Tuesday, October 30, 2012

Cisco Systems, Inc. (NASDAQ:CSCO) Replaced By China Unicom Over Security Concerns

China Unicom has replaced Cisco Systems, Inc.(NASDAQ:CSCO) is one of the most crucial backbone networks of the country, quoting security reasons, as the 21st Century Business Herald reports.

The replacement deal targets China 169, which is backbone network router of Wuxi node. As per the indications of analysts, the product vulnerability and back door problems are the main concerns of China Unicom.

The move comes at a time when a congressional report has labelled Huawei Technologies and ZTE Corp security risks in the US. Chinese domestic operators have started to intensify network security since that time, according to the report.

Cisco, with the virtue of being the largest maker of networking equipment in the world, occupies a hefty market share in China. It is responsible for more than 70% share of China Telecom’s 163 backbone network and more than 80% share of China Unicom’s 169 backbone network.

163 and 169 backbone networks constitute the most important networks in China and are responsible for delivering more than 80% of the information in the country’s Internet.

Cisco terminated its longstanding sales agreement with ZTE Corp earlier this month.

The impact of the US report has dampened sales for ZTE and Huawei. Countries like New Zealand, Canada and Australia have taken similar stances against the Chinese companies.

For Huawei, the report has stopped some of its attempts to build a channel in the US market. The company is working with Synnex and other niche distributors to lure solution providers to represent its storage products and data networking.

Security and corporate espionage problems are deterring all US companies from connecting with Huawei. A provider of broadband network services, Clearwire Corp. is purchasing new equipment from Huawei to develop its capacity. The company says that it has support of the US government to purchase from Huawei, provided the equipment passes security tests.

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