Less than two months after 3Com’s buyout of their joint venture closed, Huawei Technologies formed another joint venture, this time with security vendor Symantec Corp.
The Chinese telecommunications vendor’s joint venture with 3Com was launched with great fanfare, late last year 3Com bought out Huawei’s 49 per cent stake in Huawai-3Com Ltd., which employs just under 5,000 people, for US$882 million.
Huawai’s new venture with Symantec, which is subject to government and regulatory approvals and is expected to close late this year, will be based in Chengdu, China and will initially target the Chinese telecommunications market with security and storage appliances.
Huawei will take a 51 per cent stake in the company and Symantec will own 49 per cent. Huawei will contribute an existing telecommunications storage and security business and access to its licenses and intellectual property, while Symantec will contribute its security and storage software licenses, management expertise, working, capital, and US$150 million.
James Socas, vice-president of corporate development with Symantec, said the joint venture will initially focus on the Chinese market, where they view the security and storage appliance opportunity has great growth potential.
But, he added, “we certainly expect it will expand into a global appliance company in very short order.”
Tad Lebeck, Symantec’s vice-president of technology for Asia Pacific/Japan, said while telecommunications will be an initial area of focus for the company because of Huawei’s expertise in that market, it won’t be the only area of focus.
“The products themselves are equally applicable to the enterprise market as well,” he said.
Huawei is contributing an existing business with products in the market, but Lebeck said he envisions products incorporating both Symantec and Huawei technology coming to market soon, such as VPN/firewall combos that merge Huawei’s telecommunications technology with Symantec’s security and scanning software.
“These appliances are really targeted to be easy to install and simple to administer, so we don’t really look at this as being limited to just large enterprises,” said Lebeck. “It’s applicable to any network data centre situation.”
In partnering with Huawei, said Socas, Symantec is gaining access to one of the fastest growing markets in the world and working with “one of the emerging giants” of the technology industry. And while the focus will be on building the joint venture, Socas said the relationship could pay dividends in Symantec’s core business as well.
“We believe the JV will help us win more business in the traditional enterprise market, and with the carriers as well,” said Socas. “We think there will be spillovers with Symantec’s business.”
Brian Babineau, a senior analyst with Enterprise Strategy Group in Milford, Mass., said partnering has become a necessity for North American technology vendors looking to tap into the Chinese market, adding it’s difficult to break in any other way.
“Symantec is obviously hedging its bets by building a partnership and separating with a joint venture with Huawei, which is one of the leading technology names in China,” said Babineau. “By setting that up separately and keeping it a Chinese-owned company I think it’s a pretty strategic move for Symantec.”
Huawei has become somewhat of a serial joint venture company. Besides the 3Com relationship, it created a partnership with Nortel Networks to develop broadband technologies and a 3G joint research and development centre with Motorola. Cisco Systems president and CEO John Chambers mused last year he’d love to work with Huawei.
Babineau said that while little should be read into the history, a similar trend emerged when technology companies first entered the Indian market, dipping their feet in the pool with a joint venture before jumping into the pool solo.
“China is a hard country to get into and Huawei is open to doing (joint ventures),” said Babineau. “Of course, it benefits Huawei because now they’re taking a lot of technology that is well established in the market and using these JVs to use it for their own benefit.”