30 years ago the founder of Huawei Ren Zhengfei wouldn’t have thought that one day his $3,500 startup built in a small village of Shenzhen (China) would dare to look in the eyes of global tech giants of the likes Apple and Samsung.
The company which was formed to manufacture tiny switchboards and fixed telephone lines evolved into a networking giant and it was only until 2010 when the group practically switched from making white label phones to its own branded smartphones.
Not only this small village company is making some excellent phones but also plan to invest around $600 to $800 million in 2018 into 5G technology revolution for not only grabbing the leading position but also changing the way the entire world communicates.
Today, the $75 billion enterprise rank high in the ICT industry and synergies its three major divisions — Carrier, Enterprise, and Consumer Business Group — extremely well for serving one-third of the world through its network devices while becoming the third largest smartphone manufacturer in the world. A simple dream is to become number one smartphone supplier crushing the rivals, Apple and Samsung, but it doesn’t appear to achieve the goal anytime soon, at least not in 2018, though it surpassed Apple for a while in July – Sept 2017 for number two slot.
This Chinese company no more looks exotic to the world thanks to the fame it earned through some stunning mobile devices that are attracting more consumers with every passing year.
Starting from 3 million units that Huawei shipped in 2010, it closed 2016 with 139 million smartphones and the forecast for 2017 is 158 million units.
I was in the Shenzhen and Shanghai for a weeklong visit to China and met with various Huawei officials who eagerly talked about one single agenda for the next few years, Artificial Intelligence (AI).
Shenzhen was my first destination which is a place also referred to as the Silicon Valley of the country. And why not, they have built it amazingly during past 3 decades. Hundreds of tall buildings shine like they were built yesterday, tons of greenery all around and cleanliness of the city inspired me during my stay there.
5G and AI; the Biggest Bet
Back then, Huawei was the follower in the 2G/3G era and a catcher in 4G technology but 5G is something it wishes to nurture for becoming the leader. To fulfill the dream, the company spends huge on R&D which is why 45% of its total 180,000 workforce is directly or indirectly connected with 15 R&D centers that are spread across the world in different continents.
It invests over 10% of the sales revenue into research and development every year just behind the trendsetter Google.
In 2017, Huawei spent $12 billion on R&D that is enough to believe the Huawei’s belief of taking over the driving seat.
Research is believed to be its integral part and basing its centers in different cities of the world takes the best out of local talent. For example, Sweden center works on the algorithms, the software is taken care in India and the chipsets are researched in Silicon Valley. Among the total, 12 are dedicated to the smartphone-related research which tells the story that how aggressive Huawei is for its smartphone future.
The company is reportedly working on 5G for last 10 years and during this period it has tested and deployed several 4.5G networks. Huawei believes that 5G is the game of Gigabits and there will be a need for special equipment and AI to support such a huge bandwidth and connections that won’t be limited to human consumption only but some 40 billion IoT devices will talk to each other by the year 2025.
This year at Mobile World Congress (MWC) Huawei is expected to launch its AI platform Atlas that is a heterogeneous computing solution and will have the power to process 100 billion images in few seconds. In a pre-MWC event in London, Peter Zhou, company’s CMO for Wireless Network Product Line briefed that AI and the IoT using the 5G highway will be the money spinner for telcos in the coming years.
“A minimum of 1 Gbps in a month will be consumed by 2.5 billion customers worldwide by 2025 who will like to stream Ultra High Definition videos on their devices. We are talking about 180 Tb of data consumption by these connected devices”. Peter said.
The IoT devices generated some $8 billion revenue for telcos all over the world in 2017 should be around $400 billion by 2025 in Huawei’s opinion.
A team of Huawei officials in China headquarter while talking to a group of media people from Pakistan explained that although 5G is not commercially available but on existing 4.5G networks company has already deployed such IoT devices in the homeland for smart farming, smart planting, smart parking, smart energy and many other industries that has enhanced the performance and the revenue.
AI is the future, and it needs to be integrated not only into the devices but the networks and services too. There are roughly 200 parameters today on a telco network that needs to be configured end-to-end. Most of the times engineers deal with that configuration manually and the practice becomes one of the reasons for less than standard optimization of the network and hence the less than desired level of telecom services. Once the 5G era starts, these parameters will grow 50 times more and only the AI can make sure their optimal and seamless configuration.
The Birth Of On-Device AI
To start with on commercial grounds, Huawei introduced the first generation of AI in its 2017 premium flagships, Mate 10 and Mate 10 Pro, through integrating a Neural Processing Unit (NPU) in their 970 Kirin chipset, the latest so far.
Unlike Amazon, Apple and Samsung who believe cloud is more effective, Huawei’s AI implementation is on the device.
Dohyung Kim, Director Global Brand Management is of the view that today, the network isn’t available everywhere. In cities, the coverage is much better than the countryside. When there will be no network, the cloud-based AI will cease to work. However, the case should be otherwise. Instead, the device should be able to work standalone and this gives rise to our concept of AI.
“Not every preference of yours needs to be part of the cloud. Uploading something and fetching it back on the device will always require time and resources which we save by relying on chip based AI”, Kim said.
“The phone has a camera that with the help of AI processing, recognizes the scenes before capturing the moment and hence it adds more value to the photos which otherwise would need a manual tweaking using the pro-mode”, KiM added.
The smartphones get slower after 8 to 10 months of unboxing and it happens because of thousands of photos we store inside and dozens of bloat apps we download and forget afterward.
Unlike the iOS that is specifically designed for Apple products, the Android phones come from different manufacturers around the world so practically, it is impossible to synchronize well with different types of hardware.
Tom Chen, Senior Director Product Marketing while talking to media told how the latest Kirin chip and AI has helped to break this conventional approach.
“Our new phone learns to align itself with your usage pattern and that is how it keeps itself optimized all the time”.
On top of the OS, Huawei has put a better-optimized layer of EMUI 8.0, a much cleaner enhancement of casually designed EMUI 5.0.
“The machine learning mechanism and the latest user interface don’t let the core OS spoil the user experience”, Chen added further.
Huawei believes that its AI has to go way beyond the existing phase for becoming an actual user assistant in time of need.
“Not only the speed but the device should help the user under specific circumstances in the decision-making process. A better version of AI will reduce user’s burden by 50%”, described Chen.
The Founder Doesn’t Own Huawei Fully
Despite becoming a billion-dollar empire, Huawei is still a private limited company. The reason behind this arrangement was told to be the liberty to spend and taking a critical decision in easiest way in contrast to getting pressurized by some investors on important issues.
The founder, Ren Zhengfei owns only 1.4% of the share in the entire group, but, the rest belongs to the Huawei’s employees.
Although it sounded pretty impressive but the criteria for becoming a Huawei shareholder for an employee wasn’t disclosed despite our queries.
“We don’t believe Steve Jobs like model where a single person takes every decision, rather, our approach is towards the collective wisdom where we respect the opinion of many and that is the reason, we keep rotating our CEOs every six months”, Kim said.
Huawei A Security Risk
At Consumer Electronic Show (CES) in Las Vegas this year Richard Yu the CEO of Huawei Consumer Products looked anguished, depressed but well in control to deliver perhaps the most painful presentation for US audience because AT&T had pulled back from the deal of selling Huawei’s phones in the US market.
It was a window Huawei was really banking on to enter in US market where Apple leads in every way and where 90% of the phones are sold through the carrier and where getting success through selling unlocked phones in the open market through Amazon, Best Buy and other resellers might not bring the results.
Nevertheless, Huawei has chosen to test the waters by going unlocked way for 10% of the audience.
Being a Chinese manufacturer and also, above all, having founded by an engineer who has worked with Chinese Liberation Army is the reason solid enough for the US political elite and the security agencies to keep the company away from largest smartphone market on earth.
As per reports, AT&T and Verizon backed from the deal owing to the pressure from political and security forces. Just recently, American security agencies including CIA, FBI, and NSA have told US citizens to avoid buying Huawei phones as they might steal your valuable data. Already, the government officials in the US have been refrained from getting hold of a Huawei phone.
At CES, Richard said US consumers wouldn’t have wide choices if Huawei didn’t offer its phones here. At the stage, he said, “It’s a big loss for us, and also for carriers, but the more big loss is for the consumers because consumers don’t have the best choice”.
Not only in the US but Huawei has experienced resistance in UK and India throughout its journey.
It will be of interest to see how the third largest smartphone manufacturer surpasses the two to claim the first position without a US market support. The company had earmarked a marketing budget for $100 million for the US market and hired the most talked about brand ambassador as CEO (Chief Experience Officer) Gal Gadot, the Wonder Woman, for its marketing and overall influence in the US. Certainly, this money will be used in other Asian markets now where Huawei is facing a fierce competition from the brands like Vivo and Oppo.
Building The Huawei City
The humongous size of Huawei has not only brought the big fortune for the company but also the increased the challenges at home. With its offices and facilities located in different cities of China, close coordination, employee welfare and secrecy of strategy require a different plan. The company is in the mid of building its own 8km X 8km small city in the GuangZhou district where it plans to shift every single facility from each corner of the country. Other than the marketing, the city will house everything from R&D, manufacturing, employee welfare projects.