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					Huawei

Huawei acquisition of 3Com: Sharu U.S. market entry costs
http://www.sina.com.cn 2007 年 10 月 22 日 17:39 "IT managers in
the world" magazine
Ji Yongqing / text
September 28, the world's leading private equity Jijinbeien Capital (Bain
Capital) and Huawei Technologies jointly announced, will be 2.2 billion acquisition of
U.S. network equipment maker 3Com of all of the shares. After completion of the
acquisition, Bain Capital will hold 83.5% stake in 3Com, Huawei will hold the
remaining 16.5% stake in 3Com's 11 sides will appoint three directors of
the board. In addition, Huawei also has the right to choose again the performance of
3Com holdings of 5% of the shares.
This is a surprise acquisition of people. In November last year, Huawei to 882 million
U.S. dollars just to H3C (Huawei and 3Com's joint venture company) 49%
of the shares sold back to the 3Com, H3C from the latter became a wholly owned
subsidiary. Less than 1 year, Huawei 3Com shareholders but do it in the end for?
"This is a commercial investment for Huawei, and we believe that new
business after the reorganization, 3Com can provide customers with better products
and services to bring value to our customers." In response to the
acquisition, Huawei CEO Ren Zhengfei this said. Really true?
Business investment or strategic investment
Industry analysis is this: not so much the acquisition is a business investment, not as it
is a strategic investment. Huawei is not an 3Com itself is still targeting the U.S.
market.
Huawei is now the road on the speed of international flying. Huawei's
contract sales in the first half of this year to achieve 8.2 billion, last year sales of only
11 billion U.S. dollars contract. Huawei insiders estimate for the year of the contract
sales to reach 18 billion U.S. dollars, sales revenue is estimated at 12 billion U.S.
dollars, which formally entered the global "10 billion U.S. dollars
Club", and this year's contract sales from overseas markets will
account for for the first time more than 70%.
Huawei among world's eight large area, after years of hard work have
become important in Europe, "grain-producing areas", the first
half of this market growth rate of sales contracts more than 150%. Huawei in the
European market with the crack of thousands of people, from time to time came with
BT, Vodafone, France Telecom, Telefonica signed the message with one of the red-hot
scene.
U.S. market is still not much progress. In March of this year's visit to No.
75 in Dallas

Huawei 1700 Highway when U.S. headquarters here is still a desolate.
Huawei's representative office, including the United States, the United
States Institute and other support departments, Huawei in the United States a total of
only 200 or so, apart from the occasional few million customers to sign a few small
operators, some of millions of dollars to get a small single-level, the in the U.S.
market almost did not hear much sound.
"U.S. carriers is the most difficult to enter, to be much more difficult than
in Europe, and even Ericsson, Alcatel have no access. There are only three players,
Motorola, Nortel and Lucent." Huawei's representative office in
charge of an overseas complained. Particularly in recent years, the U.S. telecom
carriers between Le large mergers and acquisition, procurement of
telecommunications equipment, further reduced, which makes telecommunications
equipment supplier American Zhiwai Jinruzhege market's difficulty Jinyi
Bu Jia Da .
However, in the hearts of Ren Zhengfei, the U.S. market must be entered; only
entered the U.S. market, Huawei it be regarded as a truly world-class enterprise.
Huawei's first large-scale into the U.S. market since 2001, Cisco 2003, an
intellectual property lawsuit to Huawei through out the U.S. market. As the saying
goes, "is neglected and Gains", Huawei main attack instead
concentrate on the European market, and the following two years has exceeded BT,
Vodafone, France Telecom and other European "big T", will
Europe become their own "products grain region. "
Huawei still go back to thinking about how to enter the U.S. market. In early 2005,
Huawei had hired a very well-known Canadian market consulting firm in North
America conducted a detailed analysis of the telecommunications market, hoping to
find good way to enter the North American market. Consulting firm's
proposal is very simple: Huawei alone can not break their own with the ice of the
United States, the only partner with U.S. possible to achieve a big breakthrough.
Last year in February, Canada-based Huawei and Nortel Networks signed a
memorandum of understanding plans the development of broadband access products
to set up a joint venture. Later, for various reasons, this memorandum is not
implemented.
The joint acquisition of 3Com with Bain, Huawei to enter the U.S. market is clearly
yet another attempt. Although 3Com has been poorer than before, in the U.S. market
has also little influence, but it is after all U.S. companies, which have been sufficient.
Huawei can consider a large number of OEM 3Com Huawei's products,
which quietly opened the U.S. market; fact, 3Com currently marketed in the United
States most switches come from H3C, but most of the previous techniques H3C from
Huawei .
To enter the U.S. market, Bain, Huawei can rely on more resources. In the U.S.,
private equity funds of financial institutions resident in the Po spire, the United States
has very strong political and business impact. Such as the famous Private Jijinkailei
Group has been hired former U.S. president George HW Bush, now President George
W. Bush, former Commission Arthur Levitt, IBM CEO Lou Gerstner, former
chairman and chief, who held senior positions.
In 2001, Huawei's time for the U.S. market, then Intel's
executive vice president and president of investment Wei Desheng (Les Vadasz)
would have admonished Yafang Sun: "have to find a good financial partner,
it can give you a lot of value, particularly in the financial markets to bring a good
reputation. "
Of course, Bain's ability is not limited to financial markets, it can Huawei
in the United States to create a good ecosystem. And with Bain's support,
coupled with 3Com Zhege support points, Huawei is possible to gradually integrate
into American society, and long-term access to business interests, it is also many
multinational corporations in the methods of doing business outside the home country.
So, buy Huawei 3Com has been a loss of this years U.S. companies are not the
so-called "business investment", but should be seen as the entry
fee to enter the U.S. market. At least in the short term, Huawei simply do not expect
this investment will bring them much in return. The reason why only a small share of
Huawei, in fact, to avoid the U.S. government's review of the final test can
tolerate the bottom line. Zhengfei know "Name" and
"Real" dialectical relationship in November 2005 after the H3C
Huawei has been a small shareholder, but still firm to control its direction.
The integration of markets for the future
The acquisitions have stunned many observers, they generally think that last year out
of H3C Huawei is actually completely out of business network market, all the energy
focused on the telecommunications carrier market. Now, they killed a back thrust, are
Huawei has prepared a large scale into the enterprise network market?
Enterprise markets data communications products mainly to do to develop these
products, within the past Huawei did to and fro several times repeated. Huawei data
communication can be described within the ill-fated. First, the original end of 2000,
Huawei's executive vice president of Lee and one man led the exodus of a
large number of backbone data communications research and development, in turn
followed by Huawei's data communication products in the low-end
spin-off, and 3Com form H3C, himself out of the enterprise network market. Harbour
last year after the acquisition of Huawei H3C shift the sale, internal rumors that
Zhengfei want all data communications products all packaged for sale.
The reason why a firm commitment to the development of data communications
products, as Huawei found that even in the telecom carrier market, data
communications, especially TCP / IP technology has become a significant competitive
advantage. The most basic wireless network is also the most critical core network, the
current trend is from circuit switching to soft switching transition. Huawei launched
the first based on TCP / IP protocol of the R4 softswitch, grab a number of additional
market share. "ICT (telecommunications and IT integration) is an
opportunity for us. Compared to the traditional telecom equipment manufacturers
Ericsson, we have data communications and IP technology and they do not; compared
to Cisco and other network equipment providers, we have a wireless and other
telecommunications technology and they do not. Therefore, the future only will we be
able to provide end to end solution. "Huawei said with deep feeling, a
senior research and development.
Huawei suddenly discovered, 3Com currently does not look what the future will
become hot, because it already has a complete IP solution with H3C. It is indeed,
3Com, Nortel has received the traditional telecom equipment manufacturers of
courtship letter, the former president of Nortel China filtering and blocking has also
been responsible for business development office 3Com's executive vice
president, where will inevitably appeals to the imagination - Nortel and
Huawei's cancellation last year because it is aimed at the acquisition target
3Com? In order to consolidate its position in the field of data communications,
Huawei must first gain the upper hand. For this transaction the transaction, Huawei
and Bain paid a premium of up to 44%. Was announced the same day,
3Com's stock price has soared 36%.
The development trend of the past few years has also been proven, IT and IP
technologies are large-scale access to the telecommunications field, such as unified
communications, WiFi, WiMAX and other originated in the field of IT technology is
profoundly changing the pattern of the telecom market. Here even raises the ultimate
question, along with a large number of IP technology applications, future, whether
there is a large, differs from the enterprise network of the telecom carrier market? Or
carriers such as water companies to become the infrastructure provider as any
company can set up their own network in the above?
And the shrinking market for telecom operators compared to the global enterprise
network Daoshi development in full swing, and thus created this new overlord Cisco.
In recent years, Cisco in the telecom carrier market share has been stagnant, but
thanks to the rapid development of the enterprise network market, Cisco is still the
day than traditional telecom equipment manufacturers much better.
Huawei itself has felt from the enterprise network market, the great temptation. Last
year, when Huawei H3C also control the time, H3C was once an overseas enterprise
network market, small scale to merit the results at once signed the University of
Malaysia, France, Citroen, Korea University City, and several 10 million U.S. dollars
in large One, it has to catch up with some light weight of the carrier list. It also makes
Huawei H3C attitude for a 180 degree turn. Said that when 3Com H3C wholly after
the acquisition, Huawei H3C staff had asked them to hold Huawei

All the stock back, but soon after the result was not only no longer allow them to
Divestment of Huawei, but addition, they issued new stock options, this change is
really meaningful.
Huawei inside, in addition called "data communications" in the
operation of the server product line and Ethernet switches and other data products, the
Huawei has set up a "storage and network security" product line
for the operation of servers, storage and other data products. In the September 10
release AMD Barcelona quad-core processors in the conference, Huawei storage and
network security product line, high-profile debut, president Su Liqing, Huawei
announced the upcoming Barcelona quad-core processor-based blade server. It is
understood that Huawei's blade server market, telecom operators now sell
extremely strong - Huawei has been successful not only the procurement of China
Telecom Group, China Mobile, recently participated in the tender.
Moreover, Huawei has its own server products to the enterprise network market
extension, it has and telecommunications operators, will own servers sold a large
number of Internet cafes, and this has seriously threatened IBM, HP, 浪 潮
Dengzhuan Ye Fu Wuqi manufacturer's itinerant status. It seems that in
data communication products, Huawei sooner or later and 10 years when their
teachers had IBM to war.
But if a large scale into the enterprise network market, Huawei must transform their
large and cumbersome telecom body, to make themselves more flexible and
lightweight, Huawei had to learn to complete Xiao Shou Shang Lai Li Yong
distributors. "We more or telecommunications thinking rather than thinking
of IT, which in the trend of integration between the two would be less
favorable." Huawei's an R & D executives frankly
admitted.
In fact, this is a disruptive innovation, and this innovation is often not generated from
within the organization. In order to solve the problem how to do business network,
Huawei need for more involvement from the IT industry partners to obtain from them
more experience. Earlier this year, Huawei announced that storage and network
security product line out, and Symantec joint venture, is to the corporate network
more experience. The acquisition of the shares of 3Com, 3Com and H3C is to retain
aspects of the enterprise network accumulated over the years. The acquisition, if
approved by the U.S. government access and success, Bain and Huawei 3Com
possible privatization will. For them, after privatization, 3Com will have more room
for maneuver. Thereafter, not rule out spinning off H3C from Huawei came forward
with the acquisition or product lines of Huawei's data communications
joint venture. Of course, there may be a direct Huawei will set up a joint venture with
3Com. In short, with this platform, regardless of whether in the U.S. market, several
communications market, or in the enterprise network market, Huawei will have more
room for maneuvers.

				
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