Hitachi and NEC joined hands to take on Cisco

Thanks rumbleph1sh. On Friday, Hitachi announced that they will set up a joint venture with NEC to make mid-range and high-end routers and switches. Although the demand for these devices are constantly growing, competing with Cisco which, by the way, holds a dominant position in Japan, may be no different than setting out to find the end of the rainbow!

Demand for such networking equipment is expected to grow steadily as more individuals and businesses use the Internet. But the market is currently dominated by U.S. makers including Cisco and Juniper Networks.

The venture, which will be capitalised at 5.5 billion yen ($51.3 million), will aim for revenues of 40 billion yen in the year starting next April.

"This venture with NEC will strengthen our router and switch businesses. The new company aims to churn out globally competitive products," Hitachi Executive Vice President Isao Ono told reporters.

Despite Ono's intention, Cisco and Juniper are unlikely to be unduly concerned, analysts said.

"Even in their home market (Japan), Cisco holds a dominant position. In the global market, they (NEC and Hitachi) can hardly catch sight of the frontrunners," said Yuichi Ishida, an analyst at Mizuho Investors Securities.

"It is not an easy task to stage a comeback from where they are now. But this is a rapidly growing market we are talking about. If they can beat rivals in technological innovation, expanding market share is quite possible."

View: Read more at Reuters

News source: Reuters

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