Cisco, Fujitsu Target Japanese Market

UPDATED: Cisco and Fujitsu will collaborate on high-end routers
and other products for Japanese carriers and corporations moving to Internet
Protocol systems, the companies announced.

The alliance between the San Jose, Calif., industry leader and the Tokyo
communications giant reflects the growing push for interoperability. It also
underscores the growing importance of Asia for production, as well as sales
of network equipment.

The companies’ relationship dates back to 1998, when Fujitsu began selling Cisco
products in 20 countries. But this pact brings Fujitsu into the development
process.

“Fujitsu is the largest System Integrator in Japan and the third-largest
integrator worldwide,” Charles Sommerhauser, a Cisco spokesman, told
internetnews.com. “Forming this agreement as a common framework for
closer cooperation makes good sense for both parties as well as for
customers.”

The alliance will initially focus on the Japanese market in several areas.
The companies will jointly develop Cisco’s IOS-XR operating system for
multi-terabit routers. It’s the first time Cisco has worked with another
firm on OS development.

Fujitsu expects to offer co-branded routing products running IOS-XR to
telecommunications service providers in Japan as soon as spring. The company
will sell the equipment alongside its servers and other computing equipment.

Cisco expects to work closely on test and integration of the joint products
with the Japanese telecom carriers. In addition to router work, the
companies plan to cooperate on switching, support and service initiatives.

Financial terms were not disclosed, and the number of engineers working on
the project has not been set.

Cisco’s partnership with Fujitsu comes after a quarter in which it saw its
core router market share slip 2 percent to 58 percent during the third
quarter, according to Infonetics Research.

The company still comfortably holds the top spot, but it’s feeling pressure
from Juniper, which now holds 36 percent of the worldwide
market after gaining 6 percent last quarter. Juniper is also rolling out new
offerings to try and capitalize on its momentum.

In a recent research note to investors, analysts at SG Cowen & Co. said that
Cisco’s router revenue “has been volatile over the past several quarters, as
Juniper has steadily gained share.” Some of the market share losses may be
due to product transitions, SG Cowen said.

Additional details about Cisco’s router strategy are expected at its annual
analyst meeting this week.

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