Based on the agreement, Hitachi and NEC will establish a joint venture company in October 2004, providing highly competitive products. The new company will be located in Tokyo with about 350 employees from both companies. It will have a capital of around 5.5 billion yen. Hitachi will own 60% of the new company while NEC will own 40%.
The new company will supply products to Hitachi and NEC respectively, and the two companies will market them to their individual clients. Hitachi and NEC will strongly promote system integration offerings using the new company's products by effectively combining servers with network equipment. The new company will also market its products through its business partners under the new company's own brand name.
"Under the recent expansion of the broadband network market in Japan due mainly to the implementation of the e-Japan concept, there are emerging business opportunities in establishing new Internet Protocol (IP)-based network service infrastructure among telecom operators and service providers. The trend is also seen on a global scale. The strong combination of Hitachi's backbone router/switch business and NEC's development capability will create a new leading vendor in this promising market," said Isao Ono, executive vice president and executive officer of Hitachi.
"Teaming up with Hitachi will multiply our efforts to develop state of-the-art and highly reliable, mission-critical router/switch products for IP networks, one of the most important infrastructure in the information society and for corporate/business activities," said Kaoru Yano, senior executive vice president of NEC.
The new company aims to introduce competitive products to the market on a timely manner by combining Hitachi and NEC's technologies such as IPv6 and bandwidth control.