For some time, NEC America Inc. has been quietly launching new products, making small gains in the U.S. data networking market. It's not poised to become a powerhouse anytime soon, but its end-to-end strategy could lead to a solid foothold in the market.
The Irving, Texas-based company's data products, marketed under the BlueFire name, include layer two and three switches, routers, a 10 Gigabit Ethernet card and products that provide IPsec security and quality of service. All of NEC's data networking products are IPv6 compatible.
With these products, NEC has stepped into a very competitive market. Cisco controls more than 60% of the U.S. data networking market, and half a dozen other vendors are battling for the leftovers.
Even among those struggling for second place, NEC admits it is barely a recognized player. It's usually one of those companies listed as "other" in market share reports, joked John Stafford, NEC's assistant general manger of IP networking.
The company has been more successful with its networking products in Japan, but even there it is far from dominant. The company has a 3% market share in Japan, according to the Framingham, Mass.-based research firm International Data Corp.
NEC is more established in the U.S. market as a phone systems vendor. It offers voice over Internet Protocol (VoIP) systems based on the H.323 standard.
NEC is marketing its networking products in conjunction with its voice systems, hoping to leverage that sales channel to provide its customers with an end-to-end voice product. With this approach, said Stafford, NEC customers are guaranteed to have a network with the proper quality of service and management features needed for latency and jitter-sensitive voice applications.
There can be some advantages to deploying a single-vendor system, said Maximilian Flisi, an analyst with IDC. With such systems, users may be guaranteed more feature-rich management systems and fewer integration problems than if their network used a blend of products from different vendors, he said.
NEC is one of a small number of vendors -- including Cisco Systems Inc. and Nortel Networks Inc. -- to offer networking products as well voice products.
NEC may have little choice but to bundle its networking and voice products, said Zeus Kerravala, vice president with Boston-based research firm, Yankee Group. He said it gives the company an existing sales channel to pursue and may boost its ability to sell its data networking products in the U.S. market.
But NEC is a second-tier competitor in the VoIP market, said Kerravala. Instead of taking business away from competitors, NEC has generated most of its VoIP business by converting existing accounts from traditional systems to IP-based systems.
Right now, this is really the only strategy that NEC can adopt, said Flisi, but eventually, if it wants to grow, it will have to move beyond its voice customer base.
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