Difficulties piled up, Huawei stopped operating two more business divisions

Chinese tech giant Huawei has to shut down some more of its business. This time, the new core cloud and artificial intelligence divisions were formed 14 months ago. This further shows how the company is facing major difficulties when transforming from equipment manufacturer to service business.

In its internal announcement on April 2, Huawei said that these parts will be split into two units. Server operations and storage hardware will be handled by Huawei’s internet product and solution development division, which is responsible for product research and development.

Mr. Zhang Pingan has been appointed the chairman of the cloud business, replacing Richard Yu, who has been the chairman of both the cloud and AI segments as well as the cloud business since January this year.

This change shows Huawei’s difficulty transitioning from a hardware equipment provider to a service provider. The company is built around a number of core businesses including: the telecommunications network equipment segment, the corporate business and the consumer business segment.

However, in last week’s internal report, there was no mention of who Zhang Pingan would report to the new position. He was responsible for cloud services for the consumer business and previously worked under Mr. Yu.

Huawei’s cloud computing division started in 2010. And it became a new business unit in 2017 to enter the expanding cloud services market.

Huawei Cloud quickly became China’s second largest cloud service provider in Q4 2020, capturing 17.4% of the Chinese market share, according to data from market research firm Canalys. While a year earlier, in Q4 2019, this division was not yet in the top 3 markets. Currently, Alibaba is still the leader with 40.3% market share.

On March 31, Mr. Ken Hu, Huawei’s rotating chairman, once said that the pandemic is providing a favorable opportunity for businesses to adopt cloud computing and the revenue that Huawei Cloud brings will be. increased 168% over the same period last year.

However, Huawei founder Nham Chinh Phi in an internal meeting also said that the company’s cloud service is only in the mid-range and has not yet reached the level of high-end as expected. The source of the Caixin website also said that Huawei’s cloud service is still behind its competitors when it is slow to enter the market.

Refer to Nikkei