Things are about to get a little hotter for Cisco in the enterprise market.
Huawei, the cut-rate Chinese competitor Cisco fears most, is formalizing its entry into the U.S. and global enterprise market. It's establishing a presence in Silicon Valley, and shifting over and recruiting 10,000 people to staff its new group - one of three main Huawei business units along with Devices and Telecom Infrastructure.
Karen Yu is president of Huawei's Enterprise business in the U.S. The company is recruiting channel partners to market its campus networking, branch access, IP backbone, data center and videoconferencing products.
Three product areas will be a key focus for the new group, however: LAN switches, access routers and telepresence, says John Roese, Huawei's senior vice president and general manager of North American R&D. Huawei, a $29 billion company, did $2 billion in enterprise business last year, but by formalizing its enterprise efforts and attacking the North American market in earnest, it's looking to at least double that this year, and more than triple that tally in 2012.
Cisco has dominated the enterprise networking market for a decade or more. Juniper entered the market in 2004 with its NetScreen firewall and VPN acquisition, and then with LAN switches in 2008, but its sales there have been flat of late. HP is the clear No. 2 in LAN switching behind Cisco, and doubled its market share by acquiring 3Com in 2009. But HP is still at about 10% market share, while Cisco enjoys 65% or more.
What makes Huawei different and why now?
Three reasons, according to Roese: 1) the carrier, enterprise and consumer markets are converging, and that plays to Huawei's competencies in each market, he says; 2) there hasn't been a "major new entrant" in a while, even though the market grew substantially; and 3) customers trying to figure out consumerization of IT, the blurring lines between enterprise, carrier and consumer, and how to build extended or virtual enterprise.
"We're entering a market where many of our competitors are a bit complacent," Roese says. "Smaller players are not really strategic threats because they simply are not big enough. Huawei, on the other hand, is clearly big enough."
If Huawei hits that goal of $7 billion in enterprise networking revenue in 2012, it will clearly be the No. 2 player to Cisco, Roese says. The company is looking to be a $10 billion to $15 billion enterprise player in the next five years, he says.
He expects most of that business to come at the expense of Cisco rather than the HPs, Junipers, or smaller players like his old employers Enterasys and Nortel enterprise, which is now owned by Avaya.
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