It's no surprise that Nokia has put aside any thoughts of cherry-picking Alcatel-Lucent's assets. Not only do the Finns have plenty of reasons to turn their M&A attentions elsewhere but, under its new leadership, AlcaLu has quickly made itself a less affordable target, a more formidable rival, and a more cohesive operation. (See Euronews: Will NSN Buy AlcaLu's Mobile Unit? and ALU + NSN: A Reality Check.)
The most obvious change has been the dramatic rise in Alcatel-Lucent's stock from its 2012 low: Just this year, the vendor's share price has risen more than 200% on the Paris bourse, and currently stands at €2.89. In New York, the price stands at $4.01, a four-fold improvement compared with mid-October 2012.
But it has also firmed up a product portfolio that's competitive across key market sectors -- fixed access, IP and optical, wireless, the datacenter, and cloud. The only other vendors offering a similar end-to-end product bench are the Chinese players, which are also stretching themselves into the smartphone market.
It's a point CEO Michel Combes can't resist highlighting. "Alcatel-Lucent is becoming more relevant than ever. Our competitors are becoming more and more specialized," he told the company's recent 2013 Tech Symposium in Basking Ridge, N.J. (See AlcaLu Joins the Patent Chase.)
Combes argues the broader industry trends are aligning in his company's favor. "In the past 10 to 15 years, the value was in the network. Then it moved to devices and CPE [customer premises equipment]. Now value is coming back to the network -- the network and the datacenter together."
That plays to AlcaLu's strengths in IP, its most successful product division, responsible for products like its XRS core router. (See Alcatel-Lucent Thumbs Its Nose at Cisco, Alcatel-Lucent Builds Future Around IP, TiMetra at Heart of AlcaLu's Shift, and Light Reading Names 2012 Leading Lights Winners.)
The company is also one of the leaders in optical and is one of the pace-setters in datacenter SDN (software-defined networking) through subsidiary Nuage Networks and in the cloud with its carrier cloud platform Cloudband. (See Ciena Tops Infonetics Packet-Optical Survey and Alcatel-Lucent Expands CloudBand.)
In wireless, AlcaLu has pitched its LTE overlay as a faster upgrade than the single RAN approach, arguing that data-heavy 4G requires a different topology from 3G. It claims eight of the top 10 LTE operators as radio access network customers, including Telefónica SA (NYSE: TEF), China Mobile Ltd. (NYSE: CHL) and the major US operators. (See Sprint Sparks Up Vendors for Faster 4G LTE, Verizon Taps AlcaLu & Ericsson for 4G Small Cells, AT&T Has LTE Small Cells 'in the Lab', and AT&T Picks AlcaLu, Ericsson for LTE.)
Indeed, one market research firm, Dell'Oro Group , just reported that AlcaLu unseated Nokia Solutions and Networks (NSN) from the number three position in the LTE access equipment market during the third quarter of 2013, though both those companies are still a long way from market leader Ericsson AB and second placed Huawei Technologies Co. Ltd..
Of course, the vendor business needs more than just a product set, regardless of the macro trend: A great deal of sales and marketing execution is required. From the operators' point of view, incumbency counts for something, not to mention price.
In addition, the vendor still has a great deal of work on its Shift Plan, including the divestment of the less strategic parts of its business. (See Euronews: AlcaLu's Enterprise Biz Back on the Block , Alcatel-Lucent to Raise $2.7B, Alcatel-Lucent to Cut 10,000 Jobs, and Alcatel-Lucent Unveils Shift Plan.)
Still, AlcaLu's fortunes have improved steadily since Combes took the CEO seat in February, and under his control, and with the financials being addressed more robustly under the Shift Plan, the company looks better aligned with industry trends.
It certainly doesn't look like a company wanting to break itself into parts.
— Robert Clark, contributing editor, special to Light Reading