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Lucent Invests in Conceptual R&D

New research center to focus on efficient and environmentally-friendly product design and delivery

July 5, 2004

3 Min Read
Lucent Invests in Conceptual R&D

Some quizzical eyebrows were raised last week after Lucent Technologies Inc. (NYSE: LU) and the Irish government announced an investment of €69 million in new facilities for “value-chain-driven research.” (see Bell Labs Plans New R&D in Ireland)

Common questions were:

  • What the heck is value-chain driven research anyhow?

  • Does Lucent really need to spend more on research and development right now, bearing in mind that it appears to be (a) shrinking and (b) continuing its policy of reselling other vendors’ products or acquiring companies to get its hands on new technology, rather than developing it in-house (see Lucent Buys Softswitch Vendor Telica for the latest example).

  • Shouldn’t Lucent be focusing its efforts on making better use of the research and development done by Bell Labs?

    The answer to the first question -- what the heck is value-chain-driven research -- appears to be key. Lucent isn’t talking about developing new products in Ireland. It’s talking about developing new approaches to the whole business of being a supplier to telecom operators.

    This includes avoiding duplication of development work in different product lines by adopting more modular designs –- with the goal of reducing the time it takes to adapt to new market requirements, and reaping economies of scale in production processes.

    “We’re trying to integrate the global requirements from the start, so we have one configurable product that could be easily tweaked,” says John Verdon, a Lucent spokesperson. For example, Lucent will aim to rationalize wireless base station designs so that they can be more easily adapted for different frequencies.

    The concept of value-chain-driven research also includes designing products with a much longer life expectancy, so they can be upgraded or repurposed instead of being scrapped when they grow old and tired.

    Other vendors are working on similar ideas. When Cisco Systems Inc. (Nasdaq: CSCO) launched its CRS-1 core router in May, CEO John Chambers talked about it having a lifespan comparable to a telephone switch. “Once we put it in place, we don’t want to move it for one to two decades,” he said (see Carriers Weigh Savings With Cisco CRS-1).

    Lucent also appears to be responding to carriers’ calls for a different sort of relationship with their suppliers. BT Group plc (NYSE: BTY; London: BTA), for instance, has made it clear that it wants to move away from buying boxes; it wants to build long-term relationships with its suppliers. At one end of the food chain, BT wants to influence product development (see Agere Targets Resilience for example). At the other end of the food chain, BT wants suppliers to be involved in the management and maintenance of its networks (see BT Moves Ahead With Mega Project).

    The big question here is whether Lucent can respond to such challenges when it’s reselling other vendors’ products, outsourcing manufacturing, and often glossing over internal research and development in favor of acquiring new technologies from other companies.

    Can 120 researchers in Ireland help address this issue? More raising of quizzical eyebrows may be in order.

    – Nicole Willing, Reporter, Light Reading

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