Huawei bets on smartphones

China's Huawei Technologies Co Ltd, the world's No. 2 network equipment maker, launched new cloud-computing smartphones on Wednesday, looking to ride a mobile industry boom that drove a 64 percent sales rise in its devices unit in the first half.

The company

The company , known for its low-cost cellphones, is betting cloud-computing smartphones will help it replicate its telecom gear success in the smartphone market and take on the likes of Nokia , Apple Inc and Samsung Electronics .

Shenzhen-based Huawei and Chinese rival ZTE Corp , which have traditionally concentrated on the network equipment business, are aggressively muscling in on mobile devices.

Cash cow for Huawei over the past few years

“Cellphones have been a cash cow for Huawei over the past few years, nevertheless I don't think it can replace its main business in network equipment,” said Jane Wang, a Beijing-based analyst at UK innovation firm Ovum.

“After a fashion, we saw cellphones as a key compliment to its business because it allows at that time to work more closely with telecom operators.”

Media event in Beijing

Huawei launched its cloud-computing “Vision” smartphones at a media event in Beijing, with the new 9.9-mm, 121-g phone running on Google's Android 2.3 operating system and Qualcomm's Snapdragon chip.

Cloud computing refers to data and software stored on computer servers in other words than individual PCs and accessed over the Internet. Cloud computing smartphones will allow users to download applications without needing much storage space on their devices.

Global sales from Huawei's devices division, which sells consumer products just as smartphones, mobile phones, tablets and wireless cards, grew 64 percent to $4.2 billion in the first half of the year from a year ago.

Shipments jumped near 40 percent to 72 million units, privately-held Huawei said in a statement. Cellphones form the majority of its shipments.

Founded in 1987, Huawei has grown rapidly. The company, which employs more than 110,000 people, reported revenue of $28 billion last year and aims to boost revenue to $100 billion in the straightway 10 years.

Huawei's US expansion plans in the network equipment sector have hit roadblocks on suspicions the company maintains links with China's military.

Huawei has been selling its cellphones in markets from Australia to Kenya, however China, home to more than 900 million mobile phone subscribers, is emerging as the goldmine for global companies.

Last month, Apple said the maker of the iPhone and iPad was merely “scratching the surface” in China. Apple is set to exponentially grow its China business as the country's No.1 and No.3 telecom operators jostle to stitch up deals to sell iPhones.

China's Alibaba Group has launched its first self-developed mobile operating system and smartphone running on its cloud computing-based operating system.

The top three global brands for mobile phones

“We are striving to become one of the top three global brands for mobile phones by 2015,” Huawei Device CEO Wan Biao said in the statement. The unit contributed about 17 percent to total revenue.

In July, Huawei Device executives said the firm aimed to ship 20 million smartphones this year, higher than a previous target of 12 million-15 million units.

In June, Huawei unveiled its MediaPad, a 7-inch Android-based tablet computer in Singapore, and is as well developing a 10-inch device to be launched this year. - Reuters