Huawei takes on Cisco with 'smart' network switch

Cisco had a 58.8% share of the market for switches, which connect computer networks

Huawei Technologies Co, China's largest phone-network equipment maker, will offer a new line of switches that can be upgraded like applications on a smartphone as the company steps up its challenge to Cisco Systems Inc.

The new S12700 series of switches, programmable by software, enabling four times faster updates than hardware-based switches, will be released globally in October, William Xu, head of Huawei's Enterprise Business Group, said in an interview in Beijing on Wednesday.

Huawei is diversifying into smartphones and business-computing products and services as sales of its network equipment are blocked in the US on security concerns. Cisco had a 58.8 per cent share of the market for switches, which connect computer networks, in the first quarter compared with Huawei's two per cent, according to data from IDC and Bloomberg Industries. Xu said he expects the new gear to help boost Huawei's share by two percentage points in a year.

Developing hardware for a traditional switch takes about two years, while software can be written to upgrade the S12700 in about six months, Xu said. "This is like migrating from an old feature phone to a smartphone. With smartphones, applications can be upgraded by software."

The push to sell products and services to businesses and governments comes amid calls from state-owned Chinese media outlets for restrictions on Cisco after revelations of US surveillance programmes by former National Security Agency contractor Edward Snowden in June.

Security concerns
Cisco's 13,000 patents and dominant market share will make it hard for Huawei to compete, said David McCulloch, a spokesman for San Jose, California-based Cisco.

"Cisco clearly has many advantages over Huawei in terms of its proven innovation leadership, and a very extensive and loyal customer base," McCulloch said in an email. "Other competitors have been surprised by how difficult it is to translate success in service provider networking into the enterprise segment, and Huawei clearly faces a similar uphill battle."

China should develop its own internet technology because the US can attack China almost at will, the Global Times newspaper wrote in an editorial in June. US companies, including Cisco, represent a security threat, the official China Daily reported the same week.

Huawei's enterprise business in China isn't growing any faster than its overseas sales, indicating the company isn't benefiting from a shift away from Cisco because of security concerns in its home market, Xu said.