China's Huawei eyes bigger share of server market with new Tecal V2 products

The Chinese firm has been increasing its investment in enterprise products

China's Huawei Technologies, best known as a telecommunication equipment supplier, is making a greater push into the server market as the company faces the challenge of boosting its brand awareness among enterprise customers.

Huawei has been selling server products since 2002. But the company's server customers have been largely been in China and limited to telecom operators, many of which already number among Huawei's customers for its networking equipment.

Even so, the company's sales in the server market have more than doubled. Last year, the company's revenue from servers reached US$230 million, up from US$100 million in 2010, with much of the increase coming from the rapid development of China's Internet market.

In that time, Huawei has risen to become the fifth-largest x86 server provider in China, with a 6.6 percent share, according to research firm Gartner. This puts its behind leaders Dell and IBM, which have market shares of 23.9 percent and 19.3 percent respectively.

On Tuesday, Huawei held a launch event in Beijing for its Tecal V2 servers, which use Intel's latest Xeon E5-2600 chip. Rival server makers including Dell, IBM and Hewlett-Packard have also upgraded their offerings with Intel's new processor.

With the new Tecal V2 portfolio, Huawei is also working to boost awareness of its server products globally, said company branding director Catherine Du in an interview. This marks a change from simply relying on its long-standing relationships with telecom operators to sell products. To expand its server business, Huawei has been exhibiting its products at trade shows including CeBIT in Germany, submitting the servers for review by media groups, and working to improve sales channels, Du said.

"It's not like we are starting this today. We've been providing servers for a decade," she said. "I think people recognize that Huawei has made an investment in being a leading technology company."

Last year, Huawei formally launched its Enterprise Business group in the U.S., and is planning to increase the number of employees focused on enterprise from 10,000 to 30,000 during 2012, according to Gartner. Huawei also bought out the rest of a joint venture with Symantec last year, a move the Chinese company expects will improve its storage products.

Huawei is expanding into servers to tap another major market driven by the world's growing IT demands, said Gartner analyst Uko Tian. Huawei's servers are generally priced lower than the competition, and the company has to its benefit a major investment in research and development, she added.

But as a newer player in the market, the company still faces a lack of brand awareness about its server products. "Huawei's advantage has been in dealing with telecom operators," she said. "Small, medium businesses, banks and governments are major server buyers. But Huawei doesn't have those relationships with them."

Huawei, however, expects customers will recognize the reliability of its server products over time, according to Du.

"We are very competent in developing technology," she said. "We are still in the foundational stages with this market, and we will continue to invest more."

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Michael Kan

IDG News Service
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