Avici Not in on China Deal

Huawei Technologies Co. Ltd. says its contract to build phase one of China Mobile (Hong Kong) Ltd.'s (NYSE: CHL) next-generation IP backbone is for its own core routers only and doesn't include gear from OEM partner Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7). (See China Mobile Picks Huawei.)

Avici had prospered from Huawei's other recent core router deal with China Telecommunications Corp. (NYSE: CHA). (See Huawei Partnership Boosts Avici .) In that deal, the Chinese vendor supplied 10 NE5000s, the name Huawei gives to Avici's SSR core router.

So when Huawei announced the deal with China Mobile, analysts wondered whether Avici would benefit again. But Huawei spokesman Richard Lee says, "In this deal, they are all Huawei high-end routers." He wouldn't disclose the value of the contract.

Avici wouldn't answer questions on the matter, saying it doesn't comment on other vendors' customer activity as a matter of company policy.

Analysts at Lehman Brothers, while unsure whether Avici was getting any of the action, stated in a research note that Huawei's deal could have more of an impact on Juniper Networks Inc. (Nasdaq: JNPR).

"We note that Juniper has been an incumbent core routing vendor to China Mobile, and we view this announcement may be perceived as an incremental negative for Juniper." But the analysts reckon Juniper's business is holding up in China, despite increasing competition from local vendors such as Huawei. "Our field checks suggest Juniper's business in China this quarter appears to be on track, helped by continued solid traction of its E-series edge routers."

Huawei, perhaps not surprisingly, has a strong supplier relationship with China Mobile, which earlier this year opted to deploy the Chinese vendor's softswitch (see China Mobile Picks Huawei Softswitch).

China Mobile had not responded to questions regarding the contract award by the time this article was published.

— Ray Le Maistre, International Editor, Boardwatch

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marc_goofy 12/5/2012 | 1:29:18 AM
re: Avici Not in on China Deal Hi There,

You are right : in the B2B press, editors tend to avoid any reader's letter or contributor's paper which may hurt a sponsor. It might seem opposite to the freedom of expression, but it is logical from an industry/business stand-point.
Say it is a given, no one can change that, and express your frustration on Usenet or on your own blog (which may help you start a new business, by the way ;-).

Keep going,
Belzebutt 12/5/2012 | 1:29:18 AM
re: Avici Not in on China Deal This is one story about one deal between Huawei and Avici.

Actually the deal this story is based on is between Huawei and China Mobile, is it not? I think it's a stretch to put a vendor that happens to not be in the deal as the ONLY one mentioned in the headline.
bonowsfiber 12/5/2012 | 1:29:18 AM
re: Avici Not in on China Deal as i said, and the deletion of my post proves, lightreading is biased towards incumbents and advertisers.

as an aside, Huawei does indeed have their own "high end" routers -- the NE5000 -- which if the reporter asked a proper follow-up question -- "Mr. Lee, who makes the Huawei NE5000 for Huawei?"

the answer would have been:


But it didn't get that far in the questioning and Lightreading decided to go with a sexy headline.

Lightreading = Light on Reporting
routethus 12/5/2012 | 1:29:13 AM
re: Avici Not in on China Deal The question has to be asked, does Huawei like to admit that it resells Avici?
digits 12/5/2012 | 1:29:08 AM
re: Avici Not in on China Deal It seems some folk regard this article as being anti-Avici in some way. That is absolutely not the case.

On this occasion Huawei won a major backbone deal in China that didn't include Avici routers. It would have been understandable if people had assumed that Avici's SSRs might well have been included in the deal because of the previous Huawei deal with China Telecom, when Avici DID get a piece of the action in what was a significant deal for that company.

In no way was this a negative or anti-AVici story. Anyone reading the Huawei press release could easily assumed that such high capacity routers would have been part of the deal, but Huawei says they're not.

The story isn't about Avici failing in any sense. It's about clarifying the situation and dealing with assumptions that might have been made from Huawei's official communications.

Ray Le Maistre
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