Cisco Systems of the US, a network equipment company, and computer maker Fujitsu of Japan have formed an alliance to increase Japanese sales.

The two companies will sell co-branded internet networking equipment, such as routers and switches, in Japan.

Cisco will make the routers and Fujitsu will provide operating software input.

Fujitsu wants a profitable router business, while Cisco wants to boost its market share from 60% to 70% in Japan's highly competitive market.

The joint venture should also help Fujitsu bring new router products to market more quickly.

Pushing for profit

Fujitsu executive vice-president Chiaki Ito said his company planned to achieve profitability in its router business, which has sales of 40 billion yen (£201m; $392m), in its next financial year starting in April.

He also wants to increase annual revenues from routers by 50% in three years.

Cisco is keen to develop a market for its heavy duty CRS-1 line of routers, designed for telecoms, mobile and cable TV companies that are expanding their internet protocol (IP) networks.

Fujitsu, which is a major supplier to Japanese telecoms giant NTT, plans to start selling the co-branded routers from early next year. It hopes to extend the partnership with Cisco to other parts of the world.

"Cisco brings to the partnership its strength in networking products like routers and switches while Fujitsu brings its strength in IT (information technology), system and network integration as well as solutions," said Mike Volpi, senior vice president of Cisco's routing technology group.

The announcement comes two days ahead of Cisco's annual meeting with Wall Street analysts in Silicon Valley.

Progress on its sales of top-of-the-range routers is likely to be high on the agenda and the Japanese market appears to be critical to Cisco, because it is so advanced in the development of internet-based networks.

Two out of three of Cisco's paying customers for the CRS-1 are in Japan.

The terms of the partnership with Fujitsu were not disclosed.