Sponsored By

Lucent Gears Up for Product Blitz

Industry observers speculate the company is preparing to announce two new products

November 6, 2001

6 Min Read
Lucent Gears Up for Product Blitz

As Lucent Technologies Inc. (NYSE: LU) attempts to reinvent itself with a new management team and new product focus, rumors are circulating that it will announce at least two new products on Wednesday when it briefs analysts, investors, and press on its product strategy.

One of the products is expected to be an ultra-long-haul DWDM transport platform, while the other is an ATM/MPLS switch called the TMX 8800.

These announcements come at a critical juncture for Lucent, which has seen its stock tumble from $75 in December of 1999 to roughly $7 a share today. But analysts are hopeful that the company will exploit its strong research and development team at Bell Labs to introduce new and innovative products.

“They have to do something,” says Rick Schafer, an analyst with CIBC World Markets. “Every other company out there has ultra-long-haul or at least an announced road map for it.”

Although Lucent is not willing to give out details just yet, the industry is abuzz with speculation. Word coming from New Jersey is that the company is developing a product that will use Raman amplification to transport traffic between 1,500 kilometers and 2,000 kilometers with up to 2 Tbit/s of capacity, at transmission rates of 10 Gbit/s. The product roadmap will likely increase transmission rates to 40 Gbit/s, say sources.

Lucent claims that its current generation of long-haul DWDM products, the WaveStar OLS family, supports distances up to 1,020 kilometers, But some analysts say that it is typically used for distances between 400 and 500 kilometers. The WaveStar OLS 400G supports 80 channels for 400 Gbit/s worth of capacity. The OLS 800G supports 80 channels and transmits traffic at 10 Gbit/s for a total capacity of 800 Gbit/s. It also can transmit 320 channels of 2.5 Gbit/s traffic. The newer WaveStar OLS 1.6T supports 160 channels and transmits traffic 10 Gbit/s per channel for a total capacity of 1.6 Tbit/s.

The WaveStar 400G and WaveStar 800G have already shipped to customers, but the WaveStar 1.6 T product hasn’t. A $90 million contract was announced with TyCom Ltd. (NYSE: TCM; BSX: TCM) in July of this year for long-haul DWDM (see Lucent Wins TyCom Deal). The WaveStar 1.6 T was listed as one of the platforms that would be installed, but later in the press release the company stated that the WaveStar 800G will actually be shipped first. Deployments are expected to begin by the third quarter of 2002.

Lucent also announced a $100 million contract with Time Warner Telecom Inc. (Nasdaq: TWTC) last January for the WaveStar 1.6 T, but so far only the 800G has been installed in that network, as well.

The distance limitations of the current product line could hurt Lucent in winning additional contracts with larger carriers in the Unites States where many routes are longer than 500 kilometers. The reason is that systems that are optimized for distances of 500 km must use expensive regeneration equipment to convert optical signals back into electrical signals and then retransmit them as optical signals. This can add significant costs to the entire system, says Dave Smith, vice president of engineering for Corvis.

“Since Lucent is the only major competitor that has not announced ultra-long-haul or a 40 Gbit/s strategy, I think that an announcement like this is very important,” says Scott Clavenna, director of research at Light Reading and president of PointEast Research LLC. “Carriers want to see transmission of at least 1,500 km, and they want to see an upgrade path to 40 Gbit/s from a single platform that won’t require them to build an overlay network to increase capacity.”

Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Ciena Corp. (Nasdaq: CIEN), Corvis Corp. (Nasdaq: CORV), Fujitsu Ltd. (KLS: FUJI.KL), Hitachi Ltd. (NYSE: HIT; Paris: PHA), Marconi Corp. PLC (Nasdaq/London: MONI), NEC Corp. (Nasdaq: NIPNY), Nortel Networks Corp. (NYSE/Toronto: NT), Siemens AG (NYSE: SI; Frankfurt: SIE), and Sycamore Networks Inc. (Nasdaq: SCMR) have all either announced or have already shipped ultra-long-haul transmission products.

Cisco Systems Inc. (Nasdaq: CSCO) is also planning to announce a long-haul DWDM platform with a reach of up to 2,000 km -- the ONS 15808 -- in the next couple of months (see Cisco Preps Long-Haul DWDM Platform).

In addition, a slew of startups have announced ultra-long-haul gear, including PhotonEx Corp. and Innovance Networks (see The Ultimate Backbone ).

“There’s no question that long-haul transport is a weak market right now,” says Schafer. “But after it bottoms out, carriers are going to start buying new gear, and they will want the next generation of equipment. The games that Nortel and Lucent have played in the past, where they cut prices to win deals, won’t work anymore.”

Lucent’s competitors say that it will take more than speeds and feeds to win the notice of carriers these days, especially with so many players offering products in this category.

“With the current downturn in the economy, we’re seeing carriers focus more on cost and return on investment,” says Corvis’s Smith. “Their priority is coming up with a workable business solution that meets specific needs, like reduced provisioning time or ease of installation. Traditionally, we haven’t seen Lucent address these kinds of issues in previous products.”

The company is also rumored to be introducing a new ATM/MPLS switch to the market this week. This is not too surprising, given the fact that Lucent recently discontinued its MSC 25000 core ATM switch, in the hopes of building a newer box that also supports MPLS and IP in a single unit (see Lucent Bags High-End Switch). The rumor floating around for the past few months has been that Lucent is scrapping its older design for an entirely new product.

Sources close to the company say that the new product, called the TMX 8800, is based on the technology from a terabit routing startup called Nexabit Networks that Lucent acquired back in the summer of 1999. Lucent paid some $750 million for the company, which at that point had no real product to show for its efforts. A year later, founder Mukesh Chatter left, along with most of the original engineering team (see Lucent Faces "Exodus of Nexabit Staff"). The project has been relatively quiet ever since, with no word on a planned terabit IP router.

The new TMX 8800 will supposedly use the IP hardware technology from Nexabit with software added to run Navis iOperations software -- Lucent’s network management software -- as well as software to interwork between PNNI (private network-to-network interface) and MPLS, say sources. It will likely face competition from the 3200 from Équipe Communications Corp., the 7670 Routing Switch Platform (RSP) from Alcatel, the MGX 8850 from Cisco, and the Passport 15000 from Nortel (see Alcatel ATM Switch Steps Up).But the real question is: When will Lucent actually have either of these products available for the market? Once upon a time, the company tried to one-up Ciena by announcing a big leap in long-haul DWDM technology several years before it could actually deliver it (see The Last Laugh Is On Lucent). It's to be hoped that the new Lucent won't try the same trick again.

— Marguerite Reardon, Senior Editor, Light Reading

Want to know more? This very topic is the subject of a couple of sessions at Lightspeed Europe,Light Reading’s annual conference, on December 4-6, 2001, in London. For details, see: Long-Haul DWDM and ATM Upgrade

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like