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Siemens and Huawei Edge Closer

Chinese vendor Huawei Technologies Co. Ltd. has pushed further into the European market with an enterprise systems partnership with newly regrouped German giant Siemens Communications Group (see Siemens, Huawei Team Up and New Siemens Group Debuts).

And while the companies say the agreement is limited to systems for business customers, at least one analyst group believes the relationship will likely extend into the carrier market.

The deal is Huawei's latest move to further expand its international presence, and builds on its joint venture with 3Com Corp. (Nasdaq: COMS) in the North American market (see Huawei Eyes Super Sales Growth and 3Com & Huawei Launch Switch in US).

The partnership with Siemens gives the Chinese vendor a Tier 1 channel into Europe's corporate sector, where Huawei has been busy promoting its wares and where Siemens has a massive installed base of PBX customers (see Huawei Trumpets Euro Roadshow). The German vendor will sell Huawei's Quidway enterprise routers alongside its HiPath converged services platform as it bids to retain a strong position as a supplier of equipment and integration services in Europe, where it faces competition from the likes of Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Avaya Inc. (NYSE: AV), Cisco Systems Inc. (Nasdaq: CSCO), and Nortel Networks Ltd. (NYSE/Toronto: NT).

It's a growth market they're selling into, if research firm IDC is to be believed. It reckons the market for enterprise communications gear will grow from $6 billion in 2003 to $10 billion in 2008 in Western Europe, and from $635 million in 2003 to $917 million in 2008 in Central and Eastern Europe.

For Siemens, the deal is simply an "enhancement of our multivendor strategy for the enterprise sector," says spokesman Thomas Schepp. He confirms the deal is for enterprise systems only, and not for carrier gear. "Our strategic partner in the carrier sector is Juniper Networks, and there are no plans to change this," says Schepp.

But the relationship between Siemens and Huawei does go deeper, as the duo have a joint venture for the mobile operator market in China (see Siemens, Huawei Sign JV ). And analysts at Lehman Brothers believe the new deal will "likely expand into the service provider market as the partnership matures," according to a research note issued today.

The Lehman team says following discussions with Siemens, "it seems clear that the company is continuously looking at ways to expand its relationship with Huawei" following the early success of the mobile venture.

The Lehman analysts also believe this move is likely to put pressure on rival Chinese vendor ZTE Corp., which also has ambitious international expansion plans, to follow suit and cement some strong vendor partnerships (see Overseas Sales Boost ZTE).

— Ray Le Maistre, International News Editor, Light Reading

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