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Verizon Communications Inc. (VZ) Strengthens Cisco Systems Inc. (CSCO) Partnership

Verizon Communications Inc. (NYSE:VZ) announcement that it was tapping Cisco Systems, Inc. (NASDAQ:CSCO) for 100G optical technology for its metro network does not come as a surprise as both companies have had deep working relationship the past two years. Over the past few years, both companies have partnered on a number of projects, Verizon having had some input on the development of NCS 4000 while Cisco continued to supply it with a number of products.

The deal with Verizon also comes as a surprise to some people in the industry as Cisco has an ongoing supply relationship with the likes of Ciena Corporation (NYSE:CIEN), Alcatel-Lucent SA (ADR) (NYSE:ALU) and Coriant. However, there was mixed-reaction in the industry as rarely does Cisco Systems, Inc. (NASDAQ:CSCO) sit down to discuss its optical business as was the case with Verizon.

Verizon gets Cisco support

Cisco Systems, Inc. (NASDAQ:CSCO) vice president and general manager affirms that other optical vendors were informed prior to the company entering into a deal with Verizon. The executive also admits that they could not have sealed the metro deal had it come down to a “‘product beauty contest’” as there could have been all sorts of deliberations that could have favored incumbent vendors.

The win according to the executive was partly because of Cisco’s status as a large financial-stable vendor, able to support all Verizon’s ongoing needs. Cisco ability to support Verizon Communications Inc. (NYSE:VZ) TDM to IP transition also had an impact on it being a front runner compared to other vendors.

Cisco discount unlikely

Senior analyst Sterling Perrin of Heavy Reading, in a note to clients reiterated that Cisco winning the metro deal came down to three differentiators: timing of market, capabilities, and price. Cisco’s integrated optical packet NCS 4000 has been available since 2014, having preceded products from Ciena which also earned a supply deal from Verizon Communications Inc. (NYSE:VZ).

Gartner has also rubbished suggestions that because of Cisco Systems, Inc. (NASDAQ:CSCO)’s long relationship with Verizon Communications Inc. (NYSE:VZ), it discounted itself in the deal. Price was one of the key factors but not the only one. Gartner also affirms that a conclusive investigation was carried out on trying to find out what kind of problems the carrier faced instead of just having to sell them a box.

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Viraj loves to write and express his views on anything related to Finance, Crypto, or Fintech. He has been covering Finance & Crypto for more than five years now. He likes Tesla. He also writes on Healthcare, and Technology among other stuff.