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Articles by Dave Burstein
“Africa & Latin America, It’s All Huawei” - End-To-End Manufacturing Drives the Cost Down
A rival tells me how hard it is to compete with Huawei because they manufacture so many products. “We had a good opportunity at one customer. Our software is just right for them. “They wanted to buy a complete system. We bundled our software with $4 million of equipment and bid aggressively at $7 million. Huawei came in with a bid of $4 million for hardware and software combined. They manufacture their own servers at a much lower cost than he could buy servers.
Senator Cotton: Extraordinary Expansion of Huawei Cloud
Huawei’s Cloud is growing faster than Amazon, Microsoft, or Google, Iain Morris writes. He cites U.S. Senator Tom Cotton on growth in “Egypt, Indonesia, Malaysia, Mexico, Saudi Arabia, Turkey, and the United Arab Emirates.” Cotton further says: “In addition, Huawei’s cloud services revenues reportedly rose by almost 170 percent in 2020.
5G Base Stations $13,000 in China
Most carriers don't order 200,000 5G base stations, so they will pay more, but that's the actual price for the joint procurement of China Telecom and China Unicom. The 200,000-300,000 cells the two jointly are upgrading are probably more than the entire rest of the world will add. The second Chinese network, jointly built by China Mobile and China Broadcast, is growing even faster. Huawei and ZTE will probably split 90% of the order, with Ericsson, Nokia, and perhaps CICT/Datang getting the rest.
Huawei's Q1 2021 Phone Sales Down by Over 30%
"2021 will be another challenging year for us, but it's also the year that our future development strategy will begin to take shape," said Eric Xu, Huawei's Rotating Chairman. Huawei generated CNY152.2 billion in revenue, a 16.5% decrease year-on-year. The Network Business continued to grow. It wasn't officially announced1, but consumer products other than phones probably increased sales. The fitness tracker, earbuds, and watches are winning strong reviews.
$400B China-Iran Deal Includes a $Billion 4G-5G Network, Most Likely Huawei
China's tech giant Huawei spans much of the globe despite U.S. efforts to ban it. Add Iran to this map. (Source: NPR) China has agreed to buy $16 billion/year of Iranian oil in what amounts to a barter arrangement for Chinese goods. Telecommunications is specifically included, with a $billion or more for an upgraded mobile system. Huawei & ZTE will probably split the contract. Iran's population is 84 million, about the same as Germany or Turkey.
Record $89B in China Means 2020 +4% Sales, $10B Profit
The US war on Huawei brought down sales internationally, but China's 700,000 5G cells and explosive cloud growth meant Huawei had an up year. The chip blockade did hurt in Q4 and will continue to hold down sales in 2021. Huawei has sufficient reserves to outlast the United States until China catches up in chip production. Perhaps the most important figure in the financial report was the $55 billion cash. Another $10 billion will come in from the sale of Honor/Glory.
Goodbye Marilyn Cade
In memory of Marilyn Cade, 1947-2020 Marilyn Cade was an exceptionally hardworking, always gracious leader in ICANN and IGF. She was a strong supporter of U.S. interests at ITU and a member of the U.S. delegation at the WCIT. Dozens have spoken of her at a memorial site, including Vint Cerf: Marilyn was an elemental force in the ICANN, IGF and policy worlds. She was an advocate who could be counted upon to speak passionately for the causes to which she was dedicated.
5G First in China's Key Industrial Investment
Four Chinese ministries issued the policy document in September, called "Guiding Opinions on Expanding Investment in Strategic Emerging Industries and Cultivating Strengthened New Growth Points and Growth Poles." As you can see below, in this document, 5G was the top recommendation.
Canada Caves to the US, Blocks Huawei 5G (Inference)
Huawei is the strong favorite of Canadian network builders, for good products and extraordinary support. It displaced the incumbents at Bell Canada years ago and has a joint "Living Lab" in Vancouver with Telus1. Huawei had already won the 5G contracts. It has a thousand researchers and spends a quarter billion dollars on Canadian R&D. It was a government decision.
China Will Remember the U.S. Huawei War for a Generation
Only an idiot would believe that the U.S. is blocking TSMC manufacture of Huawei cell phone chips because of security fears. This is a commercial rivalry. The U.S. wants to put China's leading technology company out of business. We will fail, of course, at a price far higher than D.C. understands. The U.S. is ready for China's immediate countermeasures, even if Apple's stock price falls $hundreds of billions. But the long-run price will be devastating.
China Mobile Is Reporting 15M 5G Contracts, 8.7M Joined in February
5G is growing by millions per month in China, although the exact status is unclear. The telcos are reporting "contracts," which continue to be far higher than the separately reported 5G phone sales. Some people are apparently signing up to 5G contracts even before they get the phones. The 5G price is the same as 4G, and 5G has promotions. That said, China Mobile reported 8.7M new 5G contracts in Feb and a 15M total. 8.7M new 5G contracts in Feb and a 15M total.
Huawei Now One of China's Largest Software Companies
Huawei Now One of China’s Largest Software Companies By Dave Burstein The latest report from China’s Ministry of Industry and Information Technology (MIIT) shows Huawei at the top of the list of 100 largest software companies in China. On reflection, that’s not surprising. Half of Huawei’s business is now phones, where chief rival Apple has long considered itself a software company. The great achievement of Huawei’s phone division was to pull ahead of everyone in the quality of picture-taking.
Huawei Now One of China's Largest Software Companies
The latest report from China's Ministry of Industry and Information Technology (MIIT) shows Huawei at the top of the list of 100 largest software companies in China. On reflection, that's not surprising. Half of Huawei's business is now phones, where chief rival Apple has long considered itself a software company. The great achievement of Huawei's phone division was to pull ahead of everyone in the quality of picture-taking. The hardware can be matched; Huawei's advantage comes from software.
5G Funny Numbers: 10M Sign on October, Only 5M Phones in November
Ten million Chinese "reserved" 5G phones in the first two weeks of October, a powerful signal of high demand. Huawei thought they could all get phones in October. But the official figures are less than 1M 5G phones in October and ~5M in November. WTF? It could be an ordinary problem of ramping supply of a new product. It could be the official figures on phone sales are lagging reality by several weeks. It might also be that millions aren't following up on their reservations.
Blasphemy: The U.S. Problem Is Huawei's Security Is Too Good
Everyone knows the $100B/year U.S. security apparatus taps almost the entire Internet. Friendly governments help from Australia to Canada to France. Companies like AT&T, Ericsson, Verizon, and Nokia obviously cooperate. The NSA assumes that China is attempting to do the same and that Huawei, as a Chinese company, will provide assistance. The evidence suggests otherwise. Huawei is the primary opponent of U.S. security. Hundreds of expert agents have been looking for evidence of Huawei spying.
The Unbelievably High Cost of the War Against Huawei
U.S. companies were selling $11 billion a year of parts to Huawei before the blockade. Losing those sales is just the start of the damage. Every other Chinese and Russian company is making sure to find non-US suppliers. The U.S. has threatened India and Turkey with sanctions as well. As other companies replace U.S. components, the impact will be tens of billions more than the $11 billion of Huawei suppliers.
Huawei's Very Red World
The map below shows countries that are working with Huawei 5G in red and pink. As can be seen, Huawei is doing very well in 5G, although it's not as dominant as the colors here suggest. Ericsson is actually close to Huawei in 5G revenue, aided by the ban in the US and Australia. Years ago, Huawei was the price leader in order to break into the European market. That's no longer true, despite all the reporters that continue to make that claim.
Ren to Donald Trump: Take Our 5G, Please
Ren Zhangwei tells the Economist and the NY Times he is prepared to give the US essentially everything the President has asked, including the crown jewels: the complete design and source code of Huawei's 5G system. Ren would "license the entire Huawei 5G platform to any American company that wants to manufacture it and install it and operate it, completely independent of Huawei." This actually would be a brilliant move if the US buys in.
Almost All 5G Estimates for 2019-2020 Need to Be Doubled
The remarkable take rate in Korea and China is invalidating almost all projections of 5G subscriptions. The 5G promotion has consumers wanting to buy, buy, buy. Huawei Mate 20 5G is selling for only US$30 more than the 4G model. At that price, who would want to buy a 4G phone that could be obsolete in a year or two? In the first two weeks of sale, over a million Chinese bought Huawei's 5G phone. One of the best analyst group on earth currently expects China to have 31 million subs in 2020.
In the 5G Era, at Least 20 Million U.S. Homes Will Rely on Wireless for Broadband
There now can be no doubt that fixed wireless, mostly 5G, will be a viable business in the right locations. Today's wireless has enormous capacity, enough to supply the broadband needs of a significant population. It's better than most DSL and a workable alternative to cable in many locations. Traffic demand is falling, with Cisco predicting the U.S. will fall to 31% growth in 2021.
Economics and Common Sense Deprecates the Common Argument for Lower Spectrum Prices
Outside of China, very few governments would expect a saving in spectrum costs would mostly go to investment. Corporations have other priorities, including advertising and executive salaries. Stockholders come above everything at most companies. Rarely would even 1/3rd of the saving go to capital spending. The U.S. under Trump had a massive tax cut, worth literally billions to Verizon and AT&T. Verizon actually cut investment. AT&T's increase in capex was far lower than the tax saving.
Blockchain, Cryptocurrency Channels Considered by European Interests to Bypass U.S. Sanctions
Bitcoin's unreal hype has obscured that it is mostly used to facilitate drug deals, ransomware, tax evasion, and even the occasional murder for hire. After the 60% price drop, demand for bitcoin mining gear has fallen so much TSMC has to lower sales estimates for 2018. (That's good news for telecom. Qualcomm and probably others are close to going into production on 5G chips at TSMC.
China: We Lead 3GPP Wireless Standards
Huawei, Intel and Deutsche Telekom announcing the completion of the world's first 5G interoperability test. Photo: HuaweiIn 2018, nothing can get approved in 3GPP that China strongly opposes. In the past, 3GPP often was a battle between a few American giants and their European peers. A Qualcomm or a Nokia will still be heard, but the power has shifted. I haven't seen evidence that the Chinese influence has made for better or worse standards.
The 500M Wireless-Only Connections
Around 500M Africans, Indonesians, and Indians are regular Internet users without a landline. Brazil, Indonesia, and Mexico add about 200M more. In total, something like 1B people were wireless-only at the end of Q3 2017. I'm comparing the number of Facebook users (over 250M in India) with the number of landlines (less than 20M in India) for a rough guess at how many are wireless only. In the developed world, 70-90% of all homes have a landline connection, implying fewer than 100M are wireless only.
The Color of the Net Has Changed
About 65% of 1.5B Internet "connections" are in the Global South, led by the BRICS. The actual number of users is probably twice that. Three quarters are not native English speakers. China has three times as many as the United States. India has more Facebook users than the United States. Vietnam has the fastest growth. See some figures below for why I'm confident Indonesia has more than 100M wireless only.
Today's Internet: More BRICS Than Westerners
55%-60% of landline broadband users are in the "Global South," about 500M. The South is 65%-70% if you include "wireless-only" many of which are 4G LTE at 10 megabits or more (see chart below). The gap is widening rapidly and will increase by well over 70M in 2018. Six large developing countries grew at 5% or more in the last year, compared to only one in the developed world. China is adding ~30M more each year. Most developed countries are between 75% and 95% connected.
Sorry, Ajit Pai: Smaller Telcos Did Not Reduce Investment After Net Neutrality Ruling
Primary suppliers see sales go up. ADTRAN's sales in the most recent nine months were $445M, up from $399M the year before. Calix sold $372M, up from $327M. At analyst meeting this year, both said demand had picked up. Clearfield, a supplier of fiber optic gear, was up 8%. Pai claimed, "the impact has been particularly serious for smaller Internet service providers." It was a primary justification for his Net Neutrality decision.
A Closer Look at Why Russia Wants an Independent Internet
Actually practical and not necessarily a problem.
Net Neutrality: Both Sides Make Some Ridiculous Claims
I make a point of reading CircleID. There is no getting around the utility of knowing what thoughtful people are thinking and saying about our industry. ... this is for you. More and more professionals are choosing to publish critical posts on CircleID from all corners of the Internet industry. If you find it hard to keep up daily, consider subscribing to our weekly digest. We will provide you a convenient summary report once a week sent directly to your inbox. It's a quick and easy read.
Must IETF, ICANN Stop Meeting in the U.S.?
With Trump's "extreme vetting" extending to Pakistan and others, nearly all U.S. institutions with a global reach will be cut off from some members. Internet Society Board Member Walid Al-Saqaf, from Yemen, can't attend the IETF meeting next month in Chicago. Board Member Alice Munyua from Kenya may also have to skip the event. "There is a high threat from terrorism in Kenya," the British government reports. Kenyans likely will require extreme vetting.
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