Huawei takes on Industry 4.0 and the Mittelstand

SUMMARY:

Industry 4.0 offers new opportunities for Chinese provider Huawei to expand its Western footprint.

A couple of months ago China’s big comms/cloud/IT player, Huawei, announced that it had serious aspirations to be one of what it saw as a quintet of mega-cloud operators a position that raised some doubts as to whether this was a viable market position to pitch at. After all, pitching at a blanket, indeterminate ‘cloud’ is like trying to paint the sky using a toothbrush.

But last week’s Eco-Connect Conference hosted by the company’s Enterprise Business Group (EBG) in Berlin, put a good deal more flesh on the bone, showing that is targeting the major global industrial enterprises, where it thinks it can really pitch at being the number one specialist service provider.

The ‘Industry 4.0’ theme featured strongly throughout the two days of the conference, where digitalisation of everything and anything digitalisable in an environment that can combine globalised services with localised operations. The company sees that as an existential modern dichotomy that these days has to be made to work, as Vincent Pang, President of Huawei’s West European Region, made clear:

We are looking to build a cloud alliance with global reach, but also local compliance and a consistent experience. Our aim is to provide the global connectivity businesses need, providing a single point of access to that global reach.

To help it achieve that goal he says the aim is to remain quite agnostic in technology terms and partner with anyone with capabilities that help further its activities in six primary domains. These are cloud computing, IoT, Big Data/AI, the mobile marketplace, video, and communications.

To help such partnerships, and consequent relationships with customers develop, the aim is to build a total of 20 Global OpenLabs. The first, in Munich, opened in 2016, and one in Paris is scheduled to open shortly. One is due in London next year, said Pang:

We are also looking to invest in digital talents and digital skills. We have activities in more than 20 countries and 120 universities running more than 10 different talent and skills programs.

Educating 4.0

Education formed a major plank in the keynote at the conference, with the presentation by Yuri Van Geest, one of the founders of Singularity University, which is based in both the Netherlands and the NASA Research Park at Moffet Field, California, USA. Looking at the organisation’s website this seems to be a cross between a management school and technology incubation lab, looking to focus on all what he called, the diversity, exponential technologies, such as quantum computing, AI, robotic, energy, nanotechnology and neuroscience. Van Geest said:

We laugh with anxiety the first time we see a new technology, but humans quickly adapt to the new technology defaults. Quantum computing is very advanced in China, and they are already doing it. There is also Blockchain, which is the ultimate trust protocol, while AI is leading to a wide range of developments. AI systems are already better listeners than humans – down to 2.2% error rate. All this will affect all areas, all departments and all jobs, for it is a horizontal play. And AI can now produce better AI than humans can. Together, all this will lead to the development of tools that we don’t understand.

He refers to companies working in such fields as exponential organizations. Last year, for the first time, China started more of them that the US. Their key, he suggested, was that not do they use exponential technologies but they also use exponential ways or organising and managing themselves, with AI being core to supporting them and their use of key exponential technologies.

Van Geest put forward the notion that software is now ‘eating the world’ and that everything else is secondary, up to and including the hardware on which software runs, and is now applicable to all vertical markets.

He sees a new way to look at business models emerging that involves leveraging the continually evolving regulatory environment, the delivery of personal optimisation of systems, and the growth in preventative AI technologies that help users stop making mistakes. He also sees digitalisation taking users beyond just working with reality and within real time systems, neatly consigning that to the bin – or:

Reality is a permanent museum.

Don’t ignore the Mittelstand

As an example of the local market experience Huawei is seeking, Derrick Loi VP Orange Cloud Business told the audience how Orange has now partnered with Huawei to be that global partner with local know-how. It currently serves 3,000 global enterprises across the world, with five major service centres around the world, including Rio de Janeiro, Cairo, Paris, and New Delhi.The company also has around 1,200 cloud experts skilled on the two leading cloud environments amongst the large industrial enterprise community, OpenStack and VMware, and claims to be Europe’s leading cyber-defence operator.

He also raised the subject of a different market from the one Huawei seems to have set its heart on – the German Mittlestand. This is the SMB community in Germany, and though they are referred to as `middle-sized’ quite a few are approaching the status of `big’ and many have overseas subsidiary operations.

Most important, however, is just how big a market they are as a community. They currently number some 3.5 million businesses and employ more than 78% of the German workforce. They also produce, collectively, 53% of the German GDP. Some 67% are active internationally and 59% have foreign subsidiaries.

But according to Loi they are amongst the most exposed German companies from industrial digitalisation, and 79% say they want to innovate better products or services. They therefore do offer Huawei a significant opportunity and it will be interesting to see if it takes a step outside its commitment to the large, global enterprises, to help these companies to grow. It may, however, become an exemplar of the company moving to a more distributed approach to market outreach, leaving much of that sector for Orange to front on its behalf.

The partnership approach was even more to the fore in the Day Two 2 keynote, when Leon He, President of EBG Western Europe for Huawei, outlined some of the markets the company is working in with enterprise partners and customers. This includes IoT areas such as more smart city development, with smart waste bins, smart street lamps, smart campus environments, urban communications and urban IoT featuring strongly.

One of the key functions here will be predictive maintenance of services and devices to keep them running.
In the automotive area the company is now involved in areas such as autonomous driving, with vehicles fully connected using 4G for now, and with 5G waiting in the wings for its infrastructure to be built out. It also sees IoT use spreading to more mainstream consumer tools, such as interactive and online vending machines. Here again, it is areas such as predictive maintenance and real-time supply chain services that are the key goals.

My take

Lots of people are now talking about Industry 4.0, and as with any new marketing tag that starts to get talked about in the marketplace, the level of hype soon ramps up. So in one way Huawei is adding fuel to that particular fire………and yet, behind and underneath the hype there is something real going on as digitalisation starts to bite into industry and manufacturing sectors, and it does seem to have a coherent plan to provide the services on which I-4.0 can be built.

And it is, in this way, targeting a specialist area – even if it is a pretty broad-brush one – that the other major cloud service providers have yet to show a high level of interest in. It could capture the role of default choice if the other service vendors don’t make more effort.

Image credit - Huawei

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