of its most challenging business environments to date. A brewing trade standoff between its native China and the US has forced multiple rounds of sanctions and trade restrictions. That’s placed a tremendous amount of pressure on Huawei’s other business units.
A prolonged ban on doing business with its American partners has effectively crippled Huawei’s once-thriving mobile device business, with Huawei’s senior officials informing its semiconductor suppliers in Taiwan that the Chinese company fears its smartphone business will gradually evaporate because of the US trade ban, according to industry sources.
Similarly, the company’s telecommunications equipment segment was booming not too long ago, even overtaking traditional market competitors like Ericsson and Nokia to become the undisputed leader in telecoms hardware. However, Huawei lost out on major markets for its 5G infrastructure that would have padded its bottomline for years to come. US-friendly nations like the UK, Australia, Japan, New Zealand, Singapore, and Taiwan have all declined to use their services in the last year.
Further rounds of sanctions have also restricted Huawei and its semiconductor business HiSilicon from procuring the US-sourced components needed for its smartphone and 5G units. However, amidst all this doom and gloom for the Shenzhen-based company, Huawei Cloud can still access US chip supply. And its cloud business is now growing at record rates.
Back in 2019, the fledgling Huawei Cloud had a bumper year, with the Chinese telecommunications and mobility giant dipping their toes into managed cloud services and saw success in a number of global markets. A Gartner report details how Huawei Cloud grew at the fastest rate of any cloud services provider last year.
Huawei Cloud is now accessible in over 45 territories and this includes dedicated cloud data centers in both Asia and the Americas from Singapore, Brazil to Chile, to Mexico and Peru. It has over 2,000 technology partners around the world who have collectively released around 3,500 cloud-based applications.
Huawei Cloud itself has launched in excess of 200 cloud services and at least 190 cloud-based solutions including 43 Ascend-powered artificial intelligence (AI) cloud services which will enable corporations to leverage AI computing power in the cloud ecosystem.
This mammoth growth has seen Huawei Cloud claw its way to the top, finding itself among the IaaS elite, becoming the third-biggest cloud provider in China, and the sixth-biggest globally. The strong performance of Huawei Cloud, plus the dwindling fortunes of its other businesses, has caused Huawei to give equal credence to its cloud unit as it does for its smartphones and telecoms gear interests, says the Financial Times.
The company is still growing its IaaS portfolio, looking to add containerized hybrid cloud, high-performance batch computing, ultra-high-speed input/output cloud discs, and an All-Connect cloud network solution for cloud-native transformation.
The global cloud infrastructure services market hit a record US$30.2 billion in Q1 2020, according to market advisory firm Canalys Co, and the market was expected to grow 32% annually this year. American tech giants continue to dominate the industry, led by Amazon Web Services (AWS) with a 32.4% market share.