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Optical/IP

Is Lucent Sitting on OEM Surprises?

Neither Lucent Technologies Inc. (NYSE: LU) nor Marconi plc (Nasdaq/London: MONI) will comment on rumors that the two may be planning an OEM alliance.

Scuttlebutt about the possibility of a matchup comes hot on the heels of Lucent's decision to halt development on its core ATM multiservice switch, the TMX 880 (see Lucent Chops TMX 880). Lucent has stated that it will OEM as needed to fill demand for integrated solutions.

Could Marconi top the list of possible partners? After all, Marconi is hawking a high-end ATM multiservice switch, the BXR-48000 (see Marconi Adds 'c' to Its OC192 and Marconi's Switch Gets Tolly-fied).

A pairing's not likely, some analysts say, given that Lucent cited lack of demand in discontinuing the high-end TMX 880. "I know Lucent's been looking [for OEM partners], but I really hadn't heard about Marconi," says Sam Greenholtz, senior analyst at Communications Industry Researchers Inc. "It just doesn't make sense... Lucent has a tough enough time selling what it's got. Why put another vendor name out there if demand isn't there?"

Some skeptics, speculating that Lucent has been trying to hide its own lack of traction behind demand rhetoric, say a Marconi deal might not be so outlandish. "The TMX didn't seem to play well," says Brent Wilson, analyst at Current Analysis. Lucent might be better off to go with a partner and spin development cycles on tight integration, he says, than to struggle uphill on its own.

One source says word of a Marconi deal may have started as a suggestion in the wake of Lucent's latest cuts. "You know how these things work," said one source familiar with Lucent, who asked not to be named. "Bankers come up with an idea they hope to fund, then suddenly a rumor makes the rounds."

Still, few observers contacted for this article deny that there's a lot of talk about just how Lucent will fill the holes left in its product line -- holes made in the course of the company's ongoing "rationalization" process (see Lucent Pulls LambdaManager, Lucent Clarifies Product Strategy, and Lucent Silences SpringTide). Word is, if a Marconi deal isn't in the works, Lucent's probably planning other partnerships, given its new emphasis on services and integration.

"Lucent has to do something," says Susan Eustis, president of Wintergreen Research Inc., a telecom consultancy. Demand is growing for gear that can help carriers make the transition to MPLS and Gigabit Ethernet, she says, and Lucent needs to be able to fill the gap.

"There may be an opportunity for Marconi, but it would be one of many," says Frank Dzubeck, president of Communications Network Architects (no Website), a consultancy in Washington, D.C. Lucent's new focus on integration and services makes it likely the company will look for numerous OEM deals, he says, even in areas where its own products have failed. This strategy would help Lucent save money on development and support of "iffy" offerings, enabling it to stick to its chosen knitting. "Lucent's forte is project management," he notes.

Interestingly, when discontinuing the TMX 880, Lucent said it plans to release an ATM multiservice edge product at an unspecified future date. More grist for the partnership rumor mill?

— Mary Jander, Senior Editor, Light Reading
www.lightreading.com
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Ibeenframed 12/4/2012 | 9:19:50 PM
re: Is Lucent Sitting on OEM Surprises? Even funnier - it implies that the TMX was an ATM switch. I bet that was the last thing the Nexabit folks would have called it when they were trying to sell it as a multi-terabit router.
beetlejuice 12/4/2012 | 9:19:50 PM
re: Is Lucent Sitting on OEM Surprises? The article is funny. It's tone actually implied that the TMX was a working product.
Mech4 12/4/2012 | 9:19:49 PM
re: Is Lucent Sitting on OEM Surprises? LU is quite familiar with Marconi's ATM products dating back to the FORE Systems days. Their Chicago campus at one time was built out with FORE's ATM switches (with Cabletron labels) and there was heavy talk of an OEM deal in those days. LU decided to go it on their own and we see where that has got them.

No demand is hooey.
gigeguy 12/4/2012 | 9:19:42 PM
re: Is Lucent Sitting on OEM Surprises? It's not Marconi - it's Wavesmith! Same neigborhood, lots of old Cascade people .... those of you in Acton may have have spotted the LU people in Nagog Park. Now you know why ....
broadbandboy 12/4/2012 | 9:19:40 PM
re: Is Lucent Sitting on OEM Surprises? Wait a minute, the TMX was to be the next gen replacement for the GX. Wavesmith is an edge box. They still need to fill in the core.

BBboy
seeallwan 12/4/2012 | 9:19:37 PM
re: Is Lucent Sitting on OEM Surprises? A quick Lucent history lesson before we go any further folks...

Since buying Ascend, Nexabit, SpringTide. etc. for there Data portfolio, has LU done anything to grow, innovate and generate revenue for any of these product lines? I think we all know the answer here.

A little over a year ago in Westford, LU told all employess that ATM was dead and started the following...

1. ATM is dead!!! IP/MPLS will generate 200-300 million in the Data space for 2001!!!
2. MSC25000 (OZ) cancelled.
3. Cap all CBX500/GX550 development in favor of ST/TMX platforms.
4. AccessPoint canceled.
5. NX64000 router turned into the TMX880 ATM switch canceled.
6. SpringTide 5000/7000 canceled.
7. Navis NMS hasn't evolved to support all LU Data portfolio.

Now with that all said, who would want to partner with LU and why does LU still think they have the Data expertise to develope anything "next-gen".

They think that keeping all the SpringTide folks to develop a next gen FR/ATM/IP/MPLS "god box" platform is a joke at best. The current regime didn't deliver on ST/TMX and capped CBX/GX, so forgive me if I'm busting out laughing at this one...haha.

Oh, back to the OEM...They have the former CSD/TMX GM out on a country wide tour looking for partners, from Juniper, Equipe and Vivace that I know of, so no secret there. I'm sure there are many others being looked at, but don't see LU smart enough pulling this off.

If they OEM the core, they're done. Once you get the GX out of the core and have to use a third party platform, NMS and support, the CBX will be next on the list. Junipers (Unisphere platform), WaveSmith, among many others will finally kill any LU Data story left.

The sad thing is, LU can actually build a cheaper, faster 100G GX550 and an enhanced CBX500 to support IP/MPLS on both platforms and don't need to OEM or make another failed next-gen or ST/TMX products.



ATMer 12/4/2012 | 9:19:35 PM
re: Is Lucent Sitting on OEM Surprises? I agree, they should focus on what they already have by develpoing newer modules for CBX500/GX550.
wayland_smithy 12/4/2012 | 9:19:35 PM
re: Is Lucent Sitting on OEM Surprises? Interesting article - this does not surprise me given Lucent's current position. Marconi would be a good choice for International markets, but two problems here would arise: firstly, the coverage for domestic US markets - especially onthe Optical side- and secondly, the clash of the Services/Systems Integration businesses that each of these vendors run.
Thinking back a few weeks, LR did run an article not long ago about Lucent taking over the services deployment business for Cisco, as I remember (or was it the other way around ?) for RBOC deployments. This would be an interesting twist if Lucent took Cisco's deployment/services business as their SI & deployed their Optical products as an OEM - a better fit of business, although I'm not sure Cisco/Lucent would want to cooperate to this degree. Interesting thought, nonetheless ?
pnni-1 12/4/2012 | 9:19:34 PM
re: Is Lucent Sitting on OEM Surprises? Marconi already has a product that is a private label OEM from Lucent. If you know any history about fore it will be an easy guess as to which product I'm referring to.;)
gigeguy 12/4/2012 | 9:19:33 PM
re: Is Lucent Sitting on OEM Surprises? seeallwan said:
The sad thing is, LU can actually build a cheaper, faster 100G GX550 and an enhanced CBX500 to support IP/MPLS on both platforms and don't need to OEM or make another failed next-gen or ST/TMX products.

-------

Given what you said earlier in your message, what evidence do you have that LU management could get this done, even assuming they still have the required technical expertise in-house? (and that's a big assumption)
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