For Cisco and Huawei, a bruising rivalry reaches stalemate

For Cisco and Huawei, a bruising rivalry reaches stalemate
A man walks past a Huawei company logo outside the entrance of a Huawei office in Wuhan, Hubei province on October 9, 2012.

Cisco Systems Inc and Huawei Technologies Co, two of the world's largest communications equipment makers, have been slugging it out for a decade now - in court, in emerging markets, in the lobbies of government and even on blogs.

The past year suggests they've ground to an expensive stalemate, raising questions about their futures on each other's lucrative home turf.

Earlier this month Cisco CEO John Chambers admitted in an earnings call that political dynamics were stymieing his company's long march into Huawei's backyard.

Asked whether the recent US spying scandal was affecting overseas business, Chambers said it was having an impact, particularly in China, which is Cisco's biggest emerging market country but represents less than 5 per cent of its total revenue.

Huawei has also admitted something of a defeat in the United State for carrier equipment, which accounts for more than 70 per cent of its global revenues.

"We are not interested in the US market anymore," Eric Xu, one of Huawei's rotating CEOs, said in April. "Generally speaking, it's not a market that we pay much attention to."

The rivalry reflects how intertwined the communications industry has become with growing concerns about security - and the challenges two communications giants face in building a genuinely global presence in an interconnected world where no major market can be ignored.


It wasn't always like this. Cisco, dominant in building the hardware that links computers and networks since the early 1990s, took little notice of Huawei until it suspected that the Chinese upstart was reverse-engineering its products.

It sued the company in 2003 for patent infringement, only settling after Huawei agreed to make changes to its equipment.

The wounds are still raw: last year the two sides again aired their grievances against the other, each claiming victory in the original suit.

California-based Cisco, former executives said, refused to take Huawei seriously despite warnings that they were making headway in emerging markets with cheaper equipment.

"For years San Jose pooh-poohed Huawei until it started hurting in post-2008," said one former executive.

When Cisco did respond, it was by partnering with ZTE Corp, Huawei's local rival, but that relationship went sour and was formally disbanded in 2012.

In the meantime Shenzhen-based Huawei made headway not only into the low-end routers and switches business, but was also eating into Cisco's home terrain of higher end equipment.

"When a competitor's gear gets good enough, not as good or as secure, then a lot of customers were prepared to go with that," said another former Cisco executive.

More about

Purchase this article for republication.



Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.