NEC Plots Router Push

NEC Corp. (Nasdaq: NIPNY; Tokyo: 6701) is gearing up for a global assault on the wireless router gateway market following its latest deal with established customer NTT DoCoMo Inc. (NYSE: DCM).

Wireless routers, also known as GPRS Gateway Support Nodes (GGSNs), are the primary interface between a carrier’s radio and packet core networks. In their next-generation guises, these wireless routers comprise a new class of equipment that adds sophisticated service creation, billing, and IP traffic management capabilities to this strategic point in the network.

The Japanese vendor has secured a trial contract to deploy its recently upgraded GGSN and SGSN (Serving GPRS Support Node) within DoCoMo’s W-CDMA network (see NEC Intros Packet Core).

NEC now plans to push these products outside of its home nation and join the host of startups and traditional vendor names competing in the crowded wireless router space (see Having a Flutter on the GGSNs and What's the Wireless Router Market Worth?).

According to spokesman Akiko Shikimori, NEC "will approach operators worldwide from now on," expecting to sell “500 unit systems” in the next three years. "This includes the new type GGSN [and] SGSN but also other nodes employing this new platform architecture."

Shikimori was unable to confirm media reports suggesting that each unit is expected to sell for around ¥20 million (US$171,200). “It drastically differs based on the requirement from each operator’s service.”

Analysts are impressed with the vendor’s bullish stance. “It is a fascinating move,” says Ken Rehbehn, principal analyst for wireless infrastructure at Current Analysis. “They have not targeted this market beyond the close relationship they have had with DoCoMo. This is a statement they have arrived and will be competing head-on with the other GGSN suppliers such as Cisco and Nokia, who will have to pay attention."

NEC has made significant strides in the 3G infrastructure space in the last few months through a partnership with German vendor Siemens AG (NYSE: SI; Frankfurt: SIE) (see H3G Picks NEC/Siemens in HK and NEC, Siemens Power 3). A move into the global wireless router space signals an attempt to establish a market presence based on its own strengths.

“Outside of Japan, a large element of NEC’s success is due to the power of Siemens’ global brand and its ability to market base stations around the world,” notes Rehbehn. “It is interesting that there is no mention of Siemens with this GGSN product.”

— Justin Springham, Senior Editor, Europe, Unstrung

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