Chinese tech giant Huawei (opens in new tab) has decided to break up its cloud and artificial intelligence (AI) group, despite dedicating significant resources during the 14 months since its inception.
The Shenzhen-based firm accelerated its diversification into the cloud market in response to the US sanctions (opens in new tab) on its consumer products business. In January 2020, it combined the cloud services (opens in new tab) and AI units to create a new division.
According to analyst firm Canalys, despite being a late entrant in the game, Huawei Cloud quickly became China's second-largest cloud services provider in Q4 2020, with a market share of 17.4%.
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Recent reports had claimed that Huawei, riding on the recent successes, had committed (opens in new tab) to investing $1.5 billion into the new services division.
However, shuttering the division is an indication of the hardware vendors’ struggles to compete with the established cloud players, be it home-based firms like Tencent and Alibaba, or global providers like Amazon, Google, and Microsoft.
According to an internal Huawei memo seen by Caixin, the server and storage products unit will become part of Huawei’s Internet Products and Solutions Department, which will be renamed ICT Product Solution and handle product research and development.
However, it isn’t exactly sure if this means that Huawei is exiting the cloud space altogether, or whether the closure of the division is just part of an internal restructuring at the company.
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