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Google, Amazon, Microsoft Go East For Network Gear
theodp writes "Wired's Cade Metz has the scoop on the move away from U.S. network equipment stalwarts, calling it of the best-kept secrets in Silicon Valley. 'Cloud computing is an arms race,' writes Metz. 'The biggest web companies on earth are competing to see who can deliver their services to the most people in the shortest amount of time at the lowest cost. And the cheapest arms come straight from Asia.' Or, as Joyent's Howard Wu puts it, 'It's kind of like buying couches. If you buy one, you go to a retail store. If you buy 10,000 couches, you go straight to the factory.'"
Wow.. really? Huge multinational companies are buying equipment from developing countries because it's cheaper?! What is the world coming to?
Not Eastern, just China. They've been known to do it, and they'll do it again. You think Australia refused to let Huawei bid because they found the company's logo unpleasant?
No, it is not possible to inspect hardware at that level sufficiently thoroughly and it is certain that the entities will be coerced into doing exactly what you wrote.
This threat is not theoretical. The details are classified but what's been leaked is pretty indicative, if you know government bureaucracy, that things have happened for real. Actual chip-gate-level "flaws" and backdoors of very high sophistication have been inserted into the physical manufacturing chain.
Buy Huawei? How does that work exactly?
1) Foreign companies cannot own more than 49% of a Chinese company. All of those American companies in China? They own 49% of those facilities.. a Chinese 'partner' is required to operate in China.
2) Huawei is a government controlled corporation.
3) Huawei had 28 billion USD in revenue in 2010. Which means (by revenue) it is larger than Facebook, Google, and Amazon. It is 2/3rd the size of Cisco (and has 2x the number of employees). It is 40% the size of Microsoft.
No foreign company is buying Huawei anytime soon.
Or, as Joyent's Howard Wu puts it, 'It's kind of like buying couches. If you buy one, you go to a retail store. If you buy 10,000 couches, you go straight to the factory
Of course what Mr. Wu leaves out is that they are going straight to a factory in Asia instead of the American manufacturers (stalwarts, I beleive the summary called them).
Googe, Amazon, Microsoft are all mega-companies and strive to maximize their profits. However, at record unemployment levels in the tech industry, they claim they can't find US workers and have to bring in foreign workers. Now, it appears that US equipment manufactures can't produce enough equipment and they have to again go offshore.
Again, they can do business wherever they want, but the time has come to for them and their shareholders to either decide they want to be an American company with a world wide presence or a foreign company with a US operation.
There is no evidence of that.
"No" is a strong word. Huawei was founded in 1988 by Ren Zhengfei (he's still the CEO of the company). Right out of University, he joined the People's Liberation Army (PLA) working on military technology. He joined the Communist Part of China in 1978, and retired from the PLA in 1982. He was an elected member of the 12th National Congress of the Communist Party of China (1980's).
Sun Yafang, the chairman of the board, worked at the Ministry of State Security (MSS) Communications Department before joining Huawei.
In China, companies are not directly owned by the government, but they are controlled by Communist Party members... When people say X is a Chinese government subsidiary, this is what they are referring to (the close ties of the company to the Communist Party).