Japanese manufacturers of networking equipment, traditionally also resellers of U.S.-made networking equipment, are rethinking their strategies as the networking equipment market expands. As a result, Japanese companies are beginning to compete with the very companies they have been reselling products for until now.
The Networld+Interop 2001 Tokyo exhibition, which opened Wednesday near the Japanese capital, provided evidence of the trend as NEC, Hitachi and other equipment makers unveiled products or prototypes designed to challenge the dominance of companies like Cisco Systems, Extreme Networks and Foundry Networks.
One of those at the forefront of the push is NEC. It used the Tokyo show to unveil the latest member to its IP8800 family of switches, the 96G bps (bits per second) IP8800/740, and also promoted its CX6800-QS, a network server with QoS (quality of service) functions. The latter is a sister product to its CX5220 switching router that is due on sale in June and has been declared by NEC executives to be one of its first volleys against Cisco.
"We are now trying to develop our own technology and sell it, not just in Japan but around the world," said Hiroshi Satoh, group manager at NEC's workstation and server promotion group. The thinking marks a change in the company's strategy which has consisted, to a large degree, of reselling foreign-made gear. So much so, in fact, the NEC executives concede they are one of Cisco's largest resellers in Japan.
NEC, like many of the other major Japanese networking vendors, believes its expertise in basic research and development in the area of semiconductors is a key advantage. "We have the LSI (large scale integrated circuit) technology to build scalability and reliability into our products," said Satoh. NEC is one of the world's largest semiconductor makers.
Hitachi, also a major semiconductor company, is using Interop Tokyo to announce it is developing a new router. The company hopes to begin selling two new versions in its GR2000 range of high-speed routers next year.
The GR2000-316E has a maximum switching speed of 320G bps (bits per second) while the GR2000-630E model takes this up to 600G bps. Forwarding rates for the two routers are given as 400 million psps (packets per second) and 750 million pps respectively. The two new routers will be big advances on Hitachi's current fastest router, the GR2000-20H, which has a maximum switching speed of 45G bps.
"We have two big competitors, Cisco and Juniper," said Takashi Kumagai, a senior engineer with Hitachi's IP Network Systems Development Division. "The big jump (from 45M bps to 600M bps) was needed to keep in step with them."
It is not just the big brand companies that are looking to increase their sales overseas.
Anritsu Corp., a Tokyo-based maker of measuring equipment and networking equipment for carriers, has been selling in the U.S. for some time and is currently looking to expand its operations there. The company wants to take advantage of the faster pace of networking technology development in the U.S. to help develop its products.
"Things change rapidly. Being in the U.S. market is like walking on moving sand," said Shintaro Inagaki, assistant general manager at Anritsu's corporate business strategy center. "But we can learn the very latest market trends so we can get benefits back in Japan," he said. To make best use of this experience, the company is now planning to supplement its Japanese development laboratory with a second center in the U.S.
Success in the U.S. market will also help the company back home, said Inagaki. "If it sells in the U.S., Japanese customers will buy it," he said.
To be sure, Japanese companies don't underestimate the difficulty involved in competing with U.S. companies and are also not cutting ties with foreign vendors. Products from overseas manufacturers weren't much in evidence on the stands of major Japanese companies but could be easily found in the catalogs and pamphlets being handed out.
Despite hefty competition from U.S. manufacturers, many Japanese vendors are confident that they can carve out for themselves a larger market share in the U.S. Some even have a target.
"I think we can catch up soon, maybe in 1 or 2 years," said NEC's Satoh.