Caixin
Apr 06, 2021 08:15 PM
BUSINESS & TECH

Huawei Deactivates AI and Cloud Business Group in Restructuring

A Huawei employee told Caixin that the company’s cloud services were still lagging behind its rivals because it came late to the market. Photo: VCG
A Huawei employee told Caixin that the company’s cloud services were still lagging behind its rivals because it came late to the market. Photo: VCG

Chinese telecom giant Huawei Technologies Co. Ltd. is closing its core cloud and artificial intelligence (AI) business group after only 14 months of operation, reflecting the company’s difficulties in transforming from device-maker to service provider.

The group’s activities will be split into two units, Huawei announced in a Friday internal memo. Its server and storage hardware products activities will be taken over by Huawei’s internet products and solutions department, renamed “ICT product solutions” and made responsible for the tech giant’s product R&D.

Zhang Pingan has been appointed president of the cloud business unit, taking over from Richard Yu who in January this year became president of both the combined cloud and AI business group and the cloud business unit.

The internal changes reflect Huawei’s struggle to transform from a hardware supplier to a services provider. It is built around a few core business segments: the carrier network business group, enterprise business group and consumer business group.

The Friday internal memo, however, did not elaborate on to whom Zhang Pingan would report in his new role. He had been in charge of cloud services for consumer business and previously worked under Yu.

Huawei released its cloud computing strategy as early as 2010 and in 2017 set up the business unit to expand into the cloud services market.

Huawei Cloud became China’s second-largest cloud services provider in the fourth quarter of last year, growing its Chinese market share to 17.4%, according to data from research firm Canalys. This marked a sharp contrast to the fourth quarter of 2019, when Huawei Cloud was out of the top three. Alibaba Cloud maintained its top position by controlling 40.3% of the market, the data showed.

Ken Hu, rotating chairman of Huawei, said at a March 31 briefing, when the telecom giant released its 2020 annual report, that the Covid-19 pandemic had brought forward one to three years earlier than expected the full adoption of cloud services by global enterprises, and that the revenue generated by Huawei Cloud grew by 168% year-on-year.

In November, Ren Zhengfei, founder of Huawei, said in an internal meeting the company aimed to build world-leading ICT infrastructure, but its cloud services are at a middling level and were yet to reach the most advanced stage. Ren praised the development of terminal cloud services led by Zhang.

A Huawei employee told Caixin that the company’s cloud services were still lagging behind its rivals because it came late to the market.

Ding Yi contributed to this report.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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