Chinese Huawei Takes on U.S. Telecom Market

ChipGuy writes "With funds on loan from the Chinese government, Chinese equipment giant, Huawei is undercutting big rivals like Cisco and Nortel, and is using money to buy its way into the U.S. market. Overseas in Europe and Asia it already has become a major force. There are parallels with auto industry and home appliances. It took a little while before prices became a determining factor and shifted growth away from North American vendors. Telecom will go through the same curve. Huawei is curently selling EVDO phones for about $130 and WCDMA phones about $250 which is about 30% than everyone else on the market. Huawei's agenda is pretty clear - get business and sales at any cost. And that means bad news for already struggling telecom industry."

Comments

Old news... happening with Korea as well

[Radi-0-head]

Take a look at the rapid growth of Koren company Samsung in the global handset market. They came out of nowhere and now are in the top 3 of handset manufacturers along with established giants Nokia and Motorola.

Hyundai is also doing a great job undercutting other auto compaines with surprisingly decent cars at excellent prices. 5 years ago I would never have considered owning a Hyundai, now I think they're just as good or better than some manufacturers.

If you don't think China already has a major stronghold on the US, you haven't been to a Wal-Mart lately. It's a global market, like it or not.

Ring My Bell

[buckhead_buddy]

I wasn't around during the breakup of AT&T but the limited monopoly given to the Bell in my area (BellSouth) makes me not sad for one moment that a serious market force will challenge their dominance. My local Bell just doesn't try to innovate anything until:

• a competitor challenges them (offering new, better or cheaper services)
• They fail at getting government to subsidize them (they don't always fail though).
• They find that they can't negotiate or buy-off a limited truce with their new competitor.

At this point, if all of these money-backed attempts to ward off competition have failed they usually don't even bother looking internally at their own talent. They'll try buying up a third-party and use them as the signal that they're serious and starting to compete (whether they actually are or not).

I'd prefer that my telecom bills weren't funnelling money out of the country to an internationally owned competitor. I'd prefer to support my friends who work as sysadmins of the local Bell's subcontracting agency (since being downsized from Bell employees). But my local Bell doesn't seem to even attempt to innovate unless it has a serious challenger. Despite the coming months of political dogma, I'm glad that a serious challenger is attempting to enter the American market.

!= bad news for ALL of the telecom industry

[G4from128k]

It's only bad news for the hardware side of telecom. The services side would like nothing better than cheap equipment that boosts adoption and use of telecom. The cheaper the infrastructure, the higher the profits in service and/or the greater the adoption of services if they become less expensive to roll out.

In some ways this becomes a battle between the best interests of the infrastructure makers (a small segment) and the infrastructure users (all the rest of the economy).

The long-term impact is far less clear, however. The effect of cheap Chinese goods will depend on how the U.S. economy uses the less-costly telecom gear. If we only use it to download ring-tones while standing in the unemployment line, then it will be bad. But if businesses find growth-generating new innovations in business processes, services, and products that make use of cheap telecom infrastructure, then it will be a good thing.