What's Next for AlcaLu-Qualcomm?
Alcatel-Lucent and Qualcomm's small cell partnership is a big deal for the pair as both look to pull ahead in a competitive space, but it may only be the start of high-stakes deals for both. (See AlcaLu's Small Cell Menu: Stake and Chips.)
Partnering with Qualcomm and selling it a tiny stake in the company is a first step in Alcatel-Lucent's Shift Plan for recovery announced in June, but the vendor said Tuesday it's looking to do two to four more strategic partnerships of a similar magnitude. (See Alcatel-Lucent Builds Future Around IP.)
An Alcatel-Lucent spokesman wouldn't speculate on whether future potential collaborations would also fall in the small cell space, but getting its lightRadio radio access network (RAN) architecture in the tiny base stations is certainly a top priority for the vendor.
Small-cell backhaul is likely one area that's on AlcaLu's radar, suggests Current Analysis analyst Ed Gubbins. AlcaLu already has partners in this space such as Radwin, Sub 10 Systems and Bridgewave, but they are largely startups and unable to give AlcaLu the financial resources it's looking for out of these deals.
A backhaul partnership might not be the best idea for AlcaLu, however, as in current market conditions, Gubbins says multiple partners makes more sense than just one big one.
AlcaLu also has a slew of partners, including other silicon suppliers, that might be questioning what the deal the means for them. For example, Heavy Reading analyst Gabriel Brown points out, AlcaLu worked with Mindspeed and Broadcom in the past for femtocells and is partnered with Freescale on Light Radio. It remains to be seen if the Qualcomm investment has any implications for them.
As far as Qualcomm was concerned, teaming with Alcatel-Lucent was likely a no-brainer. The chipmaker just launched its femtocell chip at 28nm after a long build-up, so it was in need of customers, Brown says, noting "Alcatel-Lucent is probably the leading small cell vendor today so it's a good start."
Gubbins adds that Qualcomm hasn't been as successful in small-cell silicon in the past as it would like, so it's looking for vendors to help champion its technologies. It's hard to find a more ardent or committed small-cell supporter than Alcatel-Lucent, Gubbins agrees.
"And of course, one of ALU's top customers –including for small cells – is AT&T, which wants to deploy a lot of multimode small cells. So this deal makes sense for Qualcomm in multiple respects," Gubbins writes in an email to Light Reading.
While Qualcomm owning a stake in Alcatel-Lucent makes this partnership unique, it's by no means exclusive. Cisco Systems Inc. -- also a big AT&T Inc. partner -- and Qualcomm, for example, announced a development partnership for small cells at Mobile World Congress in 2012. A Cisco spokesman says it is business as usual with regards to their tie-up.
However exclusive the partnership ends up being, it likely won't be the last for either AlcaLu or Qualcomm. As reiterated by a number of companies to Light Reading, small cells, especially of the multimode variety, are a complicated business. It's also one that wireless operators are keen to see perfected as they look to their vendor partners to build out their network strategies. (See Spidercloud: Cisco Naïve on Small Cell Ambitions.) — Sarah Reedy, Senior Editor, Light Reading