Huawei’s crazy ODM plan

Kite flying, or a serious proposal? And who might be interested in buying Huawei derivative kit anyway?

Huawei’s founder Ren Zhengfei has outlined a plan that might allow Huawei technology out into the open, giving operators a way to buy Huawei tech without having to actually buy Huawei. The plan, as outlined by The Economist, would effectively create a company that would access Huawei’s IPR as a sort of very upscale and more autonomous ODM. It wouldn’t be a pure ODM in that it is not making product directly to Huawei’s spec, but it would take delivery of a bunch of technical specs, software code, presumably hardware designs also, add some sauce of its own, and then make that up into its own product.

It’s not clear if it would continue to get access to ongoing Huawei R&D, or if Ren was thinking of a one-off payment for technology at a given point in time. Ren did say he saw the buyer also adding its own code and using the Huawei tech as a baseline.

So is this a considered plan that is being taken seriously within Huawei? Or was this Ren speaking a bit off the cuff? Or perhaps a bit of both – was Ren doing a spot of kite flying to try and gauge a subsequent reaction? Our indications, gathered as best as we can get them from a couple of Huawei sources, is that it is more than a pure flier, but perhaps not a fully worked out plan either. Somewhere between the two, perhaps. Certainly neither source disputed the accuracy of the Economists’ reporting of Ren’s comments.

So treating it at face value, that it is a proposal meant to be taken seriously, then let’s look at two key issues. Who might want to make and market derivative Huawei products, and who might be a buyer of kit from such a provider?

To a certain extent we can answer the first question by answering the second. What sort of operator would be looking for a new vendor that is, in essence, offering reworked or amended Huawei kit? First off, it needs to be someone who would really like to buy actual Huawei technology – either because it isi cheaper or the they consider the tech to be better – but is also currently unable to do so. That covers the US, Australia, New Zealand, and parts of the Japanese and European markets, where Huawei is de facto locked out of the 5G core. But picking up the bits and pieces from those markets that are already well advanced in 5G deployments would be a hard grind for a new entrant.

There’s a further barrier to entry in these markets. By the time that any Huawei derivative is marketing actual product, we are likely to have seen a second tier of product enter the market. This product might well be white box type product operating to open standards along the line of OpenRAN or TIP type specs. In the core and control areas of the network, where Huawei faces more of a European ban, it’s not clear how Huawei-derivative software would really assuage concerns, and it is not really in this area where Huawei has claimed technical leadership. It does, however, feel pretty good about its massive MIMO capabilities in the RAN.

For everyone else if they want Huawei tech they could just, well, buy Huawei. The only places that might be different is in certain markets where there is a political impetus to get more of a home vendor industry up and running, even where there is no such ban on Huawei. Such a country would also need to have a decent sized software industry and potentially even manufacturing capacity, as well as a large home market to make such an enterprise worthwhile. This would certainly include India, which has been looking to develop a domestic telecoms vendor community for a while, and perhaps Russia, which is edging towards trying to define a “Russian” internet. There’s a sort of nudge towards this already happening in India, with Jio buying telecoms software “stack” developer Radisys to beef up its own network software offer internally. Y

So perhaps the most likely place we would see a Huawei-derived ODM is in India, serving a large national market first and foremost. After that they could then expand to other international markets that are, shall we say, Huawei-constrained but that have operators that still want to access either Huawei technology or Huawei prices.

But it is still a stretch.

The other suggested route has been that a current player that is weak in mobile network areas, or wants to expand a current capability, could be an option. Of course that includes a player like Cisco, although is hard to see the current US government giving blessing to a deal that enriches China’s flagship tech company and de facto brings Chinese tech into one of the USA’s own behemoths. But it could also apply to a current upstart vendor (or even Samsung, as the Economist piece says…) that could look to attract significant funding as a result of guaranteed access to Huawei technology and Huawei-constrained customers. It still looks unlikely, although not impossible.

Clearly Ren thinks there is something there, or he wouldn’t have released the idea into the public space. Let’s see if anyone likes the look of his kite.

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