Will Fujitsu Join PBT Parade?
Fujitsu would then join Nortel Networks Ltd. , Siemens AG (NYSE: SI; Frankfurt: SIE), Huawei Technologies Co. Ltd. , and other vendors in support of PBT, which lately has become the Next Big Thing (NBT) in telecom networking. (See Nortel Launches PBT, PBT Gathers Support, and Huawei Joins PBT Fan Club.)
Most famously chosen as the transport technology for the BT Group plc (NYSE: BT; London: BTA) 21st Century Network (21CN) project, PBT is aimed at providing carrier-grade transport using low-cost Ethernet gear. (See BT Likes Nortel's New Ethernet Flavor, BT Rethinks 21CN Core Strategy, and Nortel, Siemens Win PBT Deals at BT.)
Fujitsu isn't doing this just to be cool. The source, who requested anonymity, says Fujitsu's entrance into the PBT market is linked to a request for proposal (RFP) expected to be issued by a major North American operator in the coming weeks -- an RFP that Fujitsu would like to be considered for.
A Fujitsu spokesman downplayed the speculation, telling Light Reading that the PBT market is "certainly a space we're looking at, but we have no announcements at this time."
Fujitsu hasn't declared any PBT allegiance yet, but it supports PBT indirectly. The company's Flashwave 6400 box is a repackaged version of the Hammerhead Systems Inc. HSX 6000, part of a reseller deal struck in 2004. (See Hammerhead & Fujitsu Team up.) And PBT happens to be one of the features Hammerhead offers.
What are Fujitsu's chances of snagging that upcoming RFP? Heavy Reading analyst and resident Ethernet expert Stan Hubbard thinks the company has a shot.
"Fujitsu offers a number of technology options based on its own products and those of its partners, including ADVA Optical Networking , Atrica Inc. , and Hammerhead," Hubbard says. "While Nortel and Siemens may have an early lead, just keep in mind that the market is very young and PBB-TE expertise exists beyond the walls of those two companies." (PBB-TE is the Institute of Electrical and Electronics Engineers Inc. (IEEE) 's euphonius name for the technology -- Provider Backbone Bridge Traffic Engineering.)
"The market is big enough to support multiple vendors," says analyst Inder Singh of Prudential Equity Group LLC .
PBT has caught the industry's attention as a way to simplify the transport of carrier Ethernet at the edge. Multiprotocol Label Switching (MPLS) has been the accepted method to date, but it requires an IP-routing approach that some say is too expensive and complicated for edge networks. Plain Ethernet, though, lacks the resiliency required for telecom; moreover, it's got features that slow it down too much for carrier needs. PBT, which removes those Ethernet features, could be an alternative.
Plus, PBT comes cheap.
"Due to the enormous volume of Ethernet products -- over 200 million port shipments expected in 2007, versus fewer than 1 million ports for core and edge routers -- prices for Ethernet components and switching products are just a fraction of the price of core and edge routers," Singh writes in a note issued yesterday. "Nortel claims capex savings of 40%-80% over IP/MPLS using its PBT solution, with incremental opex savings on top of that."
Hubbard says he would be surprised if most major wireline equipment vendors were not looking at PBT.
"Clearly, BT is not the only one interested in PBB-TE. Multiple technology trials are already taking place with other large operators in Europe and North America, and more and more service providers will be exploring this technology as a potential means of lowering transport costs in the metro/access part of the network."
So how soon can Fujitsu -- or any other vendor -- expect to cash in on PBT? Analysts say that contracts could start rolling in as early as the second half of this year, but that it will take many years before the PBT opportunity has run its course.
Singh tells Light Reading he sees the first half of 2007 as an "experimental stage," with carriers running PBT trials and tests, and the second half beginning the technology's "commercial stage."
"Clearly we're at the beginning of something, but the overall market will take a good five years to develop and mature," he says.
— Ryan Lawler, Reporter, Light Reading