Cisco On the Defensive? Huawei Charges Into U.S. Enterprise Market

For some time, Cisco Systems Inc. has voiced fears about Huawei Technologies competing on its home turf, and the inevitable finally has happened.

Last week, China-based Huawei said it has signed SYNNEX Corp. to distribute its IP networking, unified communications (UC), collaboration and data-center products to enterprises through resellers. The deal marks a sea change for channel partners’ U.S. enterprise customers who, due to new entrants in addition to Huawei-SYNNEX, have more choices when it comes to communications infrastructure.

Huawei has operated U.S. offices from Plano, Texas, for the past decade. During that time, the equipment maker has been selling to U.S. operators, not large businesses. However, outside of the U.S., Huawei was making inroads in the enterprise market.

That’s changed. Huawei, needing to expand its strategy, now has U.S. enterprises  Cisco’s sweet spot  in its sights. For Cisco, that could be bad news as it tries to gain market share; it continues to fight customers’ reluctance to make capex purchases and a reputation for charging a premium for its products. Huawei is among the suppliers seeking to take advantage of those perceived weaknesses. GENBAND is another; its recent jump into the enterprise UC space is a direct challenge to Cisco and other big names. Similar to Huawei’s joining with SYNNEX, GENBAND has teamed with Black Box.

The Huawei U.S. enterprise announcement comes as Cisco CEO John Chambers has said several times that Huawei is positioned as Cisco’s greatest rival. But, to be sure, Huawei faces its own challenges. For example, there’s federal scrutiny in the United States about Huawei’s founder and his Chinese military background, as well as fears about the security of Huawei’s hardware.

Still, Huawei must be doing something to put Cisco on the defensive. During Cisco’s first-quarter earnings call, a couple of executives called Huawei an imitator, not an innovator, and said Huawei hasn’t mastered data privacy.

For Huawei, the criticism came off more as an endorsement of its enterprise strategy.

“If they want to declare us public enemy No. 1 and their biggest threat, I am glad to take that compliment,” John Roese, Huawei’s head of R&D in North America, told Reuters at the Interop show in Las Vegas; he also said that Huawei remains too small a player in the United States to compete with Cisco, according to Reuters.

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