Huawei: Top Vendor in 2010 as LTE Contracts Stack Up?

In telecom, 2010 looks less like the Year of the Tiger and more like the Year of Huawei Technologies.

The China-based gearmaker has gone from a low-cost, low-profile, bottom-of-the-heap contender to top dog over the past year, thanks to an economy that’s pushed service providers to upgrade their networks only as needed, and for as little money as possible. It hasn’t hurt that Huawei’s rivals haven’t withstood the global financial stress very well, either. As a result, privately held Huawei says contract sales will rise to $36 billion this year, up from $30 billion in 2009, adding that last year’s revenue surpassed 2008’s despite the worldwide recession. Could it be that the somewhat once-denigrated company stands to become the “it” vendor of 2010?

By many analysts’ tallies, Huawei is creeping up on No. 1 infrastructure supplier Ericsson, particularly in the LTE equipment sector. That’s partly because the scions of telecom, including Nokia Siemens Networks (NSN), Nortel Networks, Alcatel-Lucent and, yes, even Ericsson, have a hard time pricing their products as low as Huawei does. Their own internal money struggles – which Huawei has thus far escaped – have meant R&D cutbacks and layoffs, and overall financial sensitivity. And, the market leaders have been so preoccupied with their own woes, by the time they noticed Huawei’s growing success, it had already become a major threat.

The financial issues of its rivals have also set Huawei up as a more stable supplier in some customers’ eyes. NSN has continued to shed market share and workers, leading to talk of a dissolution of the joint venture between Nokia and Siemens, as they both took write-downs on the JV. Of course, bankrupt Nortel has all but disappeared as it’s auctioned off its various divisions, and Alcatel-Lucent can’t turn a profit. Even Ericsson has watched its net income slide.

Thanks to these factors, Huawei is landing major 3G and 4G deals around the world – much of the reason it expects an almost 30 percent increase in sales for the year. And Huawei is making headway not just in emerging markets like Africa, but in areas where NSN, Nortel, Alcatel-Lucent, Ericsson and others tend to reign. For example, in late 2009, Huawei edged out Ericsson to ink a huge deployment pact with Net4Mobility, the wireless joint venture of Norway’s Tele2 AB and Telenor ASA. It’s also entered into similar agreements in the Netherlands. Yet, perhaps most importantly for Huawei, the company is gaining ground in the United States.

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