Insight: For Cisco and Huawei, a bruising rivalry reaches stalemate

Fri Nov 22, 2013 12:29pm EST
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By Jeremy Wagstaff, Sinead Carew and Jim Finkle

(Reuters) - Cisco Systems Inc and Huawei Technologies Co, two of the world's largest communications equipment makers, have been slugging it out for a decade now - in court, in emerging markets, in the lobbies of government and even on blogs.

The past year suggests they've ground to an expensive stalemate, raising questions about their futures on each other's lucrative home turf.

Earlier this month Cisco CEO John Chambers admitted in an earnings call that political dynamics were stymieing his company's long march into Huawei's backyard.

Asked whether the recent U.S. spying scandal was affecting overseas business, Chambers said it was having an impact, particularly in China, which is Cisco's biggest emerging market country but represents less than 5 percent of its total revenue.

Huawei has also admitted something of a defeat in the United State for carrier equipment, which accounts for more than 70 percent of its global revenues.

"We are not interested in the U.S. market anymore," Eric Xu, one of Huawei's rotating CEOs, said in April. "Generally speaking, it's not a market that we pay much attention to."

The rivalry reflects how intertwined the communications industry has become with growing concerns about security - and the challenges two communications giants face in building a genuinely global presence in an interconnected world where no major market can be ignored.

RAW WOUNDS   Continued...

A man walks past a Huawei company logo outside the entrance of a Huawei office in Wuhan, Hubei province, October 9, 2012. REUTERS/Stringer