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November 22, 2005

Cisco and ZTE form alliance to counter Huawei-3Com

Cisco Systems Inc and Chinese telecom equipment manufacturer ZTE Corp have teamed up to work on joint projects in Asia-Pacific, in what looks like a clear response to the Huawei-3Com joint venture in China.

By CBR Staff Writer

The two partners said they would collaborate on next-generation networks, 3G, and data technologies in China and APAC, but not Japan where Cisco has a different go-to-market strategy. China is the first target market. Huawei-3Com Technology earlier this year predicted it would overtake Cisco in China within a couple of quarters. 3Com recently informed the SEC that it had closed a deal with Huawei to buy an additional 2% stake in the joint venture, taking its share to a controlling 51%.

The Cisco-ZTE deal is nowhere near as tight a collaboration as H-3C, however. First, it is not a joint venture, but an alliance: there is no technology transfer, nor are there any plans for joint product development of manufacturing operations. Rather it is a co-marketing agreement, designed to open doors for San Jose, California-based Cisco in Asian carriers deploying NGN generally, and Chinese ones in particular.

Rena Qin, a spokesperson for Shenzhen-based ZTE, said that since the company has its own data networking portfolio, we have areas in which we compete with Cisco, but now we’re joined hands to work together on joint future projects.

Frank Bai, MD of ZTE’s UK operations, said the company has already installed an IP-based network at China’s largest fixed-line carrier, China Telecom, and has both fixed and mobile operators among its customers. ZTE has technology in both the GSM and CDMA worlds.

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