To Enrich Life

Through Communication

Corporate Presentation
HUAWEI TECHNOLOGIES
 To Enrich Life Through
Communication

Huawei Cooperation Review

Industry Transformation

Huawei’s Preparation

Huawei’s Value Proposition – with Telcos

2

www.huawei.com 2
 Huawei Technologies
To Enrich Life Through
Communication

An innovative and customer-oriented ICT company

established in 1988 and fully owned by its staff.

 Over 35,000 staff members (over 48% engaged in R&D);

more than 10% annual revenue invested in R&D.

 Full product portfolio including wireless products,

network products, application and software products and
terminals.

 A leading global supplier with products deployed in over

100 countries, including the US, the UK, France, Portugal,
Russia, Brazil, Singapore and Thailand, and serving 28 of
the world’s top 50 operators.

 Contract sales amounted to US$8.2 billion in 2005. over

58% of which (US$4.8 billion) was from international
markets.
3

www.huawei.com
 Continuous Growth
To Enrich Life Through
Communication


Serving 28 of the world’s top 50 operators

Strategic partner with BT, Vodafone, Telefonica, etc.

Contract Sales 9
（USD1 billion） 8.2
8

7
5.58
6

5
3.83
4
2.67
3

2
4
1

0
2002 2003 2004 2005
www.huawei.com
 Financial Performance
To Enrich Life Through
Communication

USD in millions

Year ended December 31 2004 2003 2002 2001 2000

Revenue 3,827 2,694 2,128 2,290 1,933

Net Income 624 384 108 258 345

Cash Flow From Operations 396 385 311 204 255

R&D Expenditure 487 389 355 342 180

Return on Net Assets 31% 23% 7% 20% 47%

Revenue amounted to US$6,400 million in 2005

5

Notes: All financial data listed prior to 2005 are audited by KPMG.

www.huawei.com
 Human Resources
To Enrich Life Through
Communication

Marketing, Sales and

R&D:48% 48% Customer Service : 38%
38%

6% 8%

Administration: 6% Supply Chain: 8%

 Total staff: Over 35,000 employees

www.huawei.com
 Global Presence
To Enrich Life Through
Communication

Huawei Technologies
(Headquarters)

Sweden
UK Russia
Netherlands
Poland
France Germany Ukraine Canada
Romania Kazakhstan
Portugal Bulgaria Kyrgyzstan
Spain Italy Turkey USA
Greece Uzbekistan
Tunisia Turkmenistan South Korea
Morocco
Algeria Egypt Bangladesh
Pakistan Shenzhen Mexico
UAE Nepal Vietnam
Saudi India Thailand Philippines
Nigeria Arabia Cambodia
Malaysia Venezuela
Sri Lanka Colombia
Kenya Singapore
Ecuador
Indonesia

Peru
Brazil
Zimbabwe

Australia
South Africa

Chile
Argentina

 8 regional headquarters, 85 branch offices outside China 7

 3-level customer service system (HQ, regional, local)

www.huawei.com
 Management Transformation
To Enrich Life Through
Communication

Huawei works with top management consultancies to bring world-class expertise to the company,
provides customer end-to-end delivery with high quality .

Integrated Product Development and

consulting Integrated Supply Chain

Human Resources & ESOP

Financial Management
consulting

Quality Control

Organization Transformation 8

www.huawei.com
 Full Audit by Key Operators
To Enrich Life Through
Communication

Strategic Partnership Selection Completed Auditing Overview

• Auditing Concern Areas
– Management Systems  Motorola(2000-2003)
– Environmental
 BT (2003-2005)
– Sourcing with Human Dignity
– Project Management  FT(2004)
– Product Realisation
– Policy Strategy and Planning  Vodafone(2005)
– People  O2 (2004)
– Relationship Management
– Facilities  Cable and Wireless(2005)
– Capacity  DT(2005)
– Risk Management
• Qualification ( Auditing) Philosophy
– Strategy and Policy
– Process supporting
– Process Implementation
– Quality Control 9
– Continuous Improvement
– Thought Leadership

www.huawei.com
 Global R&D
To Enrich Life Through
Communication
Adopts asynchronous development, unifies product commercialization and
speeds up response to market.
 Global R&D
Stockholm, Sweden －Base Station architecture and system
design, Radio technology and RAN
algorithms
Dallas, USA －ASIC technology and CDMA algorithms
Bangalore, India －Software technology/platform
Moscow, Russia －Algorithms and RF
Shenzhen, China －CN, service platforms
Shanghai, China －RAN, terminals, ASIC chipsets
Beijing, China －Packet CN, GW, Terminals
Nanjing, China －BOSS, 3G services

 CMM5 and IPD (Integrated Product Development) have been widely

implemented into product development.
 Four R&D divisions (Central software division and institutes in 10
Bangalore, Shanghai and Nanjing) have been awarded CMM level 5
certification.

www.huawei.com
 R&D Based on a Shared Platform
To Enrich Life Through
Communication

Constructing a “speed, quality and cost” advantage, through modular

structure, standardization and sharing technology (CBB methodology).

Uniform operation and maintenance platform

Fixed Wireless Service Intelligent Terminal

IP+Optical
access access control network service
platform
platform platform platform platform platform

Common software and hardware platform

11
Uniform engineering and material development platform

www.huawei.com
 Standards and Patents
To Enrich Life Through
Communication

Persistent investment in standards and patents to be at the forefront

of future technology.


Standards

Participated in 70 international standardization organizations including ITU, 3GPP.

Patents

Domestic Patents 9600 pcs

PCT International
1574 pcs
and Overseas Patents

Authorized Patents 1844 pcs

 5% of international UMTS essential patents (69 patents), No.5 of global telecom 12

companies
（Till 31 Dec. 2005）

www.huawei.com
 Huawei E2E Delivery Process Overview
To Enrich Life Through
Communication

Research, Technology Within C2C framework, e2e delivery focuses on

standard, patent roadmaps customer commitment to committed delivery
Brand mgt Narrow e2e delivery
MM
Dev
Broad e2e delivery
Understa Perform Portfolio Align & Manage &
Bus
nd MarketSegmentationAnalysis Optimize Assess Perf
Plans

IPD
C Conc Plan Deve Qual Launc Life
Cycle
u ept lop ify h C
OR issues u
s Req mgt
T CS
s
O Sales mgt req NPI ISC T
CRM - win Engineering
m Relationship
- leadership team implement TS O
mgt - drive sales exection Supply chain plan
e - Relationship mgt
- Buz partner mgt
Sales execution
Solution Contract m
Opportunity signature
design Spare
r point mgt
- Resource
allocation
pro mfg logistics
parts mgt
e
Ad/trade show mgt -Customer sat mgt
-Market req
- Market forecast
training r
- Info mgt - Offering info

Partner and supplier mgmt 13

FIN / HR / IT

www.huawei.com
 Global Supply Chain and Logistics System
To Enrich Life Through
Communication

Beto -Huawei, Russia

Amsterdam, Holland HeBei, China

Cairo Factory, Egypt

Shenzhen Headquarter, China
Dubai

Brazil-Huawei, Brazil

 Shenzhen manufacturing and logistic center—supplies globally.

 Hangzhou factory manufacture data-com—low level products .
 Brazil factory—supplies to Latin America.
 Beto-Huawei—supplies to Russia and Eastern Europe. 14

 Hub in Holland—supplies to Europe.

 Hebei manufacturing center—supplies to northern China and Russia.
 Dubai logistics center—supplies to middle Asia and Africa.
www.huawei.com
 Supply Chain Processes Overview
To Enrich Life Through
Communication

PLAN
Plan Supply Chain Enable Plan

ORDER
Market Product

Customers
Suppliers

SOURCE MAKE DELIVER

Source Product Make Product Deliver Product
Enable Source Enable Make Enable Deliver

RETURN Huawei RETURN

 Customer-oriented, process-based, building partnerships and sharing information

15
 Integrated high-efficiency and open supply chain with advanced IT tools

www.huawei.com
 Global IT System
To Enrich Life Through
Communication

Certification Message Call

OA Support Video/Call Web Sever, Common Web Sever+Apps Sever, Common Apps Sever
Center
Facility & Conference Service Cent Exabyte/Veritus SAN Storage
Info Directory DB Sever Common DB Sever
Service Service Service Proxy er Backup System System
Securit
y Data Center Disaster Recovery Center 16
Infrastr International Network
ucture Partners’ Network Local Network
Backbone WAN Campus LAN,
Internet Network LAN
DMZ

www.huawei.com
 Industry Position
To Enrich Life Through
Communication


3G
World-leading wireless network supplier, 18 commercial UMTS networks

NGN
No.1 in global VoIP market (Dittberner)

Intelligent Network
No. 1 in global market (21.6% of users)（Ovum）

Optical Network
No.1 in global LH+MR DWDM market (Ovum-RHK)

Access Network
No.1 in global IP DSLAM market (Infonetics)
No.1 in global MSAN market in 1H05 (Infonetics)

Data Communication
17
No.3 in worldwide service provider routers (Gartner)

www.huawei.com
 Vision and Mission
To Enrich Life Through
Communication

VISION
To enrich life through communication

MISSION
To focus on our customers’ challenges and needs by
providing excellent communications network
solutions and services in order to consistently create
maximum value for customers.

18

w ww. h u a wei . com

www.huawei.com
 Development Strategy
To Enrich Life Through
Communication

 Serving our customers is the only reason Huawei exists; Customer

demand is the fundamental driving force of our development.
 High quality, excellent service, low operating costs, and giving top
priority to meeting customer requirements to enhance their
competitiveness and profitability.
 Continuously performing management transformation to realize
efficient process-based organization operation for ensuring high
quality end-to-end delivery.
 Developing with our peers in the industry as both competitors and
partners to jointly create a favorable environment and share the
benefits of the value chain. 19

www.huawei.com
 Social Responsibility
To Enrich Life Through
Communication

Fulfilling our social responsibility as a responsible corporate citizen

 A dedicated member of the United Nations Global Compact

 December 2004 Tsunami: Donated 2.42 million USD worth

of telecom equipment and an additional 2.42 million USD in
cash from the company and its employees

 August 1998 Flood (China): Donated US$3.7 million worth

of equipment, and US$1.85 million in cash schools.

 Education Fund: Donated US$3.09 million to set up a fund to

help needy students complete an undergraduate education.

20

www.huawei.com
 To Enrich Life Through
Communication

Huawei Cooperation Review

Industry Transformation

Huawei’s Preparation

Huawei’s Value Proposition – with Telcos

21

www.huawei.com 21
 Business Operation Models Face Transformation
To Enrich Life Through
Communication

How should operators and equipment suppliers adapt to a more customer-

focused business operation model?

Network-focused Service-focused Customer-focused

 Network layout  Service provisioning  Converged network

 Technology updates capability  Converged services
 Homogeneous services  Service marketing  Industry chain re-
 Service quality  Customer increase structuring
 ARPU  Integrated
information services

80s－mid and late 90s Mid and late 90s－ 21st century
early 21st century 22

www.huawei.com
 Cross-industry Penetration and Intensifying Competition
To Enrich Life Through
Communication

Carriers compete on a broader scale


Expanding into the IT service field to create value for business users

Expanding into content & entertainment and other fields to create value for end users

Applications

IT
Mobile
Infrastructure
Fixed Voice/Data

Content,
Entertainment

Broadband 23

Internet

www.huawei.com
 Change of Revenue Structure
To Enrich Life Through
Communication

Diverse contents & services and their short lifecycle makes time-to-market
critical.

Content services
for consumers

IT services for
business users
Voice（Including mobile）

1980 Voice operation 2002 Transformation 2010 Non-voice operation 24

www.huawei.com
 Value Chain Transformation
To Enrich Life Through
Communication

Value distribution is shifting toward terminal and business service. The

“carrier + equipment supplier”- focused value chain is meeting serious
challenges.

Value
Future telecom
Service provider value chain
Terminal Carrier
Equipment supplier distributing

Forepassed
Terminal Service provider telecom value
Carrier Equipment supplier chain distributing
25

www.huawei.com
 To Enrich Life Through
Communication

Huawei Cooperation Review

Industry Transformation

Huawei’s Preparation

Huawei’s Value Proposition – with Telcos

26

www.huawei.com 26
 Customer need quickly addressed through product roadmap.
To Enrich Life Through
Communication

Marketing organization has shifted to the frontier, which:

allows customer needs to be quickly transferred into a product roadmap through CCM (customer
commitment management).
ensures rapid roll-out of new products and services.

Analyze and
Collect
validate

Customer Marketing

Follow-up and Taken into product 27

carry out roadmap

www.huawei.com
Customer requirement oriented: Understand customer’s
real requirements
To Enrich Life Through
Communication
At the time of products, sales dominate; while at the time of solutions, especially
non-voice service, consulting, solution + business model are the main marketing
methods. The conformance of the strategy and the vision to the customers’
expectation decides their loyalty to the products. Customer requirements are the Global
strategy and vision, which reflect the future market. Global Vendor
Carrier
Score
Solution Marketing Capability 1031
90
High Vision China
Marketing Global following branc
Customer Expectation Capability Market h
Middle Vision Corporate
capability and
Corporate potentiality Local
Low Visioncapability and carrier
Huawei
70
potentiality
Corporate
capability and The customer in the previously called
potentiality Sales capability
60 customer requirement oriented is always
local customer according to our lesson 28
Vendor Vendor Vendor Vendor learnt in NGN. We are actually five levels
1 2 3 n behind global requirements.

Competency among vendors

www.huawei.com
 Consultancy-style Marketing
To Enrich Life Through
Communication

Improving wide-ranging service capabilities and supporting operators to

expand to the two ends of the value chain

Service consultancy 
Network

Network layout & design aggregation

Network optimization & 
Joint marketing
capability management

Professional

Technology and business plans & service 
Maintenance of special fields and
cooperative business expansion 3-level maintenance

Pre-sales
Network layout & solution design Outsourcing 
Design management and capability

Cooperation process integration cooperation management
maintenance
solution
design
Customer
Content
trusteeship &
Management

Application solution 
construction, operation

operation
Database or content application and maintenance

Mobile equipment management
Management
capability

29

Specialized management operation contract

General design, construction, operation
and maintenance

www.huawei.com
 Experience-oriented Marketing
To Enrich Life Through
Communication

Creating experience-based environment for end-users and establishing

open lab for ISPs/ICPs to attain value from end-users.

Terminal Producer Terminal Producer

Operator SP/CP Huawei inTouch Lab Operator SP/CP

Operation R&D Engineering Brand

Cooperation

Application Long-distance
Application/content Terminal Application
Long-distance Service layout application
Verification /content
VCOL Terminal IOT Integration AP Deployment AP Experience experience
experience
support Verification Verification

AP(1-N) Deployment

30

Open Lab Experiencing Environment

www.huawei.com
 Product-line Aggregation
To Enrich Life Through
Communication


Providing total network and end-to-end solutions; enabling the advantage
of future network aggregation

Aggregating product lines; actively handling future network aggregation
and service transformation

Application and Service

Core Network
End-to-end
Solutions IP+Optical Bearer Network

Wireless/ Wireline Access Network

31
Wireless/ Wireline Terminals

www.huawei.com
 Future Network Architecture - Simplified
To Enrich Life Through
Communication

Key Features：Convergence, Mobile, Broadband, Content & Service

32

www.huawei.com
 Future Technologies Research
To Enrich Life Through
Communication

Establishing laboratories to research FMC, IMS, WiMAX, IPTV, and other

innovative technologies, riding the future trend of network convergence
and service transformation.

Business Operation Support System

Personal App
Single billing, multi services and tariff package
GSM/UMTS/ Platform
CDMA/WiMAX
Mobile Bearer Layer Service POP
Access  Metro BRAS Service Control
 IP over WDM GSN  IMS core
ICT
Fixed BB  MPLS WSN (CSCF/HSS/…) Platform
Access  IPV4/IPV6 MG

xDSL /FTTx/
Cable/WLAN
Operator’s Organization Support Media App
Network oriented to customer oriented Platform 33

FMC solution

www.huawei.com
 Increasing Investment in Service Application and Terminal
To Enrich Life Through
Communication

Providing abundant service applications and terminals to help operators

expand to the two ends of the value chain.

IMPS Web/WAP Surfing

Streaming

Specially Designed Service & Mobile E-mail

Applications
Get involved
LBS

Interactive
MMS
M-RBT
Impression
Game
34
Terminals

www.huawei.com
 To Enrich Life Through
Communication

Huawei Cooperation Review

Industry Transformation

Huawei’s Preparation

Huawei’s Value Proposition – with Telcos

35

www.huawei.com 35
 Value Proposition-- Views on Telecom Industry
To Enrich Life Through
Communication

• “Size does matter”!

– Leveraging global economies of scale
– Global market expansion into high growth markets
– Global sourcing
• Open interfaces and standardized products

• Market trends
– Unpredictable customer demands - no more killer application!
– IT, telecom and entertainment convergence
– UMTS ubiquity!
– Always more competition!

• Speed to market has never been this important!

– Need to address multiple market segments
– Need to address markets with different cultural background
36

A quick-response vendor can reduce the business developing cost !

www.huawei.com
 Value Proposition
-- Telcos: Need Support From Strategic Partners
To Enrich Life Through
Communication

-> Looking for committed partners, not box sellers

“We have no clue of what our customers want. Our customers have no
clue of what they want. Customers know good when they see it.”

-> Minimize risk from transformation in the telecom industry

• Asia is leading the new round in the telecom industry.
• Speed to market is the key.
• Economies of scale is the key.

-> We are selecting Companies, not Products

• History track
• Development trend 37

• Potential for the Growth

www.huawei.com
 Value Proposition– Collaboration with Carriers’ R&D
To Enrich Life Through
Communication
• Joint Annual Planning
– Sharing marketing intelligence
– Regular workshop for dedicated issues
– Monitor and survey on-going projects
• Open interfaces for executive team and development team

• Co-marketing and Co-service Innovation

– Create customized service
– Joint development
– Host a value chain and innovate new revenue
– Some alpha trial and test,
– Dedicated solution development
– Joint standardization actions

• New Business Model and Profit Model

– Outsourcing
– Alliance and service exchange 38
– Overseas extension and service operation
– Introduce SP/CP and service bundling

www.huawei.com
 Customized Service Development Governance Model
To Enrich Life Through
Communication
• Operator: Requirement • Operator Service BP
JPOR
Market Joint Planning and • Operator & Vendors implement
• Vendors: Technique Operations Review Service BP corporately
Product
Planning Direction

PMT TWG
Issues/Actions
Process Manage Technical Work
-ment Teams Groups

• Operations&Capacity • Release Planning

Management
Status • Architecture
• Product Management • Testing
& Marketing
NSQR
Network & Service 39
Quality Review

Time to market, Quality of product, Network & service

www.huawei.com
 Joint Development (R&D)
--Platform Strategy Supports Quick Response
To Enrich Life Through
Communication

•Dedicated Team in
PDT Platform PDT for each key
PDT Wireless IN PDT Fixed IN PDT Mobile data PDT OSS customer
AIS BT SUNDAY HUTCHSON
•Close interaction
… between PDT & key
TEAM TEAM TEAM TEAM
customers guarantee
CMCC
TEAM … TELEFONICA
TEAM … TEAM … CHINATELECOM
TEAM … the quick
customization
•Benefit from every
upgrade of TDT
-3~5 new features/services for AIS per month platform

TDT platform

… Foundation Version N Foundation Version N+1 …

Note:
PDT-Product Development Team
TDT-Technology Development Team
•Every upgrade is to fulfill the most trendy new major capability-set
40
•Upgrade steadily for high quality of both TDT & PDT platform
•Reusable for all PDTs to save the comprehensive cost

www.huawei.com
 Current Service Realization Process (SRP)
To Enrich Life Through
A phased process that defines how new technology, features and services are realized.Communication
– 6 Phases
– 4 Major Decision Points
– Concurrent operation encouraged while managing risk
Concept: Defines a high level
view of the service idea and
CSD associated time and cost

Concept
Feasibility: Determines the best
network implementation
SG-14 MSD ROMA of the service or technology

Feasibility D1 Definition: Defines the detailed plan and

requirements needed to implement
SG-13 Feasibility Report the service or technology
Service Gates (Can We Go Forward)
SG-14 Start ROMA Definition D2 Development: Creates the physical
SG-13 Start Feasibility realization that implements
SG-12 Start Feasibility Decision SG-11 TP, FSD, OTP, SOTP, FRS, Proj Plan
SG-11 Start Definition
the given requirements
SG-10 Start Commitment
SG-9 Start Development Development Service Test: Tests the service
SG-8 Start Design Implementation against the test plan in simulated
SG-7 Start Unit Test SG-9 and live environments
SW/HW, Test Plans
SG-6 Start Integration
SG-5 Start Performance Verification
SG-4 Start Acceptance Test Service Test D3 Introduction: Introduce to
SG-2 Start ORT all geographic areas
SG-1 Start Introduction SG-4 SG-2 Test Results, and begin Life Cycle
SG-0 End Introduction Certification Matrix Management/Customer Care41

Decision Gates:(Should We Go Forward) Introduction D4

D1 Proceed with Definition
D2 Proceed with Development
D3 Proceed with CI or GA SG-1 SG-0
Service/Technology
D4 Proceed with Life Cycle Launch

www.huawei.com
 Joint Go To Market
---How OR, MM, Go To Market & IPD Link Together
To Enrich Life Through
From a cross-process perspective, the requirements management processCommunication
will
link to MM and IPD processes IPD Marketing Program -
Conceptual Diagram
MM

Product Line Level

MM Project
HW Biz Strategy
Go To MKT

Align Biz Plan

Segmentation

Dvlp Biz Plan

Performance
Mkt Assess
HW Historical Data

Opportunity
Business

Measure
Technology Plan
Customer
Customer Wants & Communications
Needs

Market Requirements
Release of Products

PMT Marketing Promotion

Handoff to Roadmap
Market Project
OR Managemen
t Process
Technical Support

Product Level
Requirement Products Launch
Requirements Management

s IPD Process
Project IPD
(Process & Tools)

MKTG PDT
Charter Project

Develop
Concept

Launch
Qualify

Cycle
Plan

Life
Offering Requirements PCR
Emerging Product
Project 42
Requirements
Handoff to
IPD Legend
Process Other Key Inter-project
events (Inter-process)
triggering Handover Points
PCRs
www.huawei.com
 Joint Go To Market-Case Study
To Enrich Life Through
Communication

BT－ Datacom SME Solutions Approved, Launch,

Training, Road Show, etc.
China Mobile－ PPS, etc.
China Telecom－ Baby On Line, AS8010, ICT, etc.
Neuf Telecom－ Triple play/IPTV
Deutsch Telecom－ SME Markets Launch
Some resale partners such as

43

www.huawei.com
 To Enrich Life Through
Communication

Enriching Life Through Communication

Huawei Technologies Co., Ltd.

Add: Huawei Base, Bantian, Longgang 44
District, Shenzhen
Tel: +86-755-28780808
Zip Code: 518129
http://www.huawei.com

www.huawei.com