Cisco, Fujitsu Target Japanese Market

by Colin C. Haley

UPDATED: The network gear maker teams with Fujitsu to develop high-end routers for the Japanese carriers and corporations.

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.

This article was originally published on Monday Dec 6th 2004