Original URL: http://www.theregister.co.uk/2012/10/11/cisco_marketing_vs_huawei/

Cisco lobbied telco customers to steer clear of Huawei

Marketing campaign painted Chinese firm as a threat

By Neil McAllister

Posted in Data Networking, 11th October 2012 23:21 GMT

Lawmakers aren't the only ones who have been pushing to block Chinese networking companies, including Huawei and ZTE, from bidding on US telecom contracts. According to The Washington Post, some of the strongest pressure has come from the Chinese firms' US-based competitors, in particular Cisco.

The networking giant has been lobbying its telecoms customers to shun Chinese vendors as far back as September 2011, the Post reports, citing a "remarkable" Cisco marketing document leaked by anonymous source.

Titled "Huawei & National Security," the seven-page document makes the case that the Chinese vendor is not to be trusted, and that its networking products could be used as tools of international espionage.

"Despite denials, Huawei has struggled to de-link itself from China's People's Liberation Army and the Chinese government," the document is quoted as saying.

At the time the document was distributed, Cisco was singing a somewhat different tune publicly. In a September 15, 2011 blog post, Keith Goodwin, then VP of Cisco's Worldwide Partner Organization, wrote that "healthy competition makes [Cisco] stronger," calling out Huawei by name alongside other competing firms.

"Each of our competitors brings its strengths, innovations, and programs to address a variety of customer and partner needs," Goodwin wrote.

But during Cisco's November 2011 earnings call, CEO John Chambers revealed that the networking giant was much more willing to play hardball with the Chinese competition than Goodwin's comments suggested.

"We have to take on Huawei in China," Chambers told financial analysts during the call. "Huawei will always compete with us on price, and they will be our toughest competitor going out four to five years."

Noting that Huawei had recently launched a reseller channel program in the US, Chambers said Cisco planned to "make it hard on them" in its home market.

It's not unusual for rivals to talk tough, particularly in highly competitive markets such as networking. But in this case, it seems Cisco's brand of hardball went much further than competing on price, to include a marketing campaign designed to stoke fears that Chinese companies could threaten US security.

That's assuming the purported marketing document is genuine, of course. When contacted by The Register for comment, Cisco spokesman John Earnhardt would only reply, "We've asked for a copy of this [document] from the Post for authentication, so we don't have it to share. Sorry can't help right now."

During recent Congressional hearings, however, lawmakers used language very similar to that found in the leaked document to explain why doing business with Huawei and ZTE could be detrimental to US interests.

"Throughout the investigation, Huawei consistently denied having any links to the Chinese government," reads the US Congress House Intelligence Committee report, adding that many analysts continue to believe otherwise.

For its part, Huawei has denied being involved in any spying activities, saying, We have never damaged any nation or had the intent to steal any national intelligence, enterprise secrets or breach personal privacy and we will never support or tolerate such activities."

In a statement issued earlier this week, the Chinese firm accused the Congressional investigation of having "a predetermined outcome," saying, "We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market."

Whether or not that's true, it's likely that the House Intelligence Committee findings will seriously impact Huawei's ability to expand its presence in the US – and no one, it seems, will be happier than Cisco. ®