Fujitsu wins Verizon packet optical bid

Fujitsu beats Alcatel-Lucent, Nortel to compete with Tellabs

Fujitsu Network Communications appears to have won a prized contract to supply Verizon with packet optical transport equipment, according to Simon Leopold, an analyst with Morgan Keegan.

In August, Leopold said he believed only two other vendors were in the running: Alcatel-Lucent and Nortel Networks, with Huawei Technologies as a possible long shot.

Of the three contenders, Fujitsu had the most up-to-date gear, having unveiled its packet optical networking platform, the Flashwave 9500, in June 2007. As a result, it had already been considered a likely winner.

According to Leopold, the deal could bring Fujitsu half a billion dollars or more over several years. It would make Fujitsu a second supplier behind Tellabs, whose 7100 reconfigurable optical add/drop multiplexer (ROADM) has already been widely deployed by Verizon but at nearly break-even prices.

Packet optical networking platforms are designed to help carriers migrate from legacy to packet-based networks by integrating Sonet, Ethernet and ROADM functionality in a single product.

Leopold believes Alcatel-Lucent may have been at a disadvantage in this bid at least partly because of the company’s recent merger. “Alcatel-Lucent struggled to integrate the products from the two companies for a comprehensive solution, in our view,” he wrote. “We think Alcatel-Lucent bid the former Alcatel 1850 Transport Service Switch platform, a next-generation optical switch, coupled with ROADM features from the former Lucent’s Universal Packet Mux that was announced at Globalcomm 2006 yet was scrapped post-merger, a victim of product rationalization.”

Fujitsu’s win should keep incumbent supplier Tellabs on its toes as well, he said. “Tellabs is not being replaced by Fujitsu, but Tellabs must continue to invest in its 7100 platform to develop [packet optical transport] features, which likely contributes to margin pressure on the product.”

Leopold believes Ciena was not a contender for the contract because “it lacked a ROADM-based product.”