Caijing reporter was informed that Huawei will merge and reorganize a number of departments in the near future. Some of the cloud-related business lines will be merged into the cloud business unit (Cloud BU), focusing on the public cloud market.
In August of this year, Huawei announced that Cloud BU has been upgraded to a tier-one division, in line with BG's BG, consumer BG and enterprise BG, Huawei's original three major business groups (BGs).
In September, Huawei's rotating CEO Guo Ping announced the goal of Huawei's public cloud business - eventually leaving only five clouds in the world and Huawei being one of them. Huawei also put forward the phased goal - to rank among the next three years China's first three public cloud market.
However, Huawei entered the public cloud market is not a temporary rise, "Caijing" reporter was informed that Huawei as early as 2011 quietly public cloud, only under the constraints of existing business, Huawei's decision-making on whether the public cloud, how much public cloud Indecisive.
'Cloud management' is Ren Zhengfei repeatedly reiterated the strategy, the phone is 'end', telecommunications equipment is 'pipe', 'cloud' is half-vacant status.
In recent years, Huawei has become the world's largest telecom equipment business. The world's top 3 smartphones and the relatively weak one are the corporate businesses. The BG, which aims to provide IT solutions to corporate customers, has yet to be punched To the number one camp in the world. In 2016, Huawei's revenue composition was 55.7% for carrier business, 34.5% for consumer business and only 7.8% for corporate business.
Huawei's Enterprise BG has its own private cloud business and has developed well, but the industry trend is clear. Public cloud is the future of the cloud relative to the private cloud where the market is fragmented and the overall demand is not rising enough. Currently, the 'end' and 'pipe' Of the market has reached the ceiling, only made public clouds, Huawei's 'cloud management' strategy to form a closed loop, the formation of a new growth pole. On the contrary, Huawei's growth will be stalled.
Huawei has entered each area have giant control, public cloud is no exception.Market consulting firm IDC data show that as of the first half of 2017, the world's top five public cloud vendors are Amazon AWS, Microsoft Azure, Ali cloud , Google and IBM, of which AWS accounted for 45.4%, Ali cloud share of 4.5%.
Invisible for three years
Huawei's actual public cloud business layout began in 2011, but Huawei did not mention this business.
In 2011, Huawei, a company that intends to cut into the public cloud, picked up a 'Great Deal': dug up nearly 40 cloud computing experts from Yun Express Technology Company, including CEO and CIO Jiang Jianping. These experts are domestic public cloud Field of seed experts.
Cloud Express is the second company in China to provide public cloud IaaS (Infrastructure as a Service), a subsidiary of Beijing Century Internet Broadband Data Center Co., Ltd. (NASDAQ: VENT) Spread this business before the listing in the United States, both as a brother company. Century Internet should not be on the Yun expressway capital "blood transfusion", coupled with the distribution of management interests there are some contradictions, Yun Express business stalled.
Cloud Express two former core staff told the "Financial" reporter, Huawei initially intends to acquire the overall cloud express line, but did not talk with the Century Internet, and finally actually because of the internal interconnection between the Internet and the cloud express the line between the cloud Almost all of the core staff of the Express Line do it with minimal costs.
However, Huawei did not immediately set up a public cloud department. Instead, Huawei placed it under the "Internet" section of Huawei's other BG at the time.
In the Huawei organizational structure in 2011, there was a business group called 'Other BG', and Huawei placed some emerging businesses under this BG. From 2009 to 2011, Huawei intends to enter the Internet market, thus recruiting and establishing the 'Internet Department.
The Internet division was later split into two. The business of 2C was allocated to the Huawei terminal department. The cloud express team and 2B business remained. The department name was changed to Huawei Enterprise Cloud. At the same time, the number of employees increased to over 200 and remained at This size.
A few months after the formation of Huawei's public cloud team, the core R & D of the public cloud platform was completed, a core employee involved in R & D told Caijing that the R & D speed was so fast, mainly because Huawei started server virtualization in 2007 Technology research and development, there are more mature virtualization solutions (virtualization technology is one of the core technologies of the cloud platform), coupled with the dial from the cloud express experts have rich public cloud research and development technology and experience.
Public cloud platform to do it, but after all, do not do public cloud business? This need to review the strategic development committee of Huawei.
A core employee of Huawei's public cloud team told Caijing that at that time, Huawei disagreed with the public cloud. In the end, the negative opinions prevailed. Only Xu Zhijun, one of Huawei's three rotating CEOs, insisted on doing public cloud.
There are three rotating CEOs in Huawei, namely Xu Zhijun, Guo Ping and Hu Houkun, of which Xu Zhijun's management affairs (ie business), Guo Pingguan's management 'wealth' and Hu Houkun's management of 'people' are equivalent to the separation of the three powers.
The core objection is that the public cloud is a private-owned land for carriers. Operators are the largest source of revenue for Huawei and Huawei can not have business collisions with operators.
Since 2010, the three major domestic carriers have successively deployed public cloud. China Unicom has also set up a special cloud computing subsidiary. Huawei, as a provider of communications equipment, sticks to the principle of not participating in 'operations' and not touching on data. In particular, it does not Touch communication data.
More crucially, the three major domestic carriers contribute tens of billions of yuan of revenue to Huawei every year. The total revenue of the Chinese public cloud market until 2016 is only 10 billion yuan.
Another reason to be rejected is that the public cloud was viewed as facing the mass market of small and medium-sized users at the time. Each single business may be as low as one thousand dollars and is a business that sweeps the street. Huawei is good at 'big business' , Each of the single largest business billions of millions or even hundreds of millions of dollars level.At that time Huawei's entire organizational processes, business models, skills reserves, staff mentality and public cloud market features are clouds of mud.
Measured by financial indicators, this is not a good business.Public cloud investment is a 'swallow the gold beast', to scale to win, Huawei as a device manufacturer and developer, still belongs to light asset operation, investment in heavy assets Business has always been cautious.
In spite of this, Huawei's cloud-based public cloud business barely retained the fact that it is difficult for the opposition parties to cut off this business as emerging IT trends.
This creates a peculiar situation - there is no public cloud department in Huawei's organizational structure, but in fact, more than 200 people have been doing public cloud business and have become an invisible organization within Huawei.
Around June 2012, Huawei's first-generation public cloud platform was launched on a silent basis, mainly providing computing and storage cloud services, just as Amazon AWS and Aliyun are truly public clouds. This platform has never been advertised to the public and its main service Huawei's own business unit, but also slowly accumulated some external users.
In the first three years of low-key operation, the largest contribution made by public cloud services to Huawei is not revenue or how many users have accumulated, but rather to help Huawei build a business process that serves public cloud users. Before Huawei did not serve SMEs The user experience, awareness and processes, the public cloud took the first step.
'Cloud customers pay attention to experience, you are not satisfied with the money back, Huawei is incredible this refund of money; cloud business is small, a single one thousand dollars, the financial sector know what to do, took a long time before These processes have been established. "An original Huawei employee told the" Caijing "reporter.
Huawei's invisible state of cloud business ended only in 2015. In July that year, Huawei released a public cloud platform called Huawei Enterprise Cloud for the Chinese market.
The new public cloud platform is the second-generation public cloud platform developed by Huawei. Based on the open source cloud computing framework OpenStack, Huawei is a platinum member of OpenStack, a well-known open source organization.
At that time, an informed source told Caijing that in order to circumvent the conflict with operators, Huawei told the operators that the platform could provide public cloud solutions for operators better.
L as a core business
In 2016, Huawei further upgraded its cloud strategy and proposed that Huawei's enterprise cloud reach the scale of 10 billion U.S. dollars in 2020.
However, at that time, Huawei's concept of enterprise cloud was generalized, not referring to public cloud, and also included a cloud for joint venture operators and a hybrid cloud for enterprise construction, etc. At this moment, Huawei still avoided using the term 'public cloud'.
Until March 2017, Xu Zhijun announced at a partner conference that he would "invest heavily in building an open public cloud platform," adding 2,000 to the business in the coming year.
This is the first time that Huawei has publicly stated that it wants to make a "public cloud."
Public cloud as the main form of next-generation IT has become an indisputable fact that, including IBM, Microsoft, Oracle, including the traditional IT giant has long started the transition, the process is difficult, but firm attitude.
HUAWEI Enterprise BG Traditionally IT business, the direction of the outside world is huge pressure on Huawei, Aliyun has defeated Google at the end of 2016, second only to Amazon AWS and Microsoft Azure, the growth rate of other public cloud players both praise and anxiety .
At the same time, AI quickly became the outlet in these two years.Public cloud can provide massive amounts of data and powerful computing power to AIs, and seizing the public cloud has the hope of seizing the upstream position of the industrial chain in the AI era.
A number of industry experts told Caijing reporter that in China, for the start-up companies, the public cloud's time window has been closed; for the giant players, there are 3 to 5 years.
In other words, if Huawei seizes public cloud again, it will completely miss the opportunity for admission.
On August 28 this year, Huawei issued a document restructuring within the heavyweight organization, Cloud BU promoted to a department responsible for the operation of public cloud.After the adjustment of the Cloud BU and Huawei operator BG, enterprise BG and consumer BG level .
Cloud BU, which becomes a tier-one department, will have its own HR department, CTO office, Strategy and Business Development Department and financial management department. From this year, Cloud BU's revenue will also appear in Huawei's annual report. In September, Huawei announced The goal - the world eventually only five clouds, Huawei to be one of them.
At this point, the public cloud in the Huawei from a formal celebrity can not get stealth business as the company's core business.
A middle-level executive who has worked for Huawei for more than 10 years told Caijing that although Huawei is not a listed company, it needs high-growth businesses to maintain the stable operation of its internal shareholding system. In the next phase of the current three major businesses or facing insufficient growth momentum , Or touch the top of the industry has quickly touched the urgent need to find the next high-growth business.
Huawei started publishing annual revenue data since 2006. The annual report shows that Huawei's revenue increased from RMB39.7 billion in 2005 to RMB5216 billion in 2016, with growth below 10% in 2012 and 2013 alone. , Increase revenue does not increase profits in 2016. Many industry experts predict that the next three years, Huawei will continue to increase revenue without increasing the trend.
Huawei involved in three major markets: the carrier market, enterprise IT market and consumer-oriented personal terminal market.
Among them, Huawei's carrier business has already made its head position. In 2016, its revenue reached 290.6 billion yuan (about 43.7 billion U.S. dollars), far exceeding that of its major rival, Ericsson (2016 revenues of 26 billion U.S. dollars) 2020 or so may come, is currently in the 4G to 5G transition period.
Although the sales volume of Huawei's smartphones has squeezed into the top three in the world, its profit is very low. More than 80% of the global smartphone market is grabbed by Apple. Huawei has now adjusted its strategy to focus on profits.
In the enterprise IT market, Huawei's BG revenue in 2016 was 40.7 billion yuan. Its business scale and brand influence have surpassed that of other domestic IT vendors. However, compared with other established overseas technology companies such as IBM, Hewlett-Packard, Dell, and Cisco, The public cloud has been eroding the traditional IT market.Gartner data show that in 2016 the global public cloud spending has accounted for 6% of the overall IT spending.
Left and right hand each stroke
Huawei has always kept a tight confrontation with the interests of telecom operators and has made new changes in these years.
The biggest change is that the carrier's public cloud strategy has basically failed globally. The US public cloud market is the most mature, but US carriers Verizon, AT & T and CenturyLink have closed their public cloud businesses one after another, with some even basic ones The data center is also sold.
China's public cloud market, according to IDC data, is currently only the best development of China Telecom Tianyi cloud, ranked fourth in market share, China Unicom's public clouds have been out of cloud top five, China Mobile's public cloud is responsible for the provincial companies , This mechanism determines the public cloud of China Mobile is difficult to grow.
Moreover, operators actually play a leading role in the public cloud market and are not good at platform operations and services. Next, operators can hardly compete with cloud service platforms such as Alibaba Cloud and Tencent Cloud based on their own efforts. Many operators told Caijing reporters that they are not optimistic about the long-term development of the public cloud business of Chinese operators.
'Since I knew it, but Aliyun, Huawei wants to let it do it.' A China Telecom cloud computing experts told the "Financial" reporter.
The aforementioned Huawei public cloud team experts told the "Caijing" reporter that over the years, different operators have different attitudes toward Huawei's public cloud at different time periods. "China Unicom's opposition is fierce because of its own cloud company , Telecom mobile attitude is relatively calm, and the more you can accept the more behind the matter, 'he said.
Another important reason is that when Huawei opened up the public cloud market, Huawei did not bypass the telecom operators and instead bundled deeply, and the two sides reached a tacit agreement.
In cooperation between the two companies, Huawei provides cloud computing technology and customer service capabilities, operators have rich customer resources and communication resources, which are complementary to each other. In the face of customers, Huawei and operator teams often appear together and jointly fight.
Zheng Yelai, president of Huawei Cloud BU, said publicly recently that the Huawei Cloud BU business includes Huawei's own public cloud and China Telecom Tianyi Cloud, as well as the cloud co-operated with the three major foreign carriers.
However, a veteran operator told the "Financial" reporter, Huawei large-scale public cloud layout, the relationship with carriers has become more complex and subtle.
In the past, operators and Huawei were pure B and B. However, Huawei has now become Party A of the operator on some occasions. Embarrassingly, Huawei is not yet a party with high bargaining power in front of operators .
One Huawei cloud business unit said that building a public cloud requires renting a carrier's machine room and bandwidth resources, but Huawei is not strong in the bargaining power of operators because operators are Huawei's big buyers on telecommunications equipment .
Huawei's public cloud first node deployed in Langfang, Hebei, a consideration is that when Huawei's operators in Langfang do business in general.
Even harder to evade, Huawei's public cloud aims to be the No. 1 camp in China, and is bound to face competition from the public cloud of operators. At that time, Huawei did not hesitate to hurt existing operators or public carriers for public cloud It is a dilemma to continue making perfect demands.
In fact, Huawei has already experienced such a dilemma between the "left hand and right hand each other." A China Telecom cloud computing person revealed to Caijing reporter that Huawei Cloud and Telecom Tianyi Cloud had jointly bid for a cloud computing project of a car company. Huawei Cloud Price Much lower than the Tianyi cloud, which makes a senior China Telecom annoyed, personally called Huawei executives expressed their dissatisfaction.
Sell products can sell good service?
According to IDC statistics, China's public cloud IaaS market was RMB10 billion in 2016 while total IT spending in China reached 2.3 trillion yuan (Gartner data), with public cloud accounting for only 0.4%, indicating that the public cloud market in China is also very unusual Beginner, as long as the appropriate strategy, Huawei has enough room for growth.
Ji Xinhua, founder and CEO of Ucloud, commented that Huawei has both technical strength and abundant capital. It is also a company that has both strategic determination and strong execution. Although it is not a big chance to break into China's top three in three years, in the long run, Is likely to become a major player in the public cloud Ucloud is China's fifth-largest public cloud service provider.
Huawei has accumulated a lot of 'teeth' over the years. Compared with other competitors, it owns a complete IT product system from chip to server to storage network, and also controls CT's products and technologies, enabling Huawei to build high Cost-effective cloud infrastructure, and it has long platform R & D system and 2012 laboratory to provide long-term technical support.
However, Huawei is also facing multiple challenges, some of them are not facing opponents.
One challenge is that Huawei must be 'genetically modified' before it can become a public cloud.
From CT to IT to consumer terminals, Huawei is good at research and development and production of various devices, but the public cloud to sell is the service, the current successful public cloud vendors in addition to Microsoft are service-oriented Internet vendors. Several times publicly said that Huawei cloud from good at selling equipment to good at selling services.
But this is not easy.Huawei is a product company, it used to be so successful because the entire R & D process, management, sales and service system is born for the product, has solidified into its corporate culture.
For example, Huawei strictly abides by the Integrated Product Development (IPD) process in its research and development, and the IPD process helps to develop highly reliable equipment that requires leadership approval and follow-through each step of the way, especially for highly standardized and demanding Relatively stable, high quality communication equipment research and development.
The cloud service is not the same, cloud customers vary widely, the demand is also different, requiring close combination of R & D operation and maintenance, rapid iterative development, rapid response to the individual needs of the front.
Huawei itself is clearly aware of this.
Caijing reporter learned that Huawei Cloud BU is privileged: Huawei IPD and other processes are not obeyed, but it takes time to explore a suitable R & D, service and sales system for public cloud.
Moreover, the thinking inertia that has already been formed is harder to turn around, and one Huawei person commented that Huawei is currently doing cloud or product thinking rather than service thinking. It does not always think about what services users want, but always considers what products I can provide.
Another important thing for the moment is that Huawei urgently needs to find a number of benchmark users.
Aliyun, Tencent cloud and Jinshan cloud started, based on their respective Internet business circle a number of seed users.
For example, Alibaba Cloud not only has a large number of small and micro enterprises and even individual users, but also has such a super application as "Double 11"; Tencent Cloud has the support of game developers. For game developers, Leaderboard, an unwritten but well aware of the method is to use Tencent cloud; Jinshan Yun early user accumulation also depends on Jinshan games and millet ecological support.
Although these users are mainly small to medium sized and small and micro enterprises, they are extremely beneficial to the early development of public cloud vendors.
An executive of Jinshan Yun told Caijing reporters that the public cloud emphasizes that a large number of general, reliable and maintainable operational experience accumulated from small customers can be accumulated from unreliable services affordable to small customers, and the shift from a large number of manual operation services to automation And meticulous operation, gradually mature and stable cloud platform, as well as the team's ability to fine operation and maintenance, it is difficult to quickly dig up or dig up and quickly fill.
Huawei user groups on the contrary, it is mainly large and medium-sized corporate customers.However, most of the public and corporate users of public clouds more cautious, the demand is not strong, if the cloud, but also mostly responsive policy 'policy-based cloud 'This user is worth fighting for, but more difficult.
In a recent interview with the media, Zheng Yelai said that today, almost all Internet applications are in the cloud, but the digital transformation of government and enterprises has just begun. This is Huawei's opportunity.
If Huawei's benchmark users are diverse and complex in the needs of the government and large enterprises and large enterprises, and rely on Huawei's own efforts to do well, then ecological construction becomes necessary.
For the public cloud manufacturers, the basic computing and storage cloud services are the basic capabilities, who can do, the profit is very thin, above the PaaS (platform as a service), SaaS (software as a service) is rich, the cloud industry Whether the number of partners is the key to stick to the user and the main source of profits, which is the public cloud of ecological construction.
Ji Xinhua commented that public cloud manufacturers, the current best ecological construction is Aliyun .Also, Aliyun strong ecological ability to have a large data and capacity, other manufacturers in this area temporarily difficult to match.
Huawei announced the "Cloud Partner Program 1.0" in the first half of this year.
Under the plan, Huawei public cloud will focus on the ability to resell Huawei public cloud services (cloud reselling partners), Huawei public cloud development and application (cloud solution provider), and the migration of enterprise applications to Huawei public cloud (Cloud service partners) three types of partners.
In addition, the public cloud is only swallow gold animal cloud computing senior expert Liu Liming told Caijing reporter from Google, Microsoft, IBM's financial input history point of view, if you want to sprint the first echelon of public cloud field, the annual infrastructure investment Need to 1 billion dollars, R & D investment in the market is also to 1 billion dollars.
Even Huawei, in the long run, the scale of such investment will make the capital chain too tight.China is not a listed company, can not finance from the secondary market, public cloud return cycle is too long, Ali cloud is still not profitable.This Huawei The determination is a test.
Zheng Yelai believes that if Huawei does not do cloud services, there is no base for the current three major businesses (consumer business, carrier business and enterprise business), meanwhile, Huawei has made a complete chip-to-system investment in the IT industry, but This market space is being squeezed step by step by public cloud, cloud service business, the return on investment for many years will be greatly reduced.
At the end of September, Zheng Yelai gave a report to the company's managing director about the future business plan for the public cloud. He said to the team, "No one has any restrictions on the public cloud business."