Huawei Analyst Summit 2021

neXt Curve attended Huawei’s Analyst Summit (HAS) 2021 which was hosted in-person and virtually from Shenzhen, China. This event shortly followed Huawei’s Annual Report which presented the state of their business during a difficult year for the company as it faced a wide range of sanctions by the US and the global Coronavirus pandemic. HAS 2021 gave us an holistic overview of the progress that Huawei has made in evolving and executing its “survival” strategy over the last two years since the company became the focus of deteriorating relations between the United States and China.

On April 12, 2021, Huawei held its 18th Global Analyst Summit in Shenzhen which was attended by more than 400 guests including industry and financial analysts and members of media around the globe. Due to persisting global pandemic, neXt Curve attended this year’s event virtually for the second year. This is unfortunate given that live HAS event is an intimate and highly engaging opportunity to get a sense of Huawei’s priorities and accomplishments on the technical and product fronts. There is nothing like being there in person.

At Huawei’s 2021 Annual Report press event on March 31, the company announced that it had spent on the order of 21.8 billion USD in research and development. Needless to day, we were curious where the company has and plans to focus its research agenda. This year, William Xu, Director of the Board and President of Huawei’s Institute of Strategic Research, kicked off the inaugural keynote by outlining the 9 technological challenges and proposed directions for Huawei’s research efforts today and well into the current decade.

Defining 5.5G to support hundreds of billions of different kinds of connections.
Developing nanoscale optics for an exponential increase in fiber capacity.
Optimizing network protocols to connect all things.
Providing advanced computing power strong enough to support the intelligent world.
Extracting knowledge from massive amounts of data to drive breakthroughs in industrial AI.
Going beyond von Neumann architecture for 100x denser storage systems.
Combining computing and sensing for a hyper-reality, multi-modal experience.
Enabling people to more proactively manage their health through continuous self-monitoring of personal vital signs.
Building an intelligent Internet of Energy for the generation, storage, and consumption of greener electricity.

Intelligent world 2030 Huawei — Huawei’s research priorities for Intelligent World 2030

Director Xu’s was followed up by Rotating Chairman Eric Xu’s keynote on the big picture and priorities that are guiding Huawei as a company. Simply put, Huawei’s mission is to help its customers build a connected and fully intelligent world by 2030. Chairman Xu proceeded to list the five commitments that the company has made.

Promoting low-carbon goals, electrification and intelligence across industries and societies through ICT to overcome issues such as an aging population and growing energy consumption.
Evolving and integrating ICT technology to enhance human perception, transcend physical limitations and expand cognition capabilities.
Fostering a ubiquitous connection for human progress and economic growth; and ubiquitous intelligence and accessibility to cloud via supercomputing.
Creating surreal and personalized experiences via a combination of computing and perception.
Building a smart-energy Internet for greener power generation, storage and use.

The rest of the two-and-a-half day event was filled with keynotes and forums that building on these six themes. While we did not see the usual emphasis on new product advancements of HAS events of yesteryear, there was quite a good deal of emphasis on customer value and prioritization and positioning of Huawei’s broad portfolio of technologies and ICT solution.

Here are neXt Curve’s key takeaways from Huawei Analyst Summit 2021.

TAKEAWAY 1: 5G is over-hyped and over-exaggerated

In the past, Huawei has heavily promoted the promise of 5G and has been arguably one of the more outspoken of the technology’s banner men. The company often touted the transformative potential of the next-generation mobile network technology to usher in the 4th industrial revolution.

Surprisingly, Kevin Xu, rotating chairman of Huawei, stated during a Q&A session threw a curveball that stunned many an analyst in attendance.

“The industry has poured then years worth of effort and investment into it [5G], so it will obviously have its advantages compared to 4G. But some claim that 5G is super strong and that it will be the foundation of everything else. That, to me, is simply and exaggeration.”
Eric Xu, Rotating Chairman, Huawei

Eric proceeded to bring up an example of how 5G’s potential, capabilities and role had been exaggerated by picking on one if its most touted killer hypotheticals, the autonomous vehicle. He stated that critical reliance on 5G connectivity for autonomous driving was not realistic as it would set a tremendously high bar for mobile network operators that could not be met in an economically viable way though “technically” possible. He went on to say that an autonomous vehicle should be able to operate on its own without dependence on a network connecting it to safety and mission critical functions and services. Chairman Xu went as far as calling 5G a nice-to-have and an “auxiliary capability” for this marquee 5G hopeful.

Rather than contributing to the over-exaggeration of 5G, Chairman Xu highlighted the need to build on practical applications that capitalize on the 5G capabilities that are deployable and value enhancing to consumer and, more importantly, enterprise customer. In this regard, he drew attention to Huawei’s extensive engagement in over 3,000 5G innovation projects globally and cited the need to continue the evolution of 5G to what Huawei dubs 5.5G, which the company introduced at their Mobile Broadband Forum in November of 2020.

5.5G reflects a rethinking of the original ITU use cases with a consideration for new capabilities that will be needed to meet the key requirements of industries and enterprises. Chairman Xu emphasized the need for “highly reliable network connections, large uplink capacity, deterministic latency, as well as network planning, rollout, maintenance, and optimization services to meet the massive number of small requirements from companies of all shapes and sizes.” 5.5G proposes to add three more scenarios to the company of the familiar URLLC (Ultra-Reliable Low-Latency Communications), eMBB (enhanced Mobile Broadband, and mMTC (massive Machine Type Communications):

Uplink Centric Broadband Communications (UCBC)
Real-Time Broadband Communications (RTBC)
Harmonized Communications and Sensing (HCS)

In our analysis, the tempering of 5G is something that Huawei is in a unique position to do given the vertical depth and horizontal breadth of the company represented by their enterprise, carrier, consumer and cloud business groups. Huawei clearly views the 5G opportunity for themselves and their customers as part of a larger ICT opportunity that is about intelligence (AI) made ubiquitous through software and the evolution of cloud computing.

TAKEAWAY 2: A practical vision for telco transformation – foundation first

This year’s HAS agenda was a notable nudge away from 5G aggrandizement toward an emphasis on other technologies in Huawei’s portfolio that have fundamental relevance to the early phase of the 5G transformation journey that most telcos around the globe are in. The tone that Huawei uses with the topic of 5G has become much more measured as it grapples with readiness challenges among its carrier customers around the globe and the limit of the current state of the technology as it pushes the limits with its Chinese clients.

One of the key themes at HAS 2021 was the idea of foundation. At the foundation of 5G, according to Huawei and its Chinese carrier customers, is the optical network. There was little talk of IAB (Integrated Access and Backhaul) and other fiber workaround. Fiber is king, and the optical network is the requisite infrastructure of a viable 5G network according Ye Songha, GM of China Telecom. The quality of a 5G access network depends on it.

Huawei sees its optical networking products and technologies as the critical factor in 5G readiness of the operator. Without it, the multi-gigabit broadband speeds, massive capacity and low latency would not be possible at any scale to meet the inflated expectations of 5G. Operators would not be able to realize a viable 5G network that is energy efficient and sustainable. Without a viable 5G network, operators can’t support the new applications and services that will define the 5G era.

This back-to-basics and fundamentals-focused approach works well for Huawei as it taps into a less contentious aspect of their broad business and technology portfolio. This emphasis on foundational optical network infrastructure can position Huawei well against the ground truths of operator readiness for 5G while presenting Huawei’s beleaguered carrier business a path to growth that doesn’t embroil it in the contentious geopolitical subject that 5G RAN has become as of late.

It is clear that optical technology is an area that Huawei will continue to invest in heavily. They have set expectations that this technology field will foster innovations in domains outside of communications. Huawei has indicated that it is exploring new potential applications such as optical displays, augmented reality head-up displays (AR-HUDs) and fiber sensing in an effort to create new products and, consequently, new business opportunities for the company.

TAKEAWAY 3: Software-driven adaptation

Most of the world thinks of Huawei as a network equipment manufacturer, essentially a hardware company. Yet, Huawei has been making the transitioning toward becoming a software-centric company for several years. With the advent of the US tech war on China two years ago, the Huawei Board of Directors decided to invest 2 billion USD into building out the company’s software engineering chops. Since then, software has become a vital and accelerating part of Huawei’s survival transformation.

Huawei is the 3rd largest buyer of semiconductors after Apple and Samsung. They were also TSMC’s second largest customer representing 14% of its revenues in 2019. As we had hypothesized since early last year, this move toward software has been motivated by Huawei’s desire to reduce their reliance on leading edge chips in light of their restricted access to advance node manufacturing.

The centerpieces of Huawei’s software-enabled hedge are Harmony OS and HMS which are the foundations of what Huawei calls their distributed operating system. Early descriptions of Harmony OS shared similarities with the concept of ambient computing where connected devices would be able to dynamically share computing resources and capacity with each other making computing ubiquitous.

Huawei’s idea of a distributed operating system is a departure from today’s model of mobile computing and computing in general. It promotes the idea of a secure, trusted fabric of personal computing that addresses the underutilization of computing resources characteristic of the current model of computing through north-south and east-west offloading and resource sharing.

If Huawei can make this unique computing model successful, it could bring about new economics to the mobile computing world. Leading-edge nodes are becoming more expensive making the SoCs of today’s smartphone more costly. Huawei could change the cost dynamic of personal computing devices by making computing resources at the edge shareable via high-performance, high-capacity 5G connectivity. This could be a competitive advantage in markets such as Africa, Central Asia, Eastern Europe, the Middle East and Latin America where the economics of 5G matter.

TAKEAWAY 4: Cloud will drive operator IT/CT convergence

To Huawei, cloud computing and AI have become equal partners with the 5G. In particular, cloud computing was being pushed to the forefront at HAS 2021. But Huawei’s cloud organization has undergone a number of reorganizations since its inception in 2017 as the Cloud BU. Eric Xu, described its importance in Huawei’s initiative to strengthen its software capabilities. He sees it as providing a subscription-based business model that can channel the value of Huawei’s hardware and software as a service.

One of the things that we have noticed in many of the presentations by Huawei’s carrier customers is their bold acceptance of cloud computing. Chinese operators seem to recognize that they must develop “hyperconverged” network and computing capabilities in order to evolve their business and create new services and market opportunities in industry verticals. This is in contrast to what we are seeing in the Americas and Europe where operators are partnering with hyperscalers for the edge cloud while largely resigning themselves from ever operating their own cloud.

To the Chinese operators, a hyperconverged cloud will provide them with the ability to deliver what Huawei calls “deterministic compute services” on top of a network as a service foundation that is the 5G network. This becomes important as operators look to offer their hyperconverged cloud services to industrial clients. A hyperconverged cloud will provide the operator the ability to place network and compute workloads across their infrastructure in real time to support the 5.5G scenarios of UCBC, RTBC and HCS that the most demanding industrial use cases will require.

Huawei sees four “scenarios” for the hyperconverged cloud:

Cloud Campus Network – This is the idea of a fully wireless campus that has a gigabit network backbone, ideally optical fiber for back haul. The cloud-native network will be right-sized for the scale of the campus to be easy to deploy and simple to provision and manage. Thanks to its cloud architecture, the cloud campus network will be managed with a high degree of intelligent automation that will promote an operational transition to proactive O&M.
Cloud One (Hybrid Cloud) – This scenario addresses requirements for a network to support various hybrid and multi cloud requirements that an enterprise may have. Cloud One proposes to offer what is virtually a single global network cloud for the enterprise that proves access to multiple vendor clouds that bind to it.
Hyperconverged DC within a Cloud – This concept is the application of hyperconverged infrastructure principles and capabilities in a cloud environment. Huawei defines it as a network cloud within a data center that fosters the proactive optimization of the network and cloud compute and uses intelligent algorithms and a knowledge graph to diagnose network and compute issues quickly.
End-to-End Security – This scenario applies to the three other scenarios that precede it. Security is a pervasive and constant issue. The hyperconverged cloud aims to provide a medium for instituting end-to-end security from end point device through the network to the application and service reside in the cloud and all points in-between.

The hyperconverged cloud is a bold vision for Huawei and a daunting aspiration for its carrier and enterprise customers. IT/CT convergence remains a difficult work-in-progress. However, Huawei is in a unique position to drive this convergence given their broad and heritage in CT and IT. With three years under their belt, Huawei’s Cloud BU has the potential to bring Huawei’s hyperconverged story together with compelling capabilities and deep innovations that competitors will struggle to match.

TAKEAWAY 5: Sustainability – A key focus of Huawei’s research direction

Huawei cites energy as one of the two underpinnings of societal well-being. Rapidly increasing energy consumption of a rapidly increasing human population poses an existential threat to humanity in the form of climate change. One of Huawei’s expressed ambitions is to bring about what they call the internet of energy which they claim will bring about new forms of intelligently managed energy infrastructure and the AI-enabled optimization of systems that power the devices in our lives.

Pillars of the ICT future Huawei — Huawei’s research direction

While there is little that Huawei can do in regard to population growth, it seems that the company has committed to working on promoting and enabling sustainability through technologies that promote energy-efficiency and clean forms of energy that will contribute to the preservation of our environment. This agenda seems to have become an important one for the future of Huawei’s research efforts and investments. Huawei sees three factors forming the path to sustainability and carbon neutrality:

Low-carbon – renewable sources of energy
Electric – electric powered things
Intelligence – robotics and AI for intelligent management and autonomous control

The company showcased some of their efforts in developing technologies that support and enable sustainability. Huawei emphasized the work they are doing with Chinese automakers to improve the performance of electric power systems. Specifically, Huawei cited their work on on-board chargers, ePowertrain, and battery management systems for electric vehicles. The company announced their X-in-1 ePowertrain which they claim can raise the energy efficiency of electric vehicles from 86% to 89%, thus increasing the range of vehicles by 4.5%.

Huawei is also focusing research and product development to address the data center energy consumption issue. William Xu indicated that the company’s data center teams are exploring ways to reduce the power consumption of today’s power-hungry data centers through various cooling methods as well as AI-enabled optimization and automation of data center power management. Huawei claims that they can reduce data center PUE from 1.4 to 1.2 saving operators millions of kilowatt hours of electricity every year in their facility.

Though 5G networks are more power efficient per bit versus a 4G network, they will be power hogs considering the exponential growth in data traffic expected. For this reason, the sustainability of 5G networks has become a topic of growing concern. Huawei considers this issue a huge frontier of opportunity to help operators reduce power consumption and costs through technological innovations with RAN equipment and end user devices as well as through the applications of AI to optimize infrastructure operations at massive scale.

While sustainability is an urgent matter for our data centers and network infrastructures, the edge cloud computing is a new domain and our 5G networks are relatively immature in their current form and implementations. There is plenty of work to be done to improve the energy efficiency and sustainability of these systems through intelligence optimization and automation.

Conclusion

The challenges that Huawei faces today has forced it to adopt a highly practical lens for its business and its customers. This has meant abandoning hyped notions of 5G and other “exaggerated” technologies and taking on a more value-oriented perspective on how Huawei needs to view is future and the future of ICT.

Over the course of two years, Huawei has refined its pivot strategy. They have come a long way in evolving and refining their mission and identifying the priorities that will not only help them survive but potentially thrive. Huawei has narrowed their focus on the fundamentals and essentials of Huawei’s business and that of their customers. After all, what is a 5G RAN without a robust fiber network, and 5G is not just an evolution of mobile wireless technology. For the many operators and enterprises embarking on their 5G journeys, it is also an evolution of their infrastructure that will take years dealing with the technical debt of their legacy portfolio.

Despite resetting to the basics, Huawei continues to have their eye on the future with the ambition of becoming the technology leader in this and subsequent eras. When asked about what Huawei’s view on 6G, Eric Xu humbly admitted that he didn’t know. But maybe he does. Maybe the next generation network will not be anchored on terahertz spectrum capacity and performance as it is widely believed. Maybe 6G will be about optimizing 5G networks so that they are able to economically and sustainably deliver on their promises at some point beyond 2030.

In the meantime, Eric Xu believes that Huawei will have to continue adapting its business to survive through the most tumultuous times it has faced. He does not expect that the new Biden Administration will lax current policy toward Huawei or remove it from the Entity List in the near future. In his mind, survival mode will be business as usual.

For more insights on neXt Curve‘s 5G technology and end market research themes contact us for a detailed briefing with one of our analysts. Follow our site to get updates and notifications of our research and our 2021 research agenda.

Contact us if you would like a detailed briefing of our analysis of this event and to find out more about neXt Curve‘s advisory services.

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Leonard Lee

Managing Director, neXt Curve

April 15, 2021

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