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Huawei’s enterprise, carrier businesses remain stable in 2020 despite challenges

Technology company Huawei posted record profit but revenue growth slowed down last year mainly due to the pandemic and sanctions from other countries. In its 2020 Annual Report briefing, Huawei reported that its sales revenue in 2020 rounded off at Chinese Yuan (CNY) 891.4 billion, up 3.8% year-on-year, and its net profit reached CNY 64.6 billion, up 3.2%.

The China market contributed over 65% to the total revenue of the group, said Ken Hu, rotating chair, Huawei. It achieved a revenue of CNY584.9 billion at 15% YoY.

“The different markets outside China experienced declines to various extent, partially because of the pandemic and partially because of the impact on supplies,” Hu said.

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From Huawei’s three business groups — carrier, enterprise, and consumer — the carrier business remained stable driven by the demand for remote working and online learning during the pandemic. Its 1,500 networks continued to serve clients from more than 170 countries and regions.

The enterprise business, specifically its Huawei Cloud services offerings, had a “relatively faster growth rate” with an increase of 23%, in terms of annual sales revenue. This also propelled the company to the No. 2 spot in cloud business in China, quoting a Canalys report.

Slow growth rate for mobile devices

The consumer business, particularly smartphones, “fell short of our expectations,” Hu said. “You find out that for the first time, the growth rate is much slower than in previous years.”

Huawei also announced the rollout of its Harmony OS for its mobile devices. Google has ceased providing the Android operating system to Huawei in compliance with former US President Donald Trump’s “Huawei Ban” in 2019.

The pandemic halted or slowed down business operations and affected the supply chain business affecting the manufacturing of devices. However, Hu noted that in the device business, Huawei saw growth in personal computers, tablets, smart wearables, and smart screens.

“Revenue from that increased by 65% and that, in a way, offset the decline in the mobile phone business because of the unfair sanctions placed on us by the US, our mobile phone business,” Hu said.

Full cloud adoption

Huawei is banking on the complete cloud adoption which Hu said will happen “earlier than expected” giving it one to three years. Quoting a study by industry analyst firm International Data Corp. he said, the post-pandemic era will see further acceleration in digital transformation. Cloud is one of the essential components in digitalization.

“We believe that the pandemic could probably bring the full cloud adoption,” Hu said.

Seeing the stability of its carrier business, Huawei is bolstering its 5G connectivity offerings.

“Our goal remains at ubiquitous connectivity and that means we continuously invest in innovation around 5G, data communications, and optical communications,” Hu said. “We also strive to make theoretical breakthroughs, so as to be able to enable the entire society, by providing better and more intelligent experience.”

5G technology

Hu said the company is looking at the different 5G use cases that will drive more growth than before. He highlighted the industrial application, which he called the “gold mine” of 5G, on top of other use cases such as virtual reality and faster broadband access.

“Different industries are now no longer suspecting or having necessary imaginations about 5G,” he said. “Instead, everything is now more realistic because we can see that there are a lot of industry application contracts for 5G in China. Huawei is also a part of that now and it covers transportation, energy, manufacturing, and healthcare, from among the ’20’ verticals.”

Hu said Huawei will continue with its innovation efforts amid the geopolitical tensions and the pandemic.