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Optical/IP

Fujitsu Leads in Verizon RFP

Fujitsu Network Communications Inc. could be the frontrunner for a Verizon Communications Inc. (NYSE: VZ) contract worth hundreds of millions of dollars, according to analysts.

Analysts say Fujitsu is well positioned against competing vendors Alcatel-Lucent (NYSE: ALU) and Nortel Networks Ltd. in the bidding for a packet optical RFP that Verizon issued this summer. (See Verizon Preps God Box RFP.)

The RFP calls for a "second source" optical product to be deployed along with the Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) 7100 Optical Transport System, Verizon's primary ROADM product.

According to sources, the winning product should be capable of Sonet, wavelength switching, and connection-oriented Ethernet on a single device with a universal switching fabric.

Few optical devices are capable of all that, which is why the field was narrowed fairly quickly down to just three competing products: Alcatel-Lucent's 1850 Transport Services Switch (TSS), Fujitsu's FlashWave 9500 Packet Optical Networking Platform (ONP), and Nortel's Optical Multiservice Edge (OME) 6500.

In a research note issued this morning, Jefferies & Co. Inc. analyst George Notter writes, "One of our industry contacts suggests that Fujitsu is in a good position to win the business."

Notter is not alone in believing that Fujitsu is well positioned in its bidding for the packet optical RFP. Morgan Keegan & Company Inc. analyst Simon Leopold and UBS Research analyst Nikos Theodosopoulos have both written that Fujitsu could win the contract.

"We view Fujitsu as a serious contender; its aggressive entry into the fray may signal an early lead on the competition," Leopold wrote after the Fujitsu FlashWave 9500 product was announced.

In an email to Light Reading, Leopold wrote that he believes Fujitsu is "well positioned" and that he "would not consider it a big surprise" if the company walked away the winner.

In a research note from October, Theodosopoulos writes, "we believe Fujitsu, and to a slightly lesser degree Alcatel-Lucent, [is] positioned well to be chosen" for the contract.

In Notter's note, he cites Fujitsu's "strong history of selling Verizon optical transport infrastructure - particularly Sonet add/drop multiplexers" and the RBOC's "significant experience working with Fujitsu products" as reasons why the company could win the bid.

Another advantage that the FlashWave 9500 has is that it seems to have been designed with the Verizon RFP in mind. (See Fujitsu Updates the MSPP.)

Heavy Reading analyst Sterling Perrin says, "Fujitsu built the product around Verizon's needs from Day 1, which gives them a little bit of an edge."

Compare that with Alcatel-Lucent or Nortel, whose products pre-date the RFP. Perrin says, "That means they had to either convince Verizon they should go with their product, or go back to the drawing board and tweak the product" to make it fit the RFP.

Analysts expect a decision on the RFP to be made soon. Leopold says that Verizon could choose a winner "at any time." Theodosopoulos, on the other hand, says Verizon is in no rush to make a choice, and the winner could have to wait until the first quarter for a final decision.

A representative of Verizon declined to comment, saying that all contracts are bid under non-disclosure agreement, and the company has a policy of not commenting on RFPs until after contracts are awarded. A representative of Nortel also declined comment.

Representatives of Fujitsu and Alcatel-Lucent could not be reached.

— Ryan Lawler, Reporter, Light Reading

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