ZTE Resells Ciena Gear in China

ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) has been reselling the Ciena Corp. (NYSE: CIEN) CoreDirector optical switch for about a year.

Analyst Simon Leopold of Morgan Keegan & Company Inc. mentioned a possible partnership more than a year ago. But he wasn't able to confirm it until recently, by sifting through the dangerous underworld of... Oh, who are we kidding? He found it on ZTE's Website.

"ZTE ZXMP C660/C640 originate from Ciena’s CoreDirector® series," the site says.

The deal was never formally announced, but Ciena now confirms it's real. A Ciena spokeswoman adds that CoreDirector is the only Ciena product being resold by ZTE.

"The whole agreement was established to help us get further into China," the spokeswoman says. As for ZTE, the company wanted something to suit the International Telecommunication Union (ITU) G.ASON standard for Automatically Switched Optical Networks. (See Cutting Opex in Optical Networks.)

North America represents 75 percent of Ciena's sales, so a partner like ZTE, which sells primarily into China but also into regions such as Africa and Eastern Europe, could be helpful. "We see this as a means to grow sales in some emerging markets, albeit at a potentially lower margin, while also presenting a chance to reduce costs," Leopold writes.

The duo has one sale it's willing to discuss: the C660/C640, in use by Inner Mongolia Netcom, according to Ciena's spokeswoman.

ZTE officials weren't immediately available for comment.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:15:55 PM
re: ZTE Resells Ciena Gear in China Seems like a good way to get the name out there... ZTE has all the connections and an easier "in" with the carriers, but they keep using the Ciena name and get some branding going that way.

Margins would be a question (Leopold mentions that in his note), but getting some cachet in China might make it worth it. If it works.
Pete Baldwin 12/5/2012 | 3:15:51 PM
re: ZTE Resells Ciena Gear in China ZTE got back to our query and noted that they announced the Ciena partnership, back in June at a Beijing trade show. It's an exclusive partnership.

It's more than an OEM deal; ZTE says they're working with Ciena at joint labs in China and the U.S.
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