Mobile World Congress 2009

Transmode and NEC Team Up; Target Fixed and Mobile Operators

| Feb 18, 2009 | Optical Infrastructure | Show Update

| Analyst: Jason Marcheck

Current Perspective: Positive Vendor Importance: High Market Impact: Moderate

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Event Summary

February 17, 2009 – Transmode announced a reseller partnership with NEC whereby NEC will resell Tranmode’s metro WDM gear. The arrangement is aimed at helping NEC fill out its metro optical value proposition, with a particular emphasis on backhaul solutions aimed at fixed and mobile operators. For Transmode’s part, the smaller Swedish vendor figures to gain access to a much broader set of sales channels in markets where it has struggled to penetrate.

Analytical Summary

• Current Perspective: Positive on Transmode’s signing an OEM agreement with NEC by which the Japanese conglomerate will resell the Swedish vendor’s metro WDM equipment. At first blush, the deal seems to match two vendors with capabilities that are complementary on many fronts. From an equipment point of view Transmode’s metro kit should mesh well with NEC’s microwave SDH and long-haul WDM products. In terms of sales channels, Transmode figures to benefit from NEC’s deep market reach in Japan as well as North America. However, the arrangement is non-exclusive, meaning NEC is free to sign up additional metro partners if it sees fit.

• Vendor Importance: High to Transmode, because the deal with NEC should help the Swedish vendor tap opportunities that it could not mine on its own. Case in point, while NEC’s microwave gear will provide some incremental value in crafting a more comprehensive mobile backhaul offering, NEC’s pervasive reach in Asia-Pacific and North America will grant Transmode access to sales opportunities in markets where it has struggled to carve out a significant presence.

• Market Impact: Moderate on the optical infrastructure market, because the partnership matches Transmode’s well respected metro WDM portfolio with NEC’s pervasive sales channels. As a result, this should help to provide Transmode with the customer reach to better challenge giants like Alcatel-Lucent, Ericsson, Huawei, NSN and others in hot areas such as mobile and triple play backhaul. At the same time, no reseller agreement provides a guarantee of sales, and Transmode will still have to contend with the fact that most of its larger rivals will still feature portfolio integration synergies that the Transmode/NEC tandem might not be able to claim.

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