Alcatel-Lucent hones enterprise focus

Alcatel-Lucent has had a difficult birth. Since the two struggling public network system vendors officially merged in December 2006, the Franco-US company has seen 10% of its share price wiped away by a profits warning; it has posted a larger than expected fourth quarter net loss of e618 million; and it has announced plans to chop 12,500 jobs from its global payroll.

Under the circumstances, the company’s senior executives might have been forgiven for keeping a low profile until they had some concrete good news to share. Instead, Hubert de Pesquidoux, president of the company’s enterprise network business has declared war – on dominant rival Cisco.

Specifically, in a bullish keynote speech to raise the morale of customers and partners attending Alcatel-Lucent’s Enterprise Forum in Paris mid-February, Pesquidoux made it plain that Alcatel-Lucent has no plans to exit the enterprise network market. On the contrary, “we are not frightened to take on the elephants in our industry,” says Pesquidoux, adding that he had no plans of coming second. “We are dead serious about winning,” he says. But winning what, and by when?

In all probability, the short-term goal of Pesquidoux’s address was to win back some customer and partner confidence. Since the trans-Atlantic merger was first mooted last summer, Alcatel’s enterprise channel and its largely European customer base have wondered about the significance of how combining a company with virtually no corporate network business (Lucent), with one whose business is already dominated by public network sales (Alcatel). Would the new company decide to concentrate completely on public network markets and exit the corporate network business in the same way that Lucent did five years ago when it spun-out Avaya?

Pesquidoux’s address will have gone some way to allaying any fears on this score. Picking through Alcatel-Lucent’s enterprise product portfolio, he was able to point to the strong global market leadership enjoyed by the company’s call centre software subsidiary, Genesys, and the continued growth of its OmniPCX brand in the maturing TDM-to-IP migration market.

He also had news of several major customer and channel agreements, including a $350 million 10-year deal with the University of Pennsylvania Medical Centre, and a global reseller agreement with Orange Business Services. The former, along with Lucent’s established relationships with the US Department of Defense, promises to increase the company’s opportunities in North America. The latter, is an example of how the company expects to leverage its strong public network presence to boost its enterprise business channel.

However, preaching to the converted is inevitably easier than winning new converts, and it remains to be seen whether Alcatel-Lucent’s strategic message will be sufficient to win customers away from such a powerful competitor as Cisco.

At first sight, the company’s vision of “business transformation through network transformation” seems to offer little in the way of originality. Network systems vendors have been arguing for years that modern, integrated IP networking systems are an essential platform for any organisation that wishes to respond quickly to changing business requirements. Indeed, it is now several years since Serge Tchuruk, then Alcatel’s CEO and chairman and now chairman of Alcatel-Lucent, went to market under the slogan “business without boundaries” – a similarly ‘vision-rich’ description of how converged network technology would provide customers with  a seamless, flexible business platform.

The best that can be said for Alcatel-Lucent’s new twist on this old message is that it is no less original than that of any of its competitors.


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