Huawei Asks: How Much Should You Care About the Way Your Vendors are Managed?

Peter Jarich

Peter Jarich

Once a year, Huawei holds a conference for the telecom and enterprise industry analysts that follow it; this year, it takes place from April 23rd through April 25th. Nearly every analyst invited shows up in Shenzhen to attend. As a very large – yet not public – company, getting face time with the vendor is one of the surest ways of figuring out what Huawei is up to.

Well, sort of.

In the weeks just prior to its analyst conference, Huawei traditionally puts out an annual report. Like the ones from publicly traded companies, the report treats things like business highlights, financial highlights, risk factors, etc. It’s a good read. And since its content provides a foundation for what the vendor discusses at its analyst conference, I took some time this week to reread it in preparation for next week’s trip to China. The product and business highlights were interesting, if not surprising. Management’s discussion of plans to focus more on decentralized management, however, was, in fact, something of a surprise. It also raised a question. From a procurement and network sourcing standpoint, how much should an operator pay attention to the corporate management of its vendors?

There’s no one answer. However, in considering how much management matters, there are some things to think about.

  • Longevity. Vendor-operator relationships are, ideally, supposed to last for years. That’s what vendors like to think, and it makes sense for any operator who wants to get years of value from their investments. If management decisions could be used to easily predict a vendor’s success, we’d all be Wall Street big shots. It’s much easier, however, to judge if management decisions have kept a company healthy and are successfully addressing liabilities. Likewise, if management churn is high or management is prone to a new “restructuring plan of the month,” you have to ask what it says about long-term support risks.
  • Customer Responsiveness. The CEO might not be calling regularly to check on your LTE rollout, but management decisions can impact the service you might expect. Take Huawei as an example. A decision to decentralize management (somewhat) bodes well for far-flung customers. The same could be said for the decision to bulk-up management in a certain region or around a specific product area – say, splitting a larger region or product portfolio into two.
  • Product vs. Strategy. Product roadmaps and corporate strategy may not be the same thing (though they may be for start-ups). Yet they’re not totally divorced. If management, for example, decides that consumer products are their future, should you be buying network gear from them?

Whether it’s a big vendor (Huawei circa 2014), a small vendor (Huawei circa 2004), or anyone in between, all of these considerations factor into our vendor evaluations…and our evaluations of the product portfolios they deliver. Yes, this makes those portfolio evaluations more complex. When millions of dollars of investment are on the line, however, easy answers are rarely the best ones.

About Peter Jarich
Peter is Vice President for the Current Analysis Consumer and Infrastructure services. Peter and his analyst team monitor and evaluate activities in the markets for Consumer Services and Devices, Digital Media, Fixed Access, IP Services, Mobile Access, and Transport and Routing Infrastructure, Telecom Vendor Services, and overall coverage of the Mobile Ecosystem.

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