State of Telecom Industry in Pakistan

Huawei was once regarded as a low cost telecom equipment provider. An excerpt from a Wall Street Journal article which talks about how Huawei is now challenging its competitors with better quality products.With sales of $18.33 billion in 2008 it has a huge impact on telecom industry.

Huawei Technologies Co.’s challenge to European rivals has largely focused on its pricing advantage. But industry watchers say the Chinese network-equipment vendor, which last week won a contract from Belgian telecommunications provider Belgacom SA, now has another key selling point: the quality of its technology.

Analysts say Huawei Technologies is increasingly competing on quality, not just prices, especially in Europe.

As the telecom industry emerges from the global economic slump, European telecommunication-gear companies—global market leader Telefon AB L.M. Ericsson; Nokia Siemens Networks, a joint venture between Finland’s Nokia Corp. and Germany’s Siemens AG; and Paris-based Alcatel-Lucent SA—are likely to face increased pressure from world No. 2 Huawei in their own backyard.

Huawei, which like smaller peer ZTE Corp. is based in the southern Chinese city of Shenzhen, was founded 1988, and revenue and earnings have risen steadily.

Its sales increased to $18.33 billion last year, the latest figure available, from $5.98 billion in 2005, while profit rose to $1.15 billion from $681 million.

While European vendors have, to some extent, been able to keep these low-cost Chinese rivals at bay through superior equipment, Huawei is growing quickly both because it offers lower prices than most rivals and because the quality of its equipment is getting better, said analyst Scott Siegler at research firm Dell’Oro, based in Redwood, Calif. “When we talk to service providers that use Huawei’s equipment, we have been told that it is excellent technology, he said.”

Huawei’s share of the global infrastructure market almost doubled in revenue terms to 20.1% from 10.9% in the third quarter from a year earlier, leaving behind Nokia Siemens and Alcatel-Lucent, according to Dell’Oro.