When it comes to mobile network infrastructure, Chinese companies like Huawei are getting business by being more affordable than their western counterparts. That strategy, however, won’t work in the long run and Huawei is well aware that. Hence it’s investing a ton in research and development.
Last year, they’ve put in $4.9 billion in R&D, which is the same amount Ericsson invested. To be fair, Huawei’s cash also went to its handset business whereas Ericsson doesn’t make phones anymore and is thus more focused on network infrastructure.
In 2013, Huawei plans to outspend its Swedish rival in an effort to compete both on price and quality. Here’s what the Chinese company’s head of R&D, Li Yingtao, had to say on this: “The bottom line when you talk to customers about building a network is that they will ask: ‘can you do it or not?’ That ability depends mostly on innovation capacity. That’s why we will continue to increase our investments.”
Even though Ericsson is still the market leader, Huawei is growing like crazy and could seriously disturb the market. We’ll keep following this and let you know as soon as we have something new to add. Stay tuned…