& cplSiteName &

AlcaLu's New Vision: More Convergence

Ray Le Maistre

Ben Verwaayen today set out the roadmap for Alcatel-Lucent (NYSE: ALU)'s future, and it revolves around combining the best attributes of the Web with the best attributes of communications networks. (See Verwaayen Unveils AlcaLu's New Plan .)

At the same time, of course, Verwaayen wants to make money and turn Alcatel-Lucent into "a normal company."

Say no more!

Essentially, Verwaayen believes there's money to be made from the Web world and the telecom world (carriers and large enterprises) by bringing together the "creativity" of the Web, which has evolved into the interactive and collaborative environment we know and love (or don't understand) today, with the "trust guarantee" to be had from advanced communications networks.

The best of both worlds, you see?

Currently, AlcaLu's main customer base -- the telecom operators of the world -- are (and Verwaayen did not use this phrase) getting stiffed by the growing volumes of "over-the-top" Web traffic, such as streaming video. It's increasing traffic on the carriers' networks but not generating additional revenues.

At the same time the Web community, in Verwaayen's eyes, is constrained by best-effort service delivery, security issues, and clunky e-commerce models.

The optimum scenario, then, is (for example) consumers to be able to buy an online streaming video (to be viewed on any type of screen) with guaranteed service quality, with just one click of a mouse, and with any associated payment being handled behind the scenes by carrier-grade billing, rating, security, privacy, and revenue assurance technology. That would benefit everyone involved -- the consumer, the carrier, and the service/content owner.

AlcaLu's CEO sees that model, which requires better networks, as the future, and he wants his company to be at the heart of the networks that can deliver the dream.

Technology focus
With that goal in mind, Verwaayen and his new management team have identified the areas where Alcatel-Lucent should focus its resources, and where it thinks it can win.

Those areas are: zero touch, high capacity, low cost-of-ownership optical transport capabilities; service-aware, programmable IP technology; and products that enable "broadband everywhere," whether over fixed or wireless connections.

As a result, AlcaLu is to invest in optics, IP, VDSL, and GPON for fixed broadband; and WCDMA (including all HSPA-based enhancements), CDMA EV-DO, and LTE for wireless. IP Multimedia Subsystem (IMS) capabilities, enhanced packet core capabilities, and open standards-based application development environments are also key focus areas.

Some analysts expressed surprise that CDMA EV-DO was still regarded as an investment focus, but Verwaayen was adamant. "I was just talking with a very big CDMA customer, and I'm very excited about the prospects." It's just possible that customer was China Telecom Corp. Ltd. (NYSE: CHA), which is soon to get a CDMA-based 3G license. (See China's 3G Move to Trigger Spending.)

Those investments will be underpinned by a development strategy Verwaayen was also keen on when he was at BT Group plc (NYSE: BT; London: BTA): He wants his company to create technology building blocks and then re-use them time and time again. "Do things once, do them right, and then reuse" is the new mantra.

And those building blocks need to be "open" as well. "Our systems need to be open, our standards need to be open, and our minds need to be open. Our industry has been about proprietary, closed technology and mindsets. That needs to change."

WiMax decision
WiMax has given the CEO and his team a challenge. Fixed WiMax is still in favor -- "it's a wireless DSL, so it fits in with our broadband everywhere strategy" -- and will continue to receive investment.

Mobile WiMax, however, is an alternative to LTE, and isn't needed. "We see things differently to the way we saw them two years ago. The world has changed so we have decided to stop [investing in mobile WiMax]," said Verwaayen. "It's a tough decision, but the right decision."

As for the legacy technologies (such as ATM and ADSL) in AlcaLu's portfolio, Verwaayen was keen to stress they're not being dumped -- they just won't have investment dollars showered on them. "We are not walking away [from these technologies], we are reducing our spend on them. We will keep them running and make sure they're alive and ticking for years to come. Where we are reducing our R&D, that doesn't mean we're getting out of those areas."

Cutting jobs
As for the job cuts announced today, Alcatel-Lucent noted that, among its 70,000 or so staff, it currently has 15,000 managers, of whom 1,000 are being axed, and 10,000 contract staff, of whom 5,000 will be let go. No particular geography is being targeted with the cuts.

Verwaayen and his team didn't provide any updated financial guidance for the current fourth quarter or provide any detailed forecasts for 2009 and beyond.

— Ray Le Maistre, International News Editor, Light Reading

(9)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Beer
12/5/2012 | 3:25:12 PM
re: AlcaLu's New Vision: More Convergence
Isn't this what this army of bozos has been doing for the last, I don't know, gazillion years?
User Rank: Light Beer
12/5/2012 | 3:25:12 PM
re: AlcaLu's New Vision: More Convergence
The marketing boys must be working over time on this one

"zero touch, high capacity, low cost-of-ownership optical transport capabilities; service-aware, programmable IP technology; and products that enable "broadband everywhere," whether over fixed or wireless connections."

Does this mean that current optical offerings are high touch, low capacity, high cost of ownership? ...and what about those non-programmable IP technologies? Broadband everywhere...didn't the Telecom act of '97 attempt that one?

Fundamentally, it is about service offerings and cost savings....market speak went out with the 90s.

Oh yes, are all those lay-offs going to be domestic? Probably, right? New band, same song.
User Rank: Light Beer
12/5/2012 | 3:25:11 PM
re: AlcaLu's New Vision: More Convergence
seems like this is more of a statement of "stay the course". I think we all understand, providers and vendors alike, that we need to move to a converged network that keeps the reliability of our traditional telephony gear without the tremendous CapEx liability that our legacy network imposed.
User Rank: Light Beer
12/5/2012 | 3:25:11 PM
re: AlcaLu's New Vision: More Convergence
> ...70,000 or so staff, it currently has 15,000 managers...

Wow, just wow. This ratio is even higher than I ever expected it to be. Believe me, these 1000 axed managers will not hurt. It's even Verwaayen's best move until now. However, the remaining ones have already tried and failed with something in this area since gazillion years (as flam has mentioned) without any real form of success.

Old Telco
Old Telco,
User Rank: Light Beer
12/5/2012 | 3:25:10 PM
re: AlcaLu's New Vision: More Convergence
Remember, in ALU parlance, pretty much everyone above an administrative or entry level position is a 'manager'. AL execs, in particular, still have their admin staffs to cater to their needs. LU shed most of its admin staffs years ago.
User Rank: Light Beer
12/5/2012 | 3:25:09 PM
re: AlcaLu's New Vision: More Convergence
Right -- in AT&T and all companies that came after, at least, and I think this is true of many other old corporations, everyone who is non-union is a "manager"... even with no direct reports.
Old Telco
Old Telco,
User Rank: Light Beer
12/5/2012 | 3:25:06 PM
re: AlcaLu's New Vision: More Convergence
And more than a few ALU employees listed themselves as 'VP's, again with no direct reports. But the former ALU titles are only self-reported. Not allowed to publicize employees titles... Apparently ALU STILL has not 'leveled' the titles between LU and ALU staffs.

Of course, soon they won't have too. Former LU employees seem to be bearing the brunt of the layoffs. Not exactly what the US Congress had in mind when it approved the deal.
User Rank: Light Beer
12/5/2012 | 3:25:04 PM
re: AlcaLu's New Vision: More Convergence
It is much easier to layoff in the US than in France and Germany (a long drawn out process requiring government approval). If they should reverse their fortunes, they will likely grow faster in the US because of that same reason.
User Rank: Light Beer
12/5/2012 | 3:25:03 PM
re: AlcaLu's New Vision: More Convergence
Exactly...however, Alcatel built up the employee base in Europe over the years and has left the US susceptible to bearing the brunt of the cuts during the downturn.

A very large portion of the ALU revenue (and profit) comes from the US. But that tends to subsidize employment elsewhere in the company. I am sure Congress did not see that one either.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
Wednesday, August 17, 1:00PM EDT
Using Open Source for Data Centers and Cloud Services
Roz Roseboro, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (0) comments

As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments

Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments

VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments

Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments

In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments

Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments

How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments

Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments

In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments

Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments

CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
LRTV Interviews
AT&T Launches Network Functions on Demand

7|17|16   |   05:26   |   (0) comments

Roman Pacewicz, Senior Vice President, Offer Management & Service Integration, AT&T Business Solutions, discusses the operator's launch of its Network Functions on Demand service.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Yahoo Signing Off in $4.83B Sale to Verizon
Mari Silbey, Senior Editor, Cable/Video, 7/25/2016
Is Dish Going Down the Drain?
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/21/2016
Facebook Gets Its Drone On
Ray Le Maistre, Editor-in-chief, 7/22/2016
Ericsson Ejects CEO Vestberg
Ray Le Maistre, Editor-in-chief, 7/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.