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Hitachi: A Small Fry in the Long-Haul

Light Reading
News Analysis
Light Reading
3/23/2001

Hitachi Telecom is a late bloomer. But amid jeering peers, the firm is pressing ahead in the long-haul DWDM space this week with the release of a new product and sales to an old customer.

This is the second long-haul DWDM (dense wavelength-division multiplexing) platform from the Atlanta-based Hitachi America, which is one of the more than 1,000 subsidiaries of Hitachi Ltd. (NYSE: HIT; Paris: PHA), the $75 billion Japanese concern. Its first DWDM attempt, the Advanced Multiservice Network (AMN) 6100, began shipping last year and has two customers -- Global Crossing Ltd. (NYSE: GX) and Norlight Telecommunications, the Journal Communications subsidiary (see Hitachi Inks Deal With Norlight and Global Crossing to Deploy Hitachi DWDM).

Hitachi's new DWDM product, the AMN 7100, marks an aggressive step for the company, whose previous industry belt-notches include leading the market in PBX sales to retirement homes and hotels. But the firm has a ways to go before the big equipment vendors take notice, especially considering how late to the game the company appears to be. "Those guys are nowhere in the U.S. market," says an exec with one startup competitor, which, itself, hasn't yet signed a customer.

According to David Foote, Hitachi's director of optical products and technology, the new box will function as a transponder, converting optical signals from one wavelength to another; a transmux, allowing lower speed IP and ATM traffic to be combined at the OC192 line rate; and an optical regenerator. Later this year Hitachi plans to add other features, including an optical crossconnect module.

Foote says both of Hitachi’s systems offer technical advantages over its competitors -- namely, automatic gain control, which makes it easy for carriers to add and delete traffic channels.

Global Crossing is already buying and installing the AMN 7100, but Hitachi won't say how large its contract with the carrier is. Also unknown is how Hitachi plans to sell against Corvis Corp. (Nasdaq: CORV), Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Ciena Corp. (Nasdaq: CIEN), Nortel Networks Corp. (NYSE/Toronto: NT), OptiMight Communications Inc., PhotonEx Corp., Solinet Systems Inc., Solstis, and Sycamore Networks Inc. (Nasdaq: SCMR).

The company does have some advantages over the smaller startups, such as components manufacturing help and financial backing from its huge parent company. And it claims to have the manufacturing prowess to be able to turn around customer orders more quickly than Nortel. (Nortel, of course, is likely a bit slower because it’s serving more than two customers.)

Hitachi Telecom has 300 employees and $300 million in annual revenues. Analysts put Hitachi’s long-haul DWDM market share at between 2 percent and 3 percent, so it’s got nowhere to go but up.

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com

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