The Information Communication Technology (ICT) industry is facing many challenges in spite of huge numbers of active telecoms lines and growing internet penetration. One of them is skills gap. The Chief Technology Officer, Huawei Technologies, Scanlan Paul Michael, says ubiquitous connectivity will change the dynamics. He sees Huawei overtaking Apple in mobile devices segment, and a slow down in global carrier business, LUCAS AJANAKU met him on the sideline of AfricaCom in South Africa.
There’s much talk about Internet of Things (IoT). What is it really?
Internet of Things (IoT) means different things to everybody. The concept of IoT is thinking about things being connected. So let’s take the cameras. Cameras can be connected. We can call that IoT, but we also have cameras linked to cars, linked to people’s phones and this collaboration between what we think are different things being part of one gives a different type of collaborative analysis. Now for example, I can take your picture. If you have been to China, in seven seconds, I can find out everywhere you have been. I don’t need to put you on camera but from this photo, we upload it into our system or platform, that platform will now start looking through the picture whether it is going to match up with you. Analysis may show that we saw that face in a shopping centre this morning and we now know who he is.We can track him from his cellphone. Now we see this car was moving and we saw his picture; we know that car was moving from this highway to that highway. Therefore, he lives here; he works here, he was shopping there all in seven seconds.
Security, privacy issues are popping up on this. What is Huawei doing?
Very good question. Now let us talk about a couple of the components of your question. The first part of your question is related to security and how Huawei is handling the unconventional threat in the cyberspace, I mean threat beyond the convention of mounting video cameras. One component of that is the analytics about seemingly different things and correlation. We build the networks, and we also work with operators in managing the data analytics that travel on them which can be good or malicious data. To your answer, in Huawei, we start with policy. At the top of the company, we have three CEOs. One of them is chairman of our cyber security department. We have series of people who are former equivalent of Government Communications Headquarters (GCHQ) people who work in Huawei to advise. The first thing is that we take cyber security very seriously from the company’s perspective. We hire a team of professionals to advise on how to do it. We have a couple of policies; we educate people about cybersecurity and privacy, about what we can do and what we cannot do. We work with the customer with his data, with his network and then we put people to make sure that people cannot steal information within their company. Then we put process, signature process; you sign: if you steal from Huawei, we take you to court, then we apply technology to catch people who are infringing either through camera, through software or firewalls. We employ these principles in our business dealings. I don’t know what the competitors do, but nobody does it like this. We have to step up because we have become leader in telecoms both in the mobile and fixed services now and when you are a leader, that is an obligation and people ask you more difficult questions about how you do all these things. Then we have very good hardware and software, processes and training materials. We transfer this knowledge and capability to government and other agencies in the process.
How does Huawei help telcos to improve service quality?
We do a lot of different things because we are both a vendor, and trusted advisers. Huawei is sort of taking different steps. We have moved from just selling equipment in the old days, when you knew what you want to buy, say 10,000 equipment, we get a price, we install it and it works. Huawei now come put the networks in order rather than just sell equipment to them. We work with a number of companies in Nigeria. Sometimes they tell us what they want. But as we develop a better relationship, we are able to show them that we are able do more than just sell equipment. We measure the traffic, look at the value for them; look at the capacity for them to make sure that people get good results; look at those with good coverage and make good suggestions on how alternative technologies and alternative deployments could help. We improved the situation in Ghana where the return on investment has reduced from seven to two years. We’ve changed the way we deploye the equipment with a different architecture and a different kind of technology. We have created something called Customer Solution and Emigration Centre. We build this centres in different countries; we have one of these centres in West Africa, which is in Nigeria. In the facility, we bring customers to share with them knowledge from other operators in other countries; what other countries have done. We give them ideas. It is not just about technologies, it is about deployments, it is about investment, it is about getting better customer experience so that the operators to do it better, instead of just being in a situation where they sell SIM cards alone.
There are skills gaps. How do we close these gaps?
Technology has evolved so fast, probably less than 10 years, maybe certainly in the last five years, it is growing enormously. That has made a lot of the developed countries to now transfer knowledge people. Online education is so useful in this respect. For example, YouTube, my son knows everything on YouTube because he watches it all the time. The youths of today understand a lot more. Back when we were in school, what the teacher knows is what s/he teaches. Now in Africa, we have about 75 per cent of people who are still not connected to the internet. So, that is 75 per cent of people who could only get education from traditional means. That means that they would not have enough skills, unfortunately, for the next few years, unless we get them online. This is why we at Huawei always talk about connectivity, ubiquitous connectivity, that everybody should be connected no matter what. Of course, that is good for a vendor to say, but also it shows you our thinking about how it can benefit the society. Now remember we are not saying you have to buy equipment from Huawei, but we are talking about everybody being connected. There are a lot of ways of doing this; How do we double the number of connections in Nigeria? How do you connect everybody? And mind you broadband is expensive, the cost of digging out the roads is expensive, but if you tell the farmer in the rural area that if you dig up this road in this rural area, the telecoms company would pay him or the government would pay him to dig it up and lay the fibre, he will agree. Now, does he want broadband? What he wants is health, education, food, clothing and entertainment at least. Now if we encourage pharmaceutical companies, medical companies around the world, educational facilities around the world, to offer online services, if they sell a goat for one dollar, what do they spend it on? They don’t spend it on broadband but on services they need. Now that is a completely different thinking, but this is what I believe, it is something that could be done in Africa. Everybody knows that broadband is real, everybody knows that safe city is real.
Research and development (R&D) are two critical elements in the sector. How are you addressing this?
We spend around $15 billion on R&D, we deploy a significant amount of our gross revenue on R&D. The number goes beyond $10 billion something around 14 and 15 per cent of our earnings go to research and development. This is significant in terms of management investment, we are the highest compared to any other competitors, so I think we are sitting in the top view with Google and Amazon; we are sitting with the top few.
What is your assessment of business this year?
The past year has been a lot of challenge for everybody, the financial results for all companies, operators, you will find out have gone down. But Huawei still recorded some growth. I think we are fortunate and it is because our board, the entire executive management team because this is not a public company, it is a private company, so we can decide if we want to put more money into R&D or we want to give shareholders more dividends. We can decide how we can change which market we address or how we do things. It is much more flexible and because of that, seven years ago, we took the initiatives to invest in consumer which is the mobile enhancing department, and we took a different direction to make cheap devices. We decided to make our quality the best. We think if we make the best networks, we should apply the same also to our devices. We invested in silicon, we invested in chips, we have partnership with Leica for cameras; we’ve put artificial intelligence in our devices. So we saw the opportunity many years ago. Now this is a consumer market, the consumer market can go up today and then drop tomorrow. The board wanted a very careful growth, but our products seem to have become very popular because of the quality, you can say perhaps the cost, but we are not trying to make very cheap products. That business has grown very significant and probably in the next three months, we would outgrow Apple because now Apple is in number three. Now that has changed. But the first component on how the business has been in the last 12 months is that in this particular business, it has gone ahead. In another business, which is called enterprise, five years ago, we could see that the technology we sell to the telecoms companies, the technology serving other enterprises, government, power, electricity, water, manufacturing, education, health and other industries have changed. In this technology you have to have different marketing strategies, there is a different way you talk to a reporter, talk to an engineer, talk to a finance minister, you talk in just many different ways. And then requirements are different. There are sometimes many technologies that are not similar when we get on into tech cities or smart cities and it is because technology is intrinsic to our cognisance. Now that business has a number of about 40 per cent, and the number has grown profit. This is very difficult today. But that business is also expected to also grow significantly. Now the third business which is the biggest business where I operate, is the carrier business. We have seen that a lot of the 4G networks had been built. Now we are almost ready for the next wave, which is the 5G. But a lot of African countries haven’t developed. They are still on 3G, even Nigeria. In fact, I would be encouraging everybody to migrate to 4G as quickly as they could because it is a better solution, better technology, better architecture, and better user performance experience. So this business has seen a slowdown in investment by many in other parts of the world. Imagine if a company has to pay us three per cent, it is going to be very difficult for the company. We are already on number one, we already have 30 per cent market share, that business unit is becoming more difficult. We see a slowdown in the rate of growth. So we are growing but the rate of growth is slowed down. As a company, this is slowing down while the enterprise is booming and the consumer is booming. In consumer, everybody knows there is little profit, and in enterprise, it is good profit. So we have a balanced portfolio and I will like to answer your question, as a company we already foresaw this. What would happen next year is that the carrier business would continue to come under threat, but our operations would become more proficient; Huawei Technologies would continue to invite more government engagements, try to get more investments because if we cannot find more investment then our work slows down. Our job to make the world grow, because smart cities make life quality better. It creates a digital experience for everybody including Nigerians.
You said the Carrier Business is to slow down. Why?
This is because the customers the telecoms companies are reducing investments; they are all driven by public companies, so they have got to report to their shareholders. But if their growth is slowing down, because all the networks have been built, all the people are connected. This is why Africa and other developing countries are still not perfect because they still have under developed infrastructure, I am talking from a global perspective, so maybe in Nigeria, everybody is still growing, but maybe in another country such as in America, everybody has got full mobile connections and devices. So I am just trying to get the picture. And that is the challenge that all companies around the world are facing.
