Hitachi and NEC unveil joint venture

Joint venture between Hitachi and NEC poised to challenge Cisco and Juniper in high-end vendor landscape for routers and switches

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By  Stuart Wilson Published  June 28, 2004

Hitachi and NEC have announced an agreement to join forces in the business of backbone routers and switches aimed at telecommunication companies, government and public sector customers as well as large corporations. The new joint venture will be set up in Tokyo in October 2004 with Hitachi holding a controlling 60% stake and NEC the remaining 40%. The new venture will be capitalised at around US$51m and boast a workforce of approximately 350 staff sourced from both companies. With an initial focus on building market share in Japan, the company also has an eye on expanding sales across Asia and beyond. The new company will supply products to Hitachi and NEC respectively, and the two companies will market them to their individual clients. Hitachi and NEC will strongly promote system integration offerings using the new company's products by effectively combining servers with network equipment. The new company will also market its products through its business partners. “Under the recent expansion of the broadband network market in Japan due mainly to the implementation of the e-Japan concept, there are emerging business opportunities in establishing new Internet Protocol (IP)-based network service infrastructure among telecom operators and service providers. The trend is also seen on a global scale. The strong combination of Hitachi’s backbone router/switch business and NEC’s development capability will create a new leading vendor in this promising market,” said Isao Ono, executive vice president and executive officer of Hitachi. “Teaming up with Hitachi will multiply our efforts to develop state-of-the-art and highly-reliable, mission-critical router/switch products for IP networks, one of the most important infrastructure in the information society and for corporate/business activities,” said Kaoru Yano, senior executive vice president of NEC. The new venture is looking to pull in sales of US$370m in 2005 and challenge the global supremacy of Cisco and Juniper in its target product segment. At present, the two US heavyweights control an estimated 90% of the enterprise router market. Development and production for the joint venture company will be based near Tokyo.

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