huawei award write up

2016 Global Modular UPS Company of the Year Award

2016

BEST PRACTICES RESEARCH

© Frost & Sullivan 2016 2 “We Accelerate Growth”

Contents Background and Company Performance ...................................................................... 3

Industry Challenges............................................................................................ 3

Visionary Innovation & Performance and Customer Impact ....................................... 3

Conclusion ........................................................................................................ 6

Significance of Company of the Year ........................................................................... 7

Understanding Company of the Year ........................................................................... 7

Key Benchmarking Criteria .................................................................................. 8

Best Practice Award Analysis for Huawei ...................................................................... 8

Decision Support Scorecard ................................................................................. 8

Visionary Innovation & Performance ..................................................................... 9

Customer Impact ............................................................................................... 9

Decision Support Matrix .................................................................................... 10

The Intersection between 360-Degree Research and Best Practices Awards .................... 11

Research Methodology ...................................................................................... 11

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ............................................................................................................... 12

About Frost & Sullivan ............................................................................................ 13



Background and Company Performance

Industry Challenges

Energy saving is one of the key challenges for the end users of UPS systems. Especially in the data center segment, the main focus is on improving PUE (Power Usage Effectiveness), while being flexible enough to cope with their constantly evolving needs. This is mainly driven by rising energy bills, environmental constraints, and the increase in power density. The other challenge is the need to address the scalability and flexibility issues among the end users. It has become essential for manufacturers to come up with modular UPS products that will allow end users to scale as and when they grow their business. Given the high demand for modular UPS systems and high intensity of competition, it is quite important for the UPS manufacturers to innovate in this space and come up with advanced modular concepts that allow further flexibility and modularity.

Visionary Innovation & Performance and Customer Impact

Excellence in Addressing Unmet Needs

Huawei’s success in the global modular UPS market can be attributed to its approach towards product development. It takes meticulous efforts to thoroughly understand the requirements, unmet needs, challenges, and shortcomings in the market and develops products that address these issues with high effectiveness. The primary unmet need in the market is flexibility in capacity expansion. End users are frequently posed with the challenge of predicting their future capacity requirement. This is a highly burdensome task which often ends up being inaccurate. Other gaps that exist in terms of customer requirement are 1) from an availability perspective, wherein the typical mean time to repair (MTTR) of a traditional UPS system is around 48 hours and 2) intelligence embedded in the UPS systems for effective monitoring and scaling of the UPS power density to match the increasing density levels of the IT equipment.

Huawei’s modular UPS systems are built on four pillars aimed at addressing these unmet needs and other industry challenges - reliability, efficiency, convenience, and intelligence. It leverages state of the art design in its products and has incorporated an advanced digital chip technology with cutting edge power electronics. This has enabled it to significantly increase the reliability of its units, allowing upto 160 power modules to be connected in parallel. The company employs a patented design to duplicate and distribute all critical components between the modules, including the control unit, communication unit, auxiliary power supplies and fans. Its modular UPS systems also feature an innovative fault isolation system that further enhances the overall system reliability. Its units are equipped with digital sensors, located at all key nodes to simplify operation and maintanance. Its advanced power algorithms and topology ensures 97.5% efficiency in each power module.



Visionary Scenarios through Mega Trends

Huawei boasts of four R&D centers globally for UPS systems, employing over 300 R&D engineers and has obtained over 100 patents. The most intriguing aspect about its R&D team is that all 300+ engineers are dedicated to modular UPS systems. Frost & Sullivan finds this highly commendable. The company has high potential to further strengthen its position in the market with its modular UPS systems, enabled by its long-range, macro-level innovation strategies. As a result of its meticulous mega trend scenario analysis, the company has been able to develop products that not only satisfies the current needs but also addresses anticipated future needs of the end user. Apart from analyzing the trends on a market level, Huawei also constantly studies its customers’ feedback and also the quantitative feedback from its field service reports, to carefully identify and understand the issues and problem areas and focusses its innovation on the gained intelligence. The company has leveraged the advancements in the IGBT and DSP (digital signal processing) technologies to design its own patented modular UPS design that offers industry leading efficiency, reliability and availability. Furthermore, its communication technology based on Huawei’s patented TDD (time division duplex) ensures real-time and reliable control over the modules connected in parallel. Its modular UPS systems employ advanced redundancy control architecture and two-level synchronization to reduce communication between modules and support parallel connection between more modules.

Implementation of Best Practices

Modular UPS systems occupy a relatively smaller portion of the total UPS market, which is dominated by traditional UPS systems. This is mainly due to end user concerns and skepticism about the modular technology. Huawei has gone to great lengths to educate the end users and prove the tangibility of its modular UPS systems. In December 2015, the company organized a massive event to demonstrate live testing of its innovative modular UPS systems. This event was hosted by China Data Center Committee (CDCC) and China Power Supply Association (CPAS) and the tests were witnessed by engineers from TL Certification Center (TLC) and over 300 industry experts. It was also broadcasted live across the world. During this event Huawei demonstrated a “super-capacity system” formed of eight paralleled 800 kVA/W UPSs, comprising of 160 modules (40-kVA each).

The company carried out multiple tests which were focused on three key themes - module reliability and performance, fault isolation in extreme conditions and loop current of the super-capacity system (the most critical aspect in connecting the modules in parallel). The company passed all the tests with flying colors, thus, demonstrating excellence in all aspects. It is also intriguing to note that Huawei is the first modular UPS manufacturer in the world to achieve such a high capacity paralleling of modules, reaching 6.4 MW (unity power factor kVA = KW). This achievement can be attributed to Huawei’s extensive technology expertise combined with its most sincere R&D efforts in areas such as communication, chip designing, and power electronics. This has enabled the company to make significant strides in design concepts that are digital, network-based, and intelligent.



Excellent Financial Performance

Huawei’s tremendous focus on modular UPS systems has propelled it to one of the leading positions in the global modular UPS market in terms of market share. It has established itself as an undisputed leader in the Asia-Pacific market. In 2015, the company registered over 200% revenue growth rate in China for modular UPS systems. It is aggressively increasing its penetration in the western part of the world, especially in Europe. Frost & Sullivan strongly believes that it has the potential to establish a leadership position globally over the next few years.

In 2015, Huawei’s revenues from its UPS business were $190 million, of which $150 million was from modular UPS systems, accounting for 78% of the total revenue. The company currently has a strong focus on expanding into the West European market, where it is already seeing significant success. It organized an energy summit in Madrid in the second quarter of 2016 where it launched its latest generation modular UPS, the “UPS5000-E” boasting industry leading efficiency of up to 97.5%.

Superior Price/Performance Value

The unique aspect of Huawei’s modular UPS systems is that it has extended the hot-swap feature beyond just the power module. It uses an innovative “all hot-swap module design” that allows hot-swap of the power module, bypass module, and control module which further enhances capacity expansion and significantly reduces initial investment for the end user. Its bypass module is designed to provide continuous power supply even at high load conditions. It features a unique design and includes 3 models with rated capacity of 200/320/480 kVA separately according to the rack type. Its control module supports both intra-rack parallel control area network (CAN) communication and inter-rack parallel CAN communication. The intra-rack and inter-rack load share controls are isolated at the control module to achieve better expandability. Its power module is also unique in its own way; it weighs 65% lesser when compared to other modules in the market and offers higher reliability. When a module fault occurs in a modular UPS that does not support an “all hot-swap module design”, the UPS is forced to switch to bypass mode; this affects reliability. However, when a single point of failure occurs in Huawei’s true modular UPS, the redundant module takes over, thereby eliminating any negative impact on the overall power system, thus enhancing reliability.

The company’s modular UPS systems offer high efficiency operation even at low load rates. It offers 96% efficiency at 40% load and 95% at 20% load. It features an “intelligent hibernation mode” which kicks in when the load rate is low (below 10% or 15%). This enables the power modules to automatically switch to "standby" state, to boost load rate and improve operating efficiency. Its units offer high power density of up to 320 kVA per cabinet and have a reduced footprint of 50%. Furthermore, it offers intelligent battery management, extending battery lifespan, low investment on the power distribution system, load and environmental adaptability.



Brand Equity

Huawei features in the global fortune 500 companies and is known for its technology innovation and futuristic approach towards product development. The company strongly believes that the next stage of digital society will be a deep integration of the digital and physical worlds, where traditional industries will be reformed with ICT technologies to trigger a new round of industrial revolution. With this belief, the company has invested substantially in its R&D efforts, specifically targeted at developing modular UPS systems. The company has gained a reputation for innovating based on customers’ unmet needs and enhancing the overall value to the end user. Huawei’s commitment to building a more efficient and integrated information logistics system, linking people to people, people to things, and things to things is highly commendable.

Conclusion

Huawei’s visionary innovations and technology excellence places it at the forefront of the modular UPS industry. Its strong R&D culture combined with extensive intellectual property provides it with a unique edge in the market. Frost & Sullivan firmly believes that Huawei’s path breaking modular UPS systems will prove to be a boon the end users, providing a much needed relief to the industry pain points. The company’s superior technology expertise combined with its high level focus and dedication has resulted in an industry leading modular UPS product.

With its strong overall performance, Huawei has earned Frost & Sullivan’s 2016 Company of the Year award.



Significance of Company of the Year To win the Company of the Year award (i.e., to be recognized as a leader not only in your industry, but among your non-industry peers as well) requires a company to demonstrate excellence in growth, innovation, and leadership. This kind of excellence typically translates into superior performance in three key areas: demand generation, brand development, and competitive positioning. These areas serve as the foundation of a company’s future success and prepare it to deliver on the two criteria that define the Company of the Year Award (Visionary Innovation & Performance and Customer Impact).

Understanding Company of the Year As discussed above, driving demand, brand strength, and competitive differentiation all play a critical role in delivering unique value to customers. This three-fold focus, however, must ideally be complemented by an equally rigorous focus on visionary innovation to enhance customer value and impact.



Key Benchmarking Criteria

For the Company of the Year Award, Frost & Sullivan analysts independently evaluated two key factors—Visionary Innovation & Performance and Customer Impact—according to the criteria identified below.

Visionary Innovation & Performance Criterion 1: Addressing Unmet Needs Criterion 2: Visionary Scenarios Through Mega Trends Criterion 3: Implementation Best Practices Criterion 4: Blue Ocean Strategy Criterion 5: Financial Performance

Customer Impact Criterion 1: Price/Performance Value Criterion 2: Customer Purchase Experience Criterion 3: Customer Ownership Experience Criterion 4: Customer Service Experience

Criterion 5: Brand Equity

Best Practice Award Analysis for Huawei Decision Support Scorecard To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool allows our research and consulting teams to objectively analyze performance, according to the key benchmarking criteria listed in the previous section, and to assign ratings on that basis. The tool follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are illustrated below.

RATINGS GUIDELINES

The Decision Support Scorecard is organized by Visionary Innovation & Performance and Customer Impact (i.e., the overarching categories for all 10 benchmarking criteria; the definitions for each criteria are provided beneath the scorecard). The research team confirms the veracity of this weighted scorecard through sensitivity analysis, which confirms that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies.



The results of this analysis are shown below. To remain unbiased and to protect the interests of all organizations reviewed, we have chosen to refer to the other key players as Competitor 2 and Competitor 3.

DECISION SUPPORT SCORECARD FOR COMPANY OF THE YEAR AWARD

Measurement of 1–10 (1 = poor; 10 = excellent)

Company of the Year

Visionary Innovation & Performance

Customer Impact Average Rating

Huawei 9.0 9.5 9.25

Competitor 2 7.0 6.0 6.50

Competitor 3 5.0 5.0 5.00

Visionary Innovation & Performance Criterion 1: Addressing Unmet Needs Requirement: Implementing a robust process to continuously unearth customers’ unmet or under-served needs, and creating the products or solutions to address them effectively

Criterion 2: Visionary Scenarios Through Mega Trends Requirement: Incorporating long-range, macro-level scenarios into the innovation strategy, thereby enabling “first to market” growth opportunities solutions

Criterion 4: Implementation of Best Practices Requirement: Best-in-class strategy implementation characterized by processes, tools, or activities that generate a consistent and repeatable level of success.

Criterion 3: Blue Ocean Strategy Requirement: Strategic focus in creating a leadership position in a potentially “uncontested” market space, manifested by stiff barriers to entry for competitors

Criterion 5: Financial Performance Requirement: Strong overall business performance in terms of revenues, revenue growth, operating margin and other key financial metrics

Customer Impact Criterion 1: Price/Performance Value Requirement: Products or services offer the best value for the price, compared to similar offerings in the market

Criterion 2: Customer Purchase Experience Requirement: Customers feel like they are buying the most optimal solution that addresses both their unique needs and their unique constraints

Criterion 3: Customer Ownership Experience Requirement: Customers are proud to own the company’s product or service, and have a positive experience throughout the life of the product or service



Criterion 4: Customer Service Experience Requirement: Customer service is accessible, fast, stress-free, and of high quality

Criterion 5: Brand Equity Requirement: Customers have a positive view of the brand and exhibit high brand loyalty

Decision Support Matrix Once all companies have been evaluated according to the Decision Support Scorecard, analysts can then position the candidates on the matrix shown below, enabling them to visualize which companies are truly breakthrough and which ones are not yet operating at best-in-class levels.

DECISION SUPPORT MATRIX FOR COMPANY OF THE YEAR AWARD

High

Low

Low High

Cu

stom

er I

mp

act

Visionary Innovation & Performance

Huawei

Competitor 2

Competitor 3



The Intersection between 360-Degree Research and Best Practices Awards

Research Methodology Frost & Sullivan’s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry players and for identifying those performing at best-in-class levels.

360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS

TechnologyObsolescence

DisruptiveTechnologies

NewApplications

CEO

Demographics

Needsand

PerceptionsSegmentation

BuyingBehavior

Brandingand

Positioning

CompetitiveBenchmarking

EmergingCompetition

CompetitiveStrategy

CapitalInvestments

Availabilityof

Capital

CountryRisk

EconomicTrends

CrowdSourcing

GrowthStrategies

CareerDevelopment

GrowthImplementation

IndustryEvolution

New VerticalMarkets

IndustryExpansion

IndustryConvergence

EmergingTechnologies

Smart Cities

Sustainability

New BusinessCultures

GeoPoliticalStability



Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices Frost & Sullivan Awards follow a 10-step process to evaluate award candidates and assess their fit with select best practice criteria. The reputation and integrity of the Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria Examine eligibility of all

candidates Identify any information gaps

Detailed profiles of all ranked candidates

4 Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options Invite multiple perspectives

on candidates’ performance Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5 Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized award candidates

6 Conduct global industry review

Build consensus on award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria Confirm inclusion of all

eligible candidates

Final list of eligible award candidates, representing success stories worldwide

7 Perform quality check

Develop official award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8 Reconnect with panel of industry experts

Finalize the selection of the best-practice award recipient

Review analysis with panel Build consensus Select winner

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform award recipient of award recognition

Present award to the CEO Inspire the organization for

continued success Celebrate the recipient’s

performance

Announcement of award and plan for how recipient can use the award to enhance the brand

10 Take strategic action

Upon licensing, company may share award news with stakeholders and customers

Coordinate media outreach Design a marketing plan Assess award’s role in future

strategic planning

Widespread awareness of recipient’s award status among investors, media personnel, and employees



About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.