Cisco Forms Strategic Alliance with Fujitsu

December 5, 2004

By Charles Waltner, News@Cisco

Today Cisco Systems gained another key ally in its efforts to help telecommunications companies transition to networks based on Internet Protocol technology.

Cisco has teamed with Fujitsu Ltd., Tokyo, to bring its products to Japan's telecommunications companies and major corporations. The announcement is just the latest development in Cisco's highly successful long-term strategy to meet customer needs and improve business opportunities through collaboration with leaders in the information technology industries.

As part of the new multi-year strategic alliance, Fujitsu and Cisco will establish a joint engineering team focused on adapting Cisco's high-performance networking equipment for the Japanese market. The effort will focus on tailoring Cisco's new high-end router operating system, called IOS XR, to the needs of Japanese telecommunications companies. Additionally, Fujitsu and Cisco will create and market an aligned product line featuring Cisco's CRS-1, 12000 Series routers, and Catalyst 6000 and 4000 Series switches.

This alliance marks the first time Cisco has collaborated with another networking equipment manufacturer in developing technologies for a core software base. Fujitsu is Japan's leading systems integrator and the third largest systems integrator in the world, providing Cisco with unparalleled expertise for selling its products to Japanese telecommunications companies and corporations. By partnering with Cisco and folding Cisco's high-end equipment into its product line, Fujitsu will be able to address a greater range of its customers' needs.

Japan has one of the leading broadband adoption rates of any country and is renowned for its development and adoption of high technology. Fujitsu's technical expertise and understanding of the market will give Cisco invaluable insight into the country's advanced Internet Protocol (IP) networking requirements and the requirements for advanced networks in other countries and regions.

The Fujitsu strategic alliance is just the latest example of Cisco's comprehensive and highly successful partnering strategy. Cisco works with thousands of companies to help all aspects of its business, including marketing, training, sales, research, manufacturing and services. But Cisco reserves strategic alliances like the one it formed with Fujitsu for multi-faceted, multi-year relationships with industry leading companies. Each alliance typically involves five to 15 initiatives per year. Cisco currently has strategic alliances with over a dozen companies, including IBM, Hewlett-Packard, Intel, Microsoft, BearingPoint, EDS, Capgemini, Italtel, Ericsson, Siemens Mobile and Motorola. Last year Cisco's strategic alliances generated $2.7 billion in revenue, representing more than 12 percent of the company's income. Cisco's strategic alliances program has been widely recognized for its excellence by such organizations as research companies IDC and Gartner, as well as the Harvard Business School and Forbes magazine.

Steve Steinhilber, Cisco's vice president of strategic alliances, says the reason for Cisco's success with partnering is its corporate-wide commitment to the concept. Partnering is one of the "big three" in Cisco's business strategy of "Build, Buy, Partner" and receives complete support from the company's management. As a result of this focus, Cisco invests in the tools and training to maximize results of any partnership, Steinhilber says.

Cisco has created specific quantitative and qualitative measurements that allow both Cisco and its strategic alliance partners to develop detailed business plans and assess key goals of the relationship. The company methodically analyzes how well any partnership or any initiative in an alliance is meeting such goals pertaining to revenues, market knowledge, technical knowledge, market development, brand differentiation, and profitability, among others.

"Our philosophy is not to try to manage relationships but to drive results," Steinhilber says. "Well-formed alliances share a number of characteristics, including a clear understanding of the mutual goals, executive commitment from both sides, and a balance of short and long term benefits for both members."

Steinhilber says Cisco partnering operations became a core business strategy when John Chambers and Charlie Giancarlo formed the first formal strategic alliance program in the early 1990s.

"At the time it was a fairly unique approach for the networking industry," Steinhilber says. "There were not a lot of companies dedicating specific business operations to partnerships but it has proven to be one of our great strengths as a company."

Steinhilber says partnering helps Cisco stay focused on its core competency of developing and deploying networking equipment. Strategic partnerships offer a cost-effective way to explore new technologies or enter new markets, he adds. As is the case with the Fujitsu alliance, partnering often helps Cisco gain better access to specific markets by taking advantage of another company's expertise. Partnering also allows Cisco to provide its customers with more extensive product offerings by combining its network equipment with the technologies and services from other vendors.

"Very few companies can do it all themselves," Steinhilber says. "We recognize that we only have a piece of the puzzle. Partners like Fujitsu help us offer customers better answers to their needs and challenges."

Charles Waltner is a freelance writer in Oakland, Calif.