HONG KONG – NEC Corp., a Japanese electronic conglomerate, said on Wednesday it expected orders for next-generation network (NGN) equipment to surge as much as six times in three years, helped by demand for new technologies like Internet TV and e-commerce applications.
NEC is trying to win contracts from operators in a new business area called NGN, which would unable new IP-based services such as better-quality Internet calls, high-definition broadcasts and video-on-demand.
NEC is betting on NGN as its driver for earnings as it faces challenges to turnaround its mobile phones and chip business.
The shift to NGN, an IP-based architecture, has been backed by operators including BT Group and Japan’s Nippon Telegraph and Telephone Corp. (NTT), which are trying to upgrade traditional phone users to faster and more efficient fibre-optic networks.
NEC expects NGN-related orders to reach between 500 billion yen ($4.4 billion) and 600 billion yen in 2009, from the expected 100 billion yen this year, said NEC Executive Vice President Botaro Hirosaki in charge of carrier-based businesses in an interview at the ITU Telecom World 2006 in Hong Kong.
“Orders will double next year, and then again the following year”, helped by growing demand for products such as software, he said.
NEC faces global rivals which recently underwent a major reshuffle creating giant partnerships between Alcatel, and Lucent and the network equipment businesses of Nokia and Siemens.
“There are other vendors like Alcatel but what’s unique about NEC is that it has both telecom and information technology (IT),” Hirosaki said.
NEC’s products range from network solutions, software, mobile phones, wireless network and chips.
Hirosaki also said he expected orders for NGN-related products to make up about half of its business geared toward telecom carriers.
NEC, which earns about 28 percent of its total sales abroad, is trying to expand its businesses overseas, which is a strategy also adopted by its rivals such as Hitachi and Fujitsu.
Shares of NEC gained 1.1 percent to 544 yen in Tokyo, slightly outperforming the overall market.