Redback Beats AlcaLu to French Deal

BERLIN -– Broadband World Forum Europe -– IP vendor Redback Networks Inc. was strutting here Wednesday after securing a deal with French alternative operator Neuf Cegetel Group (Euronext: NEUF) to supply edge routers that will support the carrier's FTTH rollout. (See Neuf Picks Redback.)

Redback claims it will be the primary supplier of routers that will aggregate traffic from the carrier's planned €300 million ($424 million) fiber access network, for which Alcatel-Lucent (NYSE: ALU) is supplying its GPON access platform. (See AlcaLu Racks Up Contract Wins.)

Ericsson AB (Nasdaq: ERIC), Redback's new parent company, played a role in landing the Neuf deal too, as the Swedish firm's services division will provide integration and support services as part of the contract with the French carrier.

Neuf had not responded to questions about the deal as this article was published, and neither side is saying how much Redback's piece of the buildout is worth.

Magnus Almquist, Redback's VP of field operations in Europe, says the deal is significant because Redback beat out AlcaLu and Cisco Systems Inc. (Nasdaq: CSCO), and in AlcaLu's own backyard, no less.

So how did Redback secure the deal? Almquist says that while price was "one element" Neuf considered, "it wasn't the deciding factor," adding that the services support from Ericsson was a key element.

Staff at Alcatel-Lucent were keen to paint the contract award as a one-off.

"It's a single data point -– don't read too much into it," stated one executive, who requested anonymity. He claimed that while Redback had landed the deal, "it didn't win on technology."

The deal helps showcase Redback's SmartEdge 1200, introduced in June to increase the density and subscriber-management powers of Redback's flagship router family. (See Redback Beefs Up Its Router.) Redback is pushing to put its name in the IP frame alongside the market's three major players, Cisco, Alcatel-Lucent, and Juniper Networks Inc. (NYSE: JNPR). (See Report: Router Market and AlcaLu Boasts Router Success.)

While Redback commands only about 4 percent of the edge router market, it has ambitions to grow, and had already been boasting earlier this week of business that Ericsson had helped bring its way. (See Redback, Ericsson Tout Deals.)

That Redback had been acquired by Ericsson earlier this year was a factor in sealing the Neuf deal. "We would not have been able to do that if we were not Ericsson," Almquist says.

In fact, he contends Europe, the Middle East, and Africa (EMEA) has become Redback's fastest growing market, with revenues running 60 to 70 percent higher than a year ago.

Figures from the Dell'Oro Group show Redback slipped earlier this year, with second-quarter edge router revenues down 3 percent from the same quarter in 2006. (See Report: Router Market.)

But Redback says it's been growing, with SmartEdge revenues of $60 million in the second quarter, compared with $47.8 million in last year's second quarter.

— Craig Matsumoto, Senior Editor, and Ray Le Maistre, International News Editor, Light Reading

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