Written by | Zhao Chenxi
Edit | Lee Shin Ma
On April 28, according to the data of Huawei's business report for the first quarter of 2022, in the first quarter of this year, Huawei achieved revenue of 131 billion yuan (RMB, the same below), down 13.9% year-on-year, and net profit margin of 4.3%, down 6.8% year-on-year.
Hu Houkun, huawei's rotating chairman, said that although the consumer business is affected by external objective factors, the ICT infrastructure business has grown steadily. In other words, the decline in revenue and net profit margin was mainly due to the impact of the decline in the consumer business.
The quarterly earnings data basically continued huawei's performance trend for the whole year in 2021. According to the data disclosed at Huawei's 2021 business financial report conference not long ago, in 2021, Huawei's revenue was 636.8 billion yuan, down 28.6% year-on-year, becoming the first year of revenue decline in the past five years. In addition to the slight growth of the enterprise business, the consumer business and the operator business have declined, and the consumer business has the most decline, reaching 49.6%.
However, the consumer business is almost "unsolvable" due to its well-known chip problems.
At the just-concluded 2022 Huawei Global Analyst Conference, Wang Tao, managing director of Huawei and director of the ICT Infrastructure Business Management Committee, talked about the complexity of the chip industry: "The chip industry chain is very long, involving chip involvement, manufacturing, packaging, testing and other links, in order to support these links, the upstream also involves equipment, materials and other longer chains, in such a long chain, any company in the world, including Huawei, can not rely on themselves to solve these problems." ”
Hu Houkun also made it clear that although Huawei's consumer business is facing chip shortage problems, at present, Huawei still believes that the industry has its own division of labor, and Huawei has no plans to build its own chip factory.
Huawei Rotating Chairman Hu Houkun Image source: Huawei
More importantly, Huawei is facing a variety of other serious challenges in its business this year.
"Huawei is currently experiencing quite a lot of difficulties, the difficulties it faced in the past have not decreased this year, and the changes in the external environment have brought more challenges, such as geopolitical conflicts, global epidemics have not subsided, global inflation, commodity price increases, the possibility of exchange rate fluctuations, and a series of other challenges." Hu Houkun said.
In the stage of exploration and survival, Huawei has also opened many "prescriptions" for itself. On the one hand, Huawei has successively entered new business areas, such as car manufacturing, "+8 products" in the "1+8+N" all-scenario ecosystem, software ecology, and digitalization of traditional industries such as power and coal energy.
However, whether it is making cars or others, it takes time, especially the car business that Volkswagen pays attention to, Hu Houkun quipped to the media that about Huawei's car manufacturing, it is necessary to give Huawei and Yu Chengdong some understanding and tolerance. "Huawei is engaged in car-related industries, or a newcomer, a lot of things need to learn, it is inevitable to make mistakes, I hope you have more tolerance." The goals proposed by Huawei, even if they cannot be achieved, I hope that everyone can understand more. ”
On the other hand, Huawei also tries to promote innovation from the "foundation" and consolidate the core competitiveness of enterprises, that is, the recruitment of top talents. Just one day before the 2022 Huawei Global Analyst Conference, Huawei recruited talented teenagers from all over the world, regardless of nationality, major, or college, Huawei provided worldwide topics, a powerful platform, sufficient resources, and an imaginative "five times salary".
With the "imbalance" of the revenue of the "half of the country" consumer business, the operator business and enterprise business of the traditional advantageous business sector are destined to take another step forward. From the 2022 Huawei Global Analyst Conference, it is also obvious that the keywords of Huawei's business development have become 5.5G, 5.5G To B indoor, F5G, F5.5G, HUAWEI CLOUD, storage, legion...
On April 20, Huawei's consumer business was also renamed back to its old name 10 years ago, "Huawei Terminal", fully entering the commercial field of To B, bringing commercial products including notebooks, desktops, printers, monitors, smart screens and other commercial products to the government and the industry, and implementing The To C and To B dual-line "combat".
In 2021 and 2022, Huawei has established fifteen legions, including coal mines, customs, smart photovoltaics, power digitalization, parks, government affairs netcom, wide area networks, etc., which are "no man's land" in the fields of 5G applications, commercialization, and digitalization. As Hu Houkun introduced, Huawei has been cultivating the To B business for more than 30 years and knows how to do the To B business. In the case of limited consumer business, Huawei is bound to regain its old roots and further deepen into the To B industry and industry.
To B into the "deep water area", "no man's land"
In terms of enterprise business, HUAWEI CLOUD has always been the focus, and at the 2022 Huawei Global Analyst Conference, Hu Houkun also highlighted the development of HUAWEI CLOUD. At the 2021 business financial report conference, huawei cloud specific revenue (2021 revenue of 20.1 billion yuan) was disclosed for the first time.
In fact, since Huawei was blocked by technology, HUAWEI CLOUD has been valued. In January 2021, Ren Zhengfei delivered an internal speech on enterprise business and HUAWEI CLOUD business development, expounding the positioning, composition, and development path of HUAWEI CLOUD at great length. Subsequently, including HUAWEI CLOUD and Computing BG and BU, the CEO and President of HUAWEI CLOUD and Computing continued to make adjustments.
Huawei Rotating Chairman Hu Houkun Image source: Huawei
HUAWEI CLOUD carries the heavy responsibility of Huawei's transformation from a hardware company to a software company, and from selling products to selling services. Hu Is also satisfied with the growth of HUAWEI CLOUD in the past two years. "On the one hand, the market share such as IaaS market share ranks second in China and fifth in the world; on the other hand, the basis for the development of cloud computing business is ecology, and HUAWEI CLOUD has gathered more than 30,000 partners, 2.6 million application developers, and more than 6,000 applications in the cloud market."
Shi Jilin, President of HUAWEI CLOUD Global Marketing and Sales Services, also mentioned a series of data on the development of HUAWEI CLOUD in the past year, with the value of government-enterprise and Internet dual track customers increasing by 59%, the average revenue of existing customers increasing by 33%, and the transaction volume of the cloud market increasing by 105%.
In 2021, Huawei also established Huawei Cloud Computing Technology Co., Ltd. Establish the positioning of "everything is service". In this regard, Shi Jilin told DoNews that the establishment of Huawei's cloud computing subsidiary is mainly to comply with the development characteristics of cloud computing, make business decisions better, more efficiently, and faster, and seize opportunities in the cloud computing track, including research and development, market operation, and deep digital cooperation.
In addition, HUAWEI CLOUD is also closely linked to the Legion strategy.
According to Shi Jilin, the essence of the legion is Team (team), which is an efficient operation mode of combat Team, and the greatest value is to be able to quickly gather resources and deepen cultivation for a certain industry scenario. Shi Jilin found that in the process of building solutions for all legions, customers are very concerned about the construction of cloud platforms and the application of cloud technology.
The operating model of HUAWEI CLOUD and the Legion is "close cooperation", jointly designing cloud-based solutions with the Legion and jointly building ecosystems.
"First, HUAWEI CLOUD designs joint solutions and forms a joint development team for the different characteristics of each legion. Second, in view of the industry characteristics of the legion, joint solutions and joint ecology are created with the legion. That is, Huawei provides capabilities, huawei cloud around the industry, brings relevant partners together, does joint creation, and jointly discusses the solutions and corresponding capabilities required for the digital transformation of the industry around the industry attributes and industry knowledge precipitation. Shi Jilin talked about the role of HUAWEI CLOUD in the Legion model.
At the operator business level, Huawei still focuses on promoting 5.5G and F5.5G (5.5th generation fixed network communication) this year.
By the end of 2021, the number of domestic 5G base stations will exceed 1.42 million, basically covering all prefecture-level cities and counties in China, and the number of 5G connections will also exceed 500 million, and about 600,000 base stations will be built in 2022. In terms of the To C market, the 5G data service traffic of the three major operators accounts for 20% of the total traffic, and Guangdong, Shenzhen, Zhejiang, Shanghai and other regions account for more than 30% of the total mobile traffic, which is developing rapidly.
However, there are still bottlenecks in the existing 5G network capabilities, and for new applications in the To C market, and even more diverse and complex all-scenario IoT requirements in all walks of life, such as L4 autonomous driving networks, low-altitude logistics drones and other scenarios, the existing enhanced mobile broadband (eMBB), ultra-high reliability and low latency communication (uRLLC), and massive machine-like communication (mMTC) scenarios need to be upgraded.
It is understood that as early as 2020, during the Shanghai MBBF Conference, Wang Tao, managing director of Huawei and director of the ICT Infrastructure Business Management Committee, put forward a 5.5G vision. The main directions are uplink ultra-wideband (UCBC), broadband real-time communication (RTBC) and communication perception convergence (HCS) three new application scenarios.
Gao Quanzhong, general manager of HUAWEI CLOUD 5.5G field, told the media that the three directions are mainly because, first, many applications in 5G To B are mainly uploaded, and the downstream bandwidth of the existing 5G network is better, but there is a large bottleneck in the upstream bandwidth; second, the integration of virtual and real life needs to quickly provide corresponding perspectives in the future; third, there are a large number of mobile autonomous driving devices in the digital and intelligent society, such as drones, autonomous vehicles, and robots, which do not have a sense of self-judgment. Perception is required.
Gan Bin, Vice President of Huawei's Wireless Product Line and Chief Marketing Officer, further elaborated that whether it is 5.5G or F5.5G, it is to cope with the huge traffic growth and the needs of various scenarios of enterprises, the existing 5G 400MHz is far from enough, it needs to upgrade from the original 100MHz to GHz-level spectrum resources, from large bandwidth to ultra-large bandwidth.
"6GHz, millimeter wave will be the key to the future of ultra-large bandwidth. Huawei proposed ELAA-MM (Hyperscale Antenna Array M-MIMO) to achieve higher frequency band coverage with C-Band in larger scale arrays. Gan Bin said.
In addition, 5G, F5G, 5.5G, and F5.5G in operators' business also support the operation of Huawei's various legions.
Wang Tao, Managing Director of Huawei and Director of the ICT Infrastructure Business Management Committee Image source: Huawei
Taking the Coal Mine Corps as an example, according to Guo Zhenxing, President of MKT and Solutions of Huawei Coal Mine Corps, intelligent mines not only involve the application of public clouds, private cloud deployments, big data, and AI artificial intelligence (intelligent analysis and intelligent decision-making), but its essence is actually a change in the industrial Internet architecture.
"In addition to the construction of intelligent mines, it is necessary to face problems such as operating systems and various connection protocols, mainly connection protocols, interfaces, and standards. In scenarios such as open-pit mines, 5G and F5G are also important access methods, and in order to cope with some large-bandwidth services, Huawei has adopted solutions such as F5G packet slicing networks. Guo Zhenxing said.
Telecom analyst Huang Haifeng told DoNews: "Every year Huawei's analyst conference is Huawei's R&D department sharing its own ideas and insights for the next three, five or even ten years, and how to go in the future. It is hoped that operators, customers, and partners will know the direction of Huawei, and then the industry will discuss and reach a consensus. ”
In other words, Huawei's ideas and insights are not necessarily mature, and the future landing process is bound to face a series of problems, such as the freezing of standards, a long landing time cycle, or hesitation from customers and partners. Especially from the perspective of the commercialization progress of global 5G To B, the industry is generally in the early stage, that is, the "model house" stage, and there are very few cases of successful commercialization in the world.
Huawei's digital transformation of traditional fields such as energy and coal mines, or the commercialization of 5G, F5G or even 5.5G and F5.5G, is not only a "no man's land" in the industry, but also takes a certain amount of time to accumulate to become the industry Know-How.
"Holding a hammer to find a nail" is not easy
5.5G, F5.5G from standard to supporting mature, or need 2-5 years cycle.
For 5.5G and F5.5G, DoNews interviewed employees from many different business units in mobile, and the other party did not know the concept of 5.5G and F5.5G. "At present, I have not heard of the progress of 5.5G and F5.5G, and generally new communication intergenerational upgrades must first find a local pilot to build a test network to know the effect." 5.5G generally refers to the upgrade of wireless devices and will not involve the core network level. Li Hao, a Mobile employee, told DoNews.
Zhang Qiang, another China Mobile employee, also said that at present, the operator's marketing department does not use 5G next-generation technology, and the bottleneck of 5G development now lies in fewer scenarios and fewer strong correlation scenarios.
Regarding the difference in the perception of 5G next-generation technology between operators and equipment vendors, Telecom analyst Huang Haifeng told DoNews that "this is a very normal phenomenon." Because 5.5G is an intergenerational innovation in communications, the relevant standards may not be formulated until 2023. There are currently some test fields, and it is expected that some commercial products will be available in 2024 before they can be slowly deployed in high-value areas. ”
Gao Quanzhong, general manager of the 5.5G field of HUAWEI CLOUD, said in an interview with the media that the specific standards for 5.5G are indeed being formulated. In 2020, 5.5G was proposed, and in April 2021, 3GPP was officially named 5G-Advanced. From April to the end of 2021, standards, industries, and partners such as operators, equipment, terminal manufacturers, chip manufacturers, and content-side partners will jointly discuss the research topics in key technical directions and standards, and the 5G-A R18 agreement will be officially established in the standard. ”
In fact, whether it is 2G, 3G, 4G stage, there are transition stages between each generation, such as 2.5G, 3.5G, 4.5G. It is generally mainly achieved through software upgrades or some hardware upgrades. Taking 4G to 5G as an example, in 2013, the mainland 4G commercial, 2016 4.5G began commercial deployment, from 4.5G to 5G takes another three years.
The upgrade process from 5G to 6G also requires a 5.5G transition.
The biggest difference between 5G and the 4G era is that 5G is more expensive to lay due to its high frequency band, dense deployment. "When operators invest in 5G, 4G has not fully returned the cost, and operators are currently more concerned about business model operation and maintenance." Industry analyst Cong Mo continued to DoNews, so it is normal for the operator side not to be interested in the new communication generation and not have much feeling.
"Generally speaking, Huawei's deployment bases are similar to 2G, 3G, 4G, 5G, and 6G common platforms, saving a lot of costs." Buying base station equipment accounts for only 5% of the total investment of operators, plus some infrastructure construction of fixed networks and core networks may be less than 15%, which is not expensive. The difficulty lies in operating costs, as well as electricity and maintenance costs. Huang Haifeng said.
Although, the laying of new concepts will take time and practice. However, in the view of industry analyst Cong Mo, Huawei still has certain advantages over other competitors.
Huawei Global Analyst Conference 2022 Image source: Huawei
"The market demand is there, Huawei does not do, other companies will do, but Huawei is more suitable for serving this part of the customer." First of all, Huawei's legion model according to the vertical industry division, in fact, in the to B side of the industry, is to roll out in order to understand the customer pain points and continuous industry tracking. The word 'legion' carries Huawei's strong corporate culture and political and corporate affairs. ”
Cong Mo believes that the traditional industry, whether it is minerals, energy, ports or highways, most of the large enterprises belong to the background of state-owned assets, these traditional industries are facing years of information processing and the corresponding pain points of multiple industries need to be solved urgently, Huawei's advantage in it is that its ICT deeply cultivated government-enterprise relationship and corporate culture itself and the government and enterprise culture match high, although this part of the customer market barriers are high, but in the choice of digital, intelligent, automation solutions, as long as the price is appropriate, There is a high probability that Huawei will still be given priority.
In 2022, Huawei's main channel has been fully focused on the To B end, and Hu Houkun also mentioned that Huawei's goal this year is not only to survive, but also to live "with quality". "First, the company as a whole is currently particularly focused on the quality of transactions; second, Huawei's entire business portfolio is now more diversified than in the past; and third, 'quality of life', continuous investment in innovation." We will continue to invest in talent and optimize the innovation path. ”
(Li Hao, Zhang Qiang, and Cong Mo are pseudonyms in the text)