2006 Huawei Presentation

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To Enrich Life Through Communication
Corporate Presentation HUAWEI TECHNOLOGIES
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Huawei Cooperation Review Industry
Transformation Huaweis Preparation Huaweis
Value Proposition with Telcos
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Huawei Technologies

• 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
  RD) more than 10 annual revenue invested in
  RD.
• 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 worlds top 50
  operators.
• Contract sales amounted to US8.2 billion in
  2005. over 58 of which (US4.8 billion) was from
  international markets.

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Continuous Growth

• Serving 28 of the worlds top 50 operators
• Strategic partner with BT, Vodafone, Telefonica,
  etc.

Contract Sales (USD1 billion)
9
8.2
8
7
5.58
6
5
3.83
4
2.67
3
2
1
0
2002
2003
2005
2004
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Financial Performance
USD in millions
Year ended December 31
2001
2002
2003
2004
2000
3,827
2,290
2,128
2,694
Revenue
1,933
Net Income
258
108
384
624
345
204
311
385
396
Cash Flow From Operations
255
RD Expenditure
342
355
389
487
180

Return on Net Assets
47
20
7
23
31
Revenue amounted to US6,400 million in 2005
Notes All financial data listed prior to 2005
are audited by KPMG.
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Human Resources
Marketing, Sales and Customer Service 38
48
RD48
38
6
8
Supply Chain 8
Administration 6

• Total staff Over 35,000 employees

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Global Presence
Huawei Technologies (Headquarters)
Sweden
UK
Russia
Netherlands
Poland
Canada
Germany
France
Ukraine
Kazakhstan
Romania
Portugal
Bulgaria
Kyrgyzstan
Italy
Spain
USA
Turkey
Uzbekistan
Greece
Tunisia
Turkmenistan
South Korea
Morocco
Bangladesh
Egypt
Algeria
Pakistan
Shenzhen
Mexico
Nepal
UAE
Vietnam
Saudi Arabia
India
Thailand
Philippines
Nigeria
Cambodia
Venezuela
Malaysia
Sri Lanka
Colombia
Kenya
Singapore
Ecuador
Indonesia
Peru
Brazil
Zimbabwe
Australia
South Africa
Chile
Argentina

• 8 regional headquarters, 85 branch offices
  outside China
• 3-level customer service system (HQ, regional,
  local)

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Management Transformation
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 Integrated
Supply Chain
consulting
Human Resources ESOP
Financial Management
consulting
Quality Control
Organization Transformation
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Full Audit by Key Operators

• Strategic Partnership Selection
• Auditing Concern Areas
• Management Systems
• Environmental
• Sourcing with Human Dignity
• Project Management
• Product Realisation
• Policy Strategy and Planning
• People
• Relationship Management
• Facilities
• Capacity
• Risk Management
• Qualification ( Auditing) Philosophy
• Strategy and Policy
• Process supporting
• Process Implementation
• Quality Control

• Completed Auditing Overview
• Motorola(2000-2003)
• BT (2003-2005)
• FT(2004)
• Vodafone(2005)
• O2 (2004)
• Cable and Wireless(2005)
• DT(2005)

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Global RD
Adopts asynchronous development, unifies product
commercialization and speeds up response to
market.

• Global RD
• 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 RD divisions (Central software division and
  institutes in Bangalore, Shanghai and Nanjing)
  have been awarded CMM level 5 certification.

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RD Based on a Shared Platform
Constructing a speed, quality and cost
advantage, through modular structure,
standardization and sharing technology (CBB
methodology).
Uniform operation and maintenance platform
IPOptical platform
Fixed access platform
Wireless access platform
Service control platform
Intelligent network platform
Terminal service platform
Common software and hardware platform
Uniform engineering and material development
platform
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Standards and Patents
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 and Overseas Patents
1574 pcs
Authorized Patents 1844 pcs

• 5 of international UMTS essential patents (69
  patents), No.5 of global telecom companies
• (Till 31 Dec. 2005)

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Huawei E2E Delivery Process Overview
Research, standard, patent
Technology roadmaps
Within C2C framework, e2e delivery focuses on
customer commitment to committed delivery
Narrow e2e delivery
Brand mgt
MM
Broad e2e delivery
IPD
Cus T Ome r
Life Cycle
Develop
Qualify
Launch
Cus T Ome r
Concept
Plan
OR
issues
Req mgt
CS
req
NPI
Sales mgt
ISC
CRM
Engineering implement

• - win
• leadership team
• drive sales exection

TS
Relationship mgt
Supply chain plan
- Relationship mgt - Buz partner mgt
Sales execution
Contract signature
Solution design
Spare parts mgt
Opportunity point mgt
pro
logistics
mfg

• - Resource allocation
• Customer sat mgt
• Market req
• - Market forecast
• - Offering info

training
Ad/trade show mgt
- Info mgt
Partner and supplier mgmt
FIN / HR / IT
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Global Supply Chain and Logistics System

• Shenzhen manufacturing and logistic
  centersupplies globally.
• Hangzhou factory manufacture data-comlow level
  products .
• Brazil factorysupplies to Latin America.
• Beto-Huaweisupplies to Russia and Eastern
  Europe.
• Hub in Hollandsupplies to Europe.
• Hebei manufacturing centersupplies to
  northern China and Russia.
• Dubai logistics centersupplies to middle Asia
  and Africa.

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Supply Chain Processes Overview

• Customer-oriented, process-based, building
  partnerships and sharing information
• Integrated high-efficiency and open supply chain
  with advanced IT tools

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Global IT System
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Industry Position

• 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 LHMR 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
• No.3 in worldwide service provider routers
  (Gartner)

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Vision and Mission
VISION To enrich life through communication MISSI
ON 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.
www.huawei.com
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Development Strategy

• 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.

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Social Responsibility
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 US3.7 million
  worth of equipment, and US1.85 million in cash
  schools.
• Education Fund Donated US3.09 million to set up
  a fund to help needy students complete an
  undergraduate education.

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Huawei Cooperation Review Industry
Transformation Huaweis Preparation Huaweis
Value Proposition with Telcos
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Business Operation Models Face Transformation
How should operators and equipment suppliers
adapt to a more customer-focused business
operation model?
Service-focused
Network-focused
Customer-focused

• Network layout
• Technology updates
• Homogeneous services
• Service quality

• Service provisioning capability
• Service marketing
• Customer increase
• ARPU

• Converged network
• Converged services
• Industry chain re-structuring
• Integrated information services

Mid and late 90s- early 21st century
80s-mid and late 90s
21st century
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Cross-industry Penetration and Intensifying
Competition

• 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 Infrastructure
Mobile
Fixed Voice/Data
Content, Entertainment
Broadband Internet
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Change of Revenue Structure
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
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Value Chain Transformation
Value distribution is shifting toward terminal
and business service. The carrier equipment
supplier- focused value chain is meeting serious
challenges.
Value
Future telecom value chain distributing
Service provider
Carrier
Terminal
Equipment supplier
Forepassed telecom value chain distributing
Service provider
Terminal
Carrier
Equipment supplier
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Huawei Cooperation Review Industry
Transformation Huaweis Preparation Huaweis
Value Proposition with Telcos
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Customer need quickly addressed through product
roadmap.
Marketing organization has shifted to the
frontier, whichallows 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 validate
Collect
Marketing
Customer
Taken into product roadmap
Follow-up and carry out
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Customer requirement oriented Understand
customers real requirements
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
strategy and vision, which reflect the future
market.
Global Vendor
Global Carrier
Score
1031
Solution Marketing Capability
90
High Vision
China branch
Marketing Capability
Global Market
Customer Expectation
Middle Vision
Corporate capability and potentiality
Local carrier
Corporate capability and potentiality
Low Vision
Huawei
70
Corporate capability and potentiality
The customer in the previously called customer
requirement oriented is always local customer
according to our lesson learnt in NGN. We are
actually five levels behind global requirements.
Sales capability
60
Vendor 1
Vendor 2
Vendor n
Vendor 3
Competency among vendors
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Consultancy-style Marketing
Improving wide-ranging service capabilities and
supporting operators to expand to the two ends of
the value chain

• Service consultancy
• Network layout design
• Network optimization capability management

• Network aggregation
• Joint marketing

Professional service

• Technology and business plans cooperative
  business expansion
• Network layout solution design
• Cooperation process integration

• Maintenance of special fields and 3-level
  maintenance
• Design management and capability management

Pre-sales cooperation solution design
Outsourcing maintenance
Customer
Content trusteeship solution application
Management operation

• Application
• Database or content
• Mobile equipment management

• construction, operation and maintenance

Management capability

• Specialized management operation contract
• General design, construction, operation and
  maintenance

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Experience-oriented Marketing
Creating experience-based environment for
end-users and establishing open lab for ISPs/ICPs
to attain value from end-users.
Terminal Producer
Terminal Producer
Huawei inTouch Lab
SP/CP
Operator
Operator
SP/CP
Operation
RD
Engineering
Brand
Cooperation
Application layout AP Deployment
Long-distance application AP Experience
Application /content experience
Application/content Verification
Terminal experience

Long-distance VCOL support
Service Integration Verification
Terminal IOT Verification
AP(1-N) Deployment
Experiencing Environment
Open Lab
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Product-line Aggregation

• 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
IPOptical Bearer Network
Wireless/ Wireline Access Network
Wireless/ Wireline Terminals
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Future Network Architecture - Simplified
Key FeaturesConvergence, Mobile, Broadband,
Content Service
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Future Technologies Research
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 Platform
Single billing, multi services and tariff package
GSM/UMTS/ CDMA/WiMAX
Bearer Layer
Service POP
Mobile Access
Service Control

• Metro
• IP over WDM
• MPLS
• IPV4/IPV6

• BRAS
• GSN
• WSN
• MG

ICT Platform

• IMS core
• (CSCF/HSS/)

Fixed BB Access
xDSL /FTTx/ Cable/WLAN
Media App Platform
Operators Organization Support
Network oriented to customer oriented
FMC solution
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Increasing Investment in Service Application and
Terminal
Providing abundant service applications and
terminals to help operators expand to the two
ends of the value chain.
IMPS
Web/WAP Surfing
Streaming
Service Applications
Mobile E-mail
LBS
MMS
M-RBT
Game
Terminals
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Huawei Cooperation Review Industry
Transformation Huaweis Preparation Huaweis
Value Proposition with Telcos
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Value Proposition-- Views on Telecom Industry

• 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

A quick-response vendor can reduce the business
developing cost !
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Value Proposition-- Telcos Need Support From
Strategic Partners
- 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
• Potential for the Growth

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Value Proposition Collaboration with Carriers
RD

• 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
• Overseas extension and service operation
• Introduce SP/CP and service bundling

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Customized Service Development Governance Model
JPOR Joint Planning and Operations Review

• Operator Requirement
• Market
• Vendors Technique
• Product

• Operator Service BP
• Operator Vendors implement Service BP
  corporately

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

• OperationsCapacity Management
• Product Management Marketing

• Release Planning
• Architecture
• Testing

Status
NSQR Network Service Quality Review
Time to market, Quality of product, Network
service
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Joint Development (RD) --Platform Strategy
Supports Quick Response

• Dedicated Team in PDT for each key customer
• Close interaction between PDT key customers
  guarantee the quick customization
• Benefit from every upgrade of TDT platform

PDT Platform
PDT Wireless IN
PDT Fixed IN
PDT Mobile data
PDT OSS
AIS TEAM
BT TEAM
SUNDAY TEAM
HUTCHSON TEAM





CMCC TEAM
TELEFONICA TEAM
TEAM
CHINATELECOM TEAM
-35 new features/services for AIS per month
TDT platform

Foundation Version N
Foundation Version N1

• Every upgrade is to fulfill the most trendy new
  major capability-set
• Upgrade steadily for high quality of both TDT
  PDT platform
• Reusable for all PDTs to save the comprehensive
  cost

Note PDT-Product Development Team TDT-Technology
Development Team
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Current Service Realization Process (SRP)

• A phased process that defines how new technology,
  features and services are realized.
• 6 Phases
• 4 Major Decision Points
• Concurrent operation encouraged while managing
  risk

Concept Defines a high level view of the service
idea and associated time and cost
Concept
Feasibility Determines the best network
implementation of the service or technology
SG-14
ROMA
MSD
D1
Feasibility
Definition Defines the detailed plan and
requirements needed to implement the service or
technology
SG-13
Feasibility Report
Service Gates (Can We Go Forward) SG-14 Start
ROMA SG-13 Start Feasibility SG-12 Start
Feasibility Decision SG-11 Start Definition SG-10
Start Commitment SG-9 Start Development SG-8
Start Design Implementation SG-7 Start Unit
Test SG-6 Start Integration SG-5 Start
Performance Verification SG-4 Start Acceptance
Test SG-2 Start ORT SG-1 Start Introduction SG-0
End Introduction
D2
Definition
Development Creates the physical realization
that implements the given requirements
SG-11
TP, FSD, OTP, SOTP, FRS, Proj Plan
Development
Service Test Tests the service against the test
plan in simulated and live environments
SG-9
SW/HW, Test Plans
D3
Service Test
Introduction Introduce to all geographic
areas and begin Life Cycle Management/Customer
Care
SG-4
SG-2
Test Results, Certification Matrix
D4
Decision Gates(Should We Go Forward) D1 Proceed
with Definition D2 Proceed with Development D3
Proceed with CI or GA D4 Proceed with Life Cycle
Introduction
SG-1
SG-0
Service/Technology Launch
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Joint Go To Market---How OR, MM, Go To Market
IPD Link Together
From a cross-process perspective, the
requirements management process will link to MM
and IPD processes
IPD Marketing Program - Conceptual Diagram
MM
MM Project
HW Biz Strategy
Go To MKT
HW Historical Data
Mkt Assess
Segmentation
Opportunity
Dvlp Biz Plan
Align Biz Plan
Measure Performance
Product Line Level
Technology
Customer Communications Release of
Products Marketing Promotion Technical Support
Market Requirements
PMT Project
OR
Products Launch
Requirements Project
IPD Process
IPD
Product Level
MKTG PDT Project
PCR Project
Offering Requirements
Emerging Product Requirements
Other events triggering PCRs
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Joint Go To Market-Case Study
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
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Enriching Life Through Communication