NSN, Juniper Plan Ethernet Marriage
The new venture, which needs regulatory approval, is set to be formed by the end of this year, and will be based in the Netherlands, where both companies have facilities. Juniper will own 60 percent of the entity, and NSN the remaining 40 percent.
Both partners are contributing the relevant parts of their technology portfolios. Juniper is pitching in its MX960, MX480, and MX240 metro Ethernet Services Routers, while NSN is offering up its A-series carrier Ethernet edge switches -- the A-8000, A-4000, A-2160, and A-2000 -- as well as its Aspen network management system, which will be used in deployments to manage Juniper's MX series boxes as well as the A-series products. (See Juniper Expands the Edge and Nokia Siemens Shares Ethernet Secrets.)
That's a compelling combination, according to Heavy Reading senior analyst and Carrier Ethernet market specialist Stan Hubbard.
"Heavy Reading survey feedback and conversations with multiple operators indicate Juniper has an outstanding reputation for overall platform- and service-related leadership related to carrier Ethernet service edge and metro aggregation platforms, but as a stand-alone company it lacks an Ethernet access play," states Hubbard.
"Deepening the relationship with NSN in the form of a joint venture should help ensure and accelerate the development of a more integrated and competitive Carrier Ethernet access, aggregation, and network management portfolio without consuming a lot of resources," adds the analyst.
NSN isn't putting all of its Ethernet assets into the new venture, though -- but for a good reason. Its technology contribution does not include NSN's family of Surpass hiD Ethernet switches (6630, 6650, and 6670). Why? Because the new joint venture is aiming to take to the market an MPLS-based offering, notes Martin Brundert, head of strategy and portfolio management, Broadband Connectivity Solutions, at NSN.
"We strongly believe in MPLS, and further evolution toward MPLS-TP [MPLS Transport Profile]. [The hiD switches] are not part of that journey," Brundert tells Light Reading.
That move also truly puts to bed any lingering suggestion that NSN might want to keep a toe in the PBB-TE camp, which it had initially backed but abandoned last year. (See Nokia Siemens Gets Ruthless on R&D Focus and IEEE to Rubber-Stamp PBB-TE .)
Ready-made customer base
When it's formed, the new venture will have a ready-made customer base of 200 service providers, though the companies don't want to comment currently about what sort of revenues the joint venture will have when it opens for business.
Heavy Reading's Hubbard, though, believes that the combined portfolio being pooled by the partners generated about $123 million in revenues in the fourth quarter of 2008, and about $100 million during the first quarter of 2009.
That latter figure would be approximately 10 percent of the combined Carrier Ethernet switch router (CESR) and Ethernet service edge (ESE) market, which generated about $1 billion in revenues globally during the first three months of this year.
So who's going to run the new outfit? Brundert says a CEO has been lined up but not yet publicly identified, and total headcount for the as yet unnamed joint venture will be in the "low double-digits" (so anything up to 50).
That doesn't seem like many people to address a market that, while suffering slightly from the current economic environment, is on course for significant expansion in the coming years: The CESR market alone, for example, is set to grow from $1.9 billion this year to $2.6 billion in 2012, according to market projections from Heavy Reading. (See Carrier Ethernet Suffers Shrinkage.)
But the new venture doesn't need a large team because it won't be responsible for the nitty-gritty technical development, explains Brundert. He says product R&D will continue to be done by the parent companies, while the new venture will focus on the marketing and selling of the joint portfolio.
But does that need a new outfit? The two companies had already moved closer to address the carrier Ethernet market in February this year when they announced an "enhanced partnership." (See Nokia Siemens, Juniper Team on Ethernet.)
Brundert says the approach to the market is critical as packet and transport technologies come together and service providers start using single, combined transport and packet infrastructures for their fixed and mobile, business and residential traffic. "It needs a robust structure," and more than just a partnership, states the NSN man.
Robustness will certainly be required if the new venture is to grow its business and mount a meaningful challenge against market leaders Cisco Systems Inc. (Nasdaq: CSCO) and Alcatel-Lucent (NYSE: ALU), while seeing off the challenge of other carrier Ethernet hopefuls such as ECI Telecom Ltd. , Ericsson AB (Nasdaq: ERIC), and Huawei Technologies Co. Ltd.
— Ray Le Maistre, International News Editor, Light Reading