Huawei's Revenue Picture

While Huawei is a little-known IT giant in the U.S. where it is quietly building a market and channel presence, the Shenzhen, China-based company is a technology powerhouse in nearly every other market.

Fan Chen, vice president of accounting for Huawei, told analysts and press at last month's Huawei Global Analyst Summit, which CRN attended, that the company's worldwide 2013 revenue reached $39.5 billion, up 8.5 percent over 2012. Operating profit, in Chinese currency terms, was just more than 12 percent of revenue. About 77 percent of the global top 50 telecom carriers are Huawei customers, he said.

However, revenue in the Americas, including North and South America, was only 13.1 percent of total revenue, and actually fell 1.3 percent over 2012, Chen said. Growth in the Americas was actually high for the year except in North America, where spending cutbacks impacted Huawei sales, he said.

[Related: Huawei Quietly Builds Up Its U.S. Presence, But Needs Channel Partners To Start Making Some Noise ]

Huawei's carrier business accounts for just less than 70 percent of Huawei's revenue, Chen said. Consumer business, particularly in mobile devices, accounts for nearly 24 percent. However, the enterprise business, which is the one area where Huawei has done well in the U.S., accounted for only 6.4 percent, he said.

Ken Wang, president of Huawei's global marketing and solutions, said during the Global Analyst Summit that the carrier business is still the backbone of Huawei's business, with a value of $27.5 billion in 2013 and a 10 percent compound annual growth rate (CAGR) over the past few years.

Wang, speaking through an interpreter, said Huawei is investing both in bringing mobile broadband everywhere, with a focus on easy availability, and in fixed broadband, which provides a higher bandwidth. The company expects this part of the business to increase to $40 billion by 2018, he said.

During a question-and-answer period, Wang, speaking in Chinese as interpreted by CRN, said the company's fixed broadband product revenue has been falling as customers are now investing heavily in LTE. The company's broadband revenue also fell last year, but he said that was temporary.

However, the company's U.S. revenue has been stable over the past couple of years, and saw some growth, Wang said.

"We expect conservative growth in the U.S.," he said. "But we have no big plans to expand business in tier-one customers. Our growth [in the U.S.] is in tier-two and tier-three customers."

The slow U.S. market is not a function of Huawei's technology, said Joseph Hoffman, practice director at ABI Research, an Oyster Bay, N.Y.-based technology market intelligence firm.

Just look at virtualization in the networking industry where telecom vendors initially dug in their heels when the technology first started appearing, Hoffman told CRN.

"They felt it was a play against them," he said. "Last year Huawei said they saw the wave of virtualization coming, and now it's following through with its strategy. SDN [software-defined networking] and NFV [network functions virtualization] are coming. When things change, it's easier to change the software than it is to change the hardware. In the meantime, while the network is growing, Intel has gone through another 'tick-tock' cycle, so the user will get better performance when they do upgrade hardware."

Instead, this part of Huawei's business suffers from political pressures on the part of the U.S. government, which sees Huawei's technology as a potential back door for spying on the U.S., Hoffman said.

"I'm not sure the equipment vendors are involved in this," he said. "I accept their argument that they don't do it. All vendors put back doors into their equipment to facilitate maintenance and upgrades."

In the mobile handset market, Huawei is seen as a low-cost provider, and will likely have a fair amount of success in the U.S., he said. However, the company is less likely to enjoy success in the mobile infrastructure market in large part because of political pressures.

"There are one or two rural telecoms in the U.S. who use Huawei, and they are under pressure to not use the vendor," said Hoffman. "The U.S. also pressures Korea to not use Huawei. But most of the world accepts its technology."

This article originally ran an as an exclusive on the CRN Tech News App for tablet.