Writing / AI Finance Zheng Yahong
Editing / Zhao Yanqiu
"Huawei is very fierce"
The security industry has long been led by Hikvision and Dahua, forming a "two super strong" pattern.
The security industry has long been led by Hikvision and Dahua to form a "two super strong" pattern, which is dominated by Hikvision, the world's largest market share, known as "small Huawei", with a market capitalization of nearly 500 billion yuan, ranked 15th on the A-share market value list, and ranked in the manufacturing industry only after the Ningde Times and the Midea Group.
But now with Huawei's entry, the pattern of the security market is being quietly broken.
"Huawei is making great progress in the security market, taking down a number of large provincial peace city orders." Zhao Ling, the southern regional sales of Dahua, a listed company in the security industry, told AI Caijing, "In fact, we are also pushing, but we are being beaten very badly." Zhao Ling, who works for this long-established company, felt helpless.
Another domestic head of the security enterprise Jiadu technology employees An Peng bluntly said, Huawei is the two years cut into the security market, a very strong in. "Huawei only do the integration of large projects, such as hundreds of millions of orders. It takes a single very quickly, bidding encounter them, we basically can not compare." Jia Du technology is the security field of the world's Top50 companies, mainly to do software, while the company is also doing some integration projects in Guangdong, the employee said Jia Du and Huawei are both competitors, but also have a cooperative relationship.
The security market is worth trillions. In the past years, with the "safe city", "snow bright project" and other representative projects, video surveillance, alarm scheduling and other public **** security systems in the city and the countryside to apply up, all kinds of security companies also exceeded 22,000, of which Hikvision Nuctech, Dahua, led by Chinese companies, in the international Top50 accounted for about 10 seats. And in recent years, security has gone far beyond the public **** security category, the security industry used in the video surveillance technology, artificial intelligence technology, such as face recognition, in the digitalization of cities and enterprises to get more widely used, pan-security era has arrived.
"Huawei's attack on the security market is very loud." A number of security people have lamented to AI Finance. Huawei also maintains its usual style, once the strategy is determined, it will be high, and internal performance targets will be set.
At the end of July this year, the Guangzhou World Security Expo, this is a small industry exhibition, but in the hundreds of exhibitors, Huawei's booth area is the largest, reaching 720 square meters. Half of this area was accessible only to Huawei's partners and customers. Despite this, the Huawei booth was one of the hottest on both days.
Industry insiders who visited the booth described to AI Finance that Huawei's business scenarios were all done by its partners, and that it was using an ecological playbook to do security. Further, "Huawei is cutting in from a cloud perspective to do security, it only provides the base, cloud, platform, servers, but it does not do specific business."
Senior industry analysts said that Huawei's business scenarios are all done by partners.
Senior industry insider Li Ke further observed, "Huawei is mainly positioned in the high-end market, targeting those head customers, such as government-related and large enterprises, for the more fragmented market in the field of security does not have obvious power action."
Why would Huawei choose to enter the security market at this time? The reason is likely to be the last two years security is no longer pure security, but into the large market of government and enterprise digitalization. And the government and enterprise market is one of the areas Huawei attaches the most importance to. So, Huawei through the digital government, cloud computing to take the government and enterprise market way, quickly in the field of security to conquer the city.
According to media reports, in the first half of 2020, the cloud computing market public bidding in 58 projects, Huawei cloud took 22 projects, in which 12 projects announced the amount, Huawei won the bidding amount added up to 1.54 billion yuan. An industry source told AI Financial News that there are usually more bidding projects in the second half of the year, and Huawei will win more big projects.
Earlier this year in August, the research organization Omdia released a report showing that in 2020, the global intelligent video surveillance and infrastructure market share rankings, Hikvision, Dahua, Axis, Huawei, respectively, the global market for the top four. In addition to Axis from Sweden, Hikvision and Dahua are both giants in the domestic video surveillance field, while Huawei is ranked so high for the first time.
Strategic repetition
Huawei's security is not a spur of the moment, it has a history.
The most famous is Huawei's "small Haisi" video surveillance chip. Small Haisi was founded in 2004, is a wholly owned subsidiary of Huawei, but also when Ren Zhengfei determined to make an impact in the chip industry product. At that time, the main player in the security chip market is the U.S. factory Texas Instruments. However, Haisi found that Texas Instruments chips are not cost-effective, and the support for customers is not grounded, for example, customers need to pay 500,000 yuan in license fees before they can get a development kit. Only a few large domestic manufacturers such as Hikvision and Dahua can afford to use it.
Huawei small Heath for Texas Instruments weaknesses, to provide a cost-effective chip, and fast service response also does not charge a license fee, in the small company is very popular. Little Hess soon attacked the city, from foreign rivals to take the tiger's mouth. "After the small companies used it, if the big companies didn't use it, they didn't have a competitive advantage." Zhuo Yi, a former employee of Xiaoxis, recalled to AI Finance.
In 2007, Little Hess took a contract for 200,000 chips from Dahua, which was its first really big contract for exporting chips. 2010, Little Hess finally took care of the world's largest security camera manufacturer, Hikvision. After that, in the field of surveillance camera chips, Huawei small Heath once occupied more than 70% of the national market share.
Zhuo Yi recalled that Hikvision later also wanted to do their own chips, but this will have a huge impact on Huawei. Small Heath rushed to communicate, they gave Hikvision calculated a sum of money, "came to the conclusion that their own development of the chip is not as good as directly with the small Heath, cheap and mature." I don't know what Hikvision will think when it is reviewed today.
2020, Huawei small Haisi supply of high-end chips appeared in short supply. "Huawei has a hoard, but it will depend on the importance of the customer, decide whether to supply high-end chips." Wu Hang, a person engaged in the smart city, said, "Huawei's low-end chip supply is still more adequate."
In addition to the layout of the small Heath on the chip, Huawei's actions in the field of security has been less obvious, but there have been a few attempts in this decade. The first was in 2006, when Huawei assisted the operator to do the "Global Eye" project. At that time, Huawei did monitoring software, choose other security equipment manufacturers OEM cameras and other end products, to some extent, Huawei orders also contributed to the rise of a large number of security companies in Shenzhen.
Another time is 6 years later. 2012, Huawei applied to become the governing unit of the China Security Products Industry Association, and at the end of the same year in a security expo officially announced its entry into the field of security, released security products and solutions.
The announcement made traditional security companies really nervous. Because of the existence of small Haisi, Huawei's positioning in the field of security is more like the role of chip suppliers. The supplier became a competitor, which had to make Hikvision, Dahua and other companies to raise vigilance. But the fact is that, after a few years, Huawei in the terminal product is still no obvious action, small Heath as usual to the supply of chips to security companies. Some industry insiders analyze, perhaps when the security market is overly fragmented, Huawei is not interested in such a market. This situation of mutual peace and quiet has continued until 2019.
2019 Shenzhen Security Expo, Huawei launched three heavyweight video surveillance products, but also launched the first video algorithm mall Huawei HoloSens Store. at that time, just appointed as Huawei security president Duan Aiguo is a passionate speech, saying that it will "adjust the rhythm of the entire industry".
This time Huawei looks serious. 2020 May, then Huawei machine vision president Duan Aiguo shouted out Huawei security goals: "in the field of security, Huawei this year can certainly do the top three, the goal is to do the first in five years." He also said that Huawei's approach is completely different from traditional security manufacturers to "platform + ecology" as a development strategy. "Shouting slogans" outside, Huawei also did a series of organizational restructuring to support the development of security business.
In the past two years, Huawei has been attacking the security market. Some industry veterans summarized to AI Finance, Huawei can take a big single, mainly depends on three aspects: government relations, national brand and ecological play. These factors add up to give Huawei an advantage that other competitors can hardly reach.
"Huawei's entry into security so quickly can't be separated from its government-enterprise relationship." Several industry sources expressed this view to AI Finance. "Security is an industry that values customer relations." A government and enterprise business line source from KDDI said.
"Huawei has access to government relations at the provincial level, and we don't have access to that level." Dahua's sales person said. And after Huawei has access to provincial projects, it will be much smoother to do it at the municipal and district levels.
National branding is also one of Huawei's strengths. From chips, middleware to servers, Huawei's own brand is one of the core reasons for taking many government and enterprise projects. Ecological play, but also Huawei in the past two years often referred to the word, security covers the hardware terminal, business platform, specific applications, solutions, data security and a series of needs, Huawei did not take over, but to do a good job of the top design, will be handed over to partners.
Hikvision and Dahua's helplessness
Huawei's intervention has also changed the pattern of the current security market. "Now our situation is more embarrassing." Liu Yu, a senior Dahua employee, told AI Finance.
In the context of digital transformation, the security industry is also being redefined. Liu Yu observed, with Huawei with the same model into the field of security, and Ali, Tencent, such as the Internet cloud vendors, as well as China's system, such as the state-owned background of the integrator. Their **** the same point is to have a top-level design, can provide a base, good at making a big platform.
Liu Yu said, Hikvision and Dahua also see the demand for information technology around the spurt, but their front-line employees feel some nowhere to start. It is not difficult to understand, the traditional video surveillance companies do product origin, their understanding of information technology and how to do the ability to make a large platform, it is difficult to compete with Huawei or cloud vendors.
Liu Yu told AI Finance, Haikang and Dahua's advantage is that they have long established a complete distribution channel and system. Take a headline company as an example, it has more than 200 offices across the country, equivalent to eight in each province, which means that its sales and service network basically covers from first-tier to third-tier cities. In comparison, Huawei has only 32 representative offices across the country, while Ali has 16 subdivisions and Tencent is a bit more granular.
"But the customers that a company like ours reaches out to, not many are closely related to government departments, mainly small security orders", Liu Yu revealed that the company's orders are more fragmented, transportation, education, buildings are the main several scenarios. The actual order amount is usually not large, such as a neighborhood underground garage is a single, average down 200,000 yuan level is the most common. He said they will also take tens of millions of dollars to do the role of the total set of large projects, but due to capacity issues, the number is limited, such as in the field of transportation, such projects are only about five or six per year, and then more can not be received.
Liu Yu said that in the past two years, the company began to take the idea of ecological cooperation, and Ali, Tencent, China system to reach a partnership. "Ali they are also willing to cooperate with us, through our offices to reach customers." In practice, but it is not smooth. The main reason is that the sales staff do not understand information technology and do not understand the cloud.
For example, in recent years, literature and ancient history as a hot field of information technology, sales staff to have such sensitivity, such as taking the initiative to go to the library to establish contact with the director of the library, so that the follow-up may bring business needs. Liu Yu said, but the company's sales staff will not be able to associate, they will only stare at the traditional security needs, "there is no such thinking."
In addition to establishing partnerships with large manufacturers, the head of the company, represented by Dahua, is also broadening the boundaries of the business. For example, in addition to the security market, the company is also laying out the fire fighting market. "The fire protection market is huge, and in the context of carbon neutrality, it is involved in everything from fine-tuning the management of electricity and energy consumption to security."
Hikvision is similarly in a dynamic adjustment.
As the industry leader, two years ago, Hikvision has recognized the changes in the security industry, when the company began to dilute the concept of security, Hikvision President Hu Yangzhong has proposed that Hikvision experience video perception, to the Intelligent Internet of Things, and then to the integration of things and information, has been developed into a big data company.
To this end, Hikvision has developed a series of innovative businesses, including IoT cloud platform, machine vision, thermal imaging sensing, storage devices, intelligent firefighting, and healthcare. One of its IoT cloud platform, Fluorite Networks, announced in August this year that it intends to spin off 60% of its shareholding to go public on the Science and Innovation Board.
"The cloud platform is a very large investment in the business, and the listing of the fluorite network is conducive to increasing Hikvision's valuation and providing more funds for the development of this business." An industry observer said. But he also said that Hikvision's ability to do software services and Internet cloud vendors still have a certain gap.
However, Huawei does not have an absolute advantage in the field of security. Industry sources told AI Finance, Huawei out of the high price of the product, the model is limited, it is with Hikvision, Dahua gap is dozens of models against the difference of thousands of models. An industry source even said that Huawei's products are mainly used as a brand image, more convenient in the bidding, the actual end equipment Huawei still mainly rely on partners.
Responding to the market speed Huawei also to be slower. Dahua's employees said that a new device development market, Dahua with half a year, Huawei needs two years.
Therefore, it can be seen that despite the impact of Huawei on large projects, the market value of Hikvision and Dahua, which are ranked in the top two of the industry, are still very high, for example, the market value of Hikvision maintains a plate of nearly 500 billion yuan, and they are still maintaining a stable growth momentum. According to the 2021 semi-annual report, during the reporting period, Hikvision's revenue amounted to 33.902 billion yuan, up 39.68% year-on-year; net profit attributable to shareholders of listed companies amounted to 6.481 billion yuan, up 40.17% year-on-year. During the same period, Dahua's revenue was 13.505 billion yuan, up 37.27% year-on-year, and net profit attributable to shareholders of listed companies was 1.643 billion yuan, up 20.03%.
And the recent information about the state-owned cloud, but also the cloud vendors in the center of the competitive arena of uncertainty. Some regions will migrate information systems deployed in third-party public cloud platforms to the state-owned cloud.
People in the security industry also said that there is already some uncertainty about big government projects. In the coming period of time, Huawei as the representative of the cloud vendors, and Haikang, Huawei on behalf of the traditional security companies, is still in a delicate relationship. In the advantage of the difference, they have both cooperation and competition, but in the long run, who can dominate can not yet be determined.