Huawei’s days as a global household name in smartphones may be numbered. With its smartphone business being pummeled by US sanctions enacted by the Trump administration, the Chinese conglomerate seeks to reinvigorate itself with a focus on cloud services.
According to the South China Morning Post, Ren Zhengfei, Huawei founder and CEO, said the company must prioritise cloud services, even as he conceded that it had not been the company’s strength and the company needed to achieve a “breakthrough”.
“It is impossible for us to simply follow the same path as Alibaba and Amazon … They have access to unlimited money in the US stock market,” he reportedly said.
“Our enterprise business needs to scale back its battlefront … If our strategy is too broad, we will lose our combat strength.”
Ren wants the company to emulate the successes of Amazon and Microsoft, both global leaders in cloud services, by focusing on infrastructure as a service (IaaS) and platform as a service (PaaS). He also urged the company to secure major corporations and firms in major industries as clients – a noted departure from Huawei’s previously consumer-heavy focus.
Ren’s remarks come as US sanctions continue to batter Huawei’s smartphone supply chain, rapidly depriving the company of the chips needed for manufacturing. The US has accused Huawei of enabling spying on behalf of the Chinese government.
Incidentally, Beijing might turn out to be a major lifeline for the company. In August last year, an individual at a Chinese supplier to Huawei told the Financial Times that the Chinese government would increasingly shore up the company through public cloud contracts.
Nonetheless, as the Financial Times also noted, half of Huawei’s US$122 billion revenue in 2019 was generated by its consumer unit. So the change in focus will be painful no matter what. Then again, with the COVID-19 pandemic and remote working spurring the astounding growth in cloud services, Huawei might just make lemonade out of lemons.