Lucent Dabbles in IP Services

Lucent Technologies Inc. (NYSE: LU) announced a new IP services router today, the AccessPoint 1500 (see Lucent Launches IP Service Router). At first glance, the new product looks as though it’s an edge router platform. But upon closer examination, the new product is simply a new version of an existing access router acquired from Xedia in 1999.

While the announcement itself is not earth-shattering news, it does highlight an important hole in Lucent’s product offering. The company, which has one of the largest telecom distribution channels in the industry, doesn’t offer an IP edge router. And for a company that claims to be focusing more and more on IP, this seems like a rather big void (see Taking Routing to the Edge).

According to the latest figures from Infonetics Research Inc., worldwide revenues for service provider edge/aggregation routers totaled $472 million in 1Q02. And even though this figure was down 8 percent from the previous quarter, the edge/aggregation router segment declined less than other areas, such as core IP routing, which declined 24 percent. Further, the firm expects 2002 to be an up year for edge/aggregation routers, totaling $1.9 billion, a 25 percent increase from 2001.

Such activity has prompted a slew of contenders to enter the market (see Edge Routing Gets Service Friendly ). It also helped drive the merger between Juniper Networks Inc. (Nasdaq: JNPR) and Unisphere Networks Inc., which was completed today (see Juniper Acquires Unisphere).

Lucent’s new box, which only supports 700 Mbit/s of throughput, is designed to sit at the customer premises and provide IPSec virtual private network tunneling and encryption, along with quality of service and traffic shaping functions. It does not currently support Multiprotocol Label Switching (MPLS) functionality.

In terms of routing and IP services products, Lucent has two main product families: the SpringTide Service Switch and the TMX MPLS multiservice switch. The SpringTide IP service switch competes with the IPSX switches from CoSine Communications Inc. (Nasdaq: COSN) and the Shasta product from Nortel Networks Corp. (NYSE/Toronto: NT) (see Lucent to Ship IP Services Switch). Lucent hasn’t made much noise about the box in quite some time, leading many in the industry to speculate that the development team has refocused its efforts on preparing this box to sell into the wireless router space.

Refocusing SpringTide may not be such a bad idea. CoSine and Nortel/Shasta haven’t been terribly successful in selling their products. CoSine reported only $7.1 million in revenue for Q102, along with a pro forma loss of $19.9 million. While the concept of managed IP VPNs seems to be gaining momentum, service providers have several choices of what equipment to deploy to offer this service (see VPNs Branch Out ). For example, more and more IP edge routers are adding VPN (virtual private network) functionality to their boxes (see Edge Routing Gets Service Friendly ).

CoSine, Shasta, and SpringTide all offer some routing functionality, but they are not considered full-blown routers and lack the robustness of proven routers, such as those from Cisco Systems Inc. (Nasdaq: CSCO) and Juniper/Unisphere, says Frank Dzubeck, president of Communications Network Architects Inc.

Other than SpringTide, the closest offering Lucent has to an edge router is the TMX MPLS switch, says Kevin Mitchell, an analyst with Infonetics (see Lucent Unveils Core Switch). However, this multiservice switch is focused more on ATM and MPLS, rather than IP edge routing and aggregation, says Mitchell. He also says that Lucent’s void in edge routing could be a problem down the road for the company.

"It depends on what their long-term strategy is. In the long term, if they want to be in the IP/MPLS game, they need to get into edge routing,” he says. “But for the short term, it’s not a big deal to go without it.”

It’s no secret that Lucent has little expertise in IP. Back in 1999, the company acquired Nexabit Networks for its core IP router. But within a year the core IP routing project was cancelled, and the engineers working on that product were gone (see Lucent Faces "Exodus of Nexabit Staff").

Despite a lack of true IP expertise, Lucent still has one important thing going for it: a strong distribution channel. And in a tough market such as this one, it is important to have ties to established carriers. Lucent, with its worldwide reach and its well established distribution channel, could offer strong competition against both Cisco and Juniper/Unisphere, says Dzubeck.

“What differentiated Unisphere from the rest was its relationship with Siemens AG [NYSE: SI; Frankfurt: SIE],” he says. “Lucent has a strong distribution channel, and if they decided to get into this market, they would have to be a significant player.”

But at the end of the day, Lucent doesn’t appear to be moving in that direction. The AccessPoint 1500 is not targeted for edge applications, say Lucent officials.

“This is an access router. It competes with Cisco’s 7100 and 7200 routers,” says Joseph Raccuglia, senior product manager at Lucent. “It is definitely not an edge router.”

— Marguerite Reardon, Senior Editor, Light Reading
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BobbyMax 12/4/2012 | 10:10:17 PM
re: Lucent Dabbles in IP Services It is rather very surprising that Lucent does not have an IP edge router in its arsenal of products.Edge Router Swich can be put together by Lucent in about 6 moths or so. What I find trouble some is the lack of marketing and sales focus. Lucent largely failed because of its inability to create a strong Sales and Marketing porganization.

Lucent's management is largely inept and it has put the company in a very risky situation.

It appears that Lucent cannot recruit the right kind of marketing and management personnel.

At the President and CEO level, the company does not have an appropriate person. Its Board of Directors is useless and inactive.
jamesbond 12/4/2012 | 10:10:12 PM
re: Lucent Dabbles in IP Services why not grab a next gen edge company like celox on east coast or Corona on west coast before they are gone. Few big equipment makers have already started shopping to fill out the edge void in their suite of offerings.


And repeat the same mistake they made with
all those previous startups they bought??
You are dreaming pal. They would rather buy
Cosine or somebody more established - not
junk like Celox or Corona.
canttakemore 12/4/2012 | 10:10:12 PM
re: Lucent Dabbles in IP Services
juniper became junisphere.
why not grab a next gen edge company like celox on east coast or Corona on west coast before they are gone. Few big equipment makers have already started shopping to fill out the edge void in their suite of offerings.
canttakemore 12/4/2012 | 10:10:12 PM
re: Lucent Dabbles in IP Services he he he - seems like a cosine guy. If you think cosine is not junk and has value then why are you so desperate to get bought out Mr. 007. he he he
umberto 12/4/2012 | 10:10:08 PM
re: Lucent Dabbles in IP Services One would think that Lucent management would realize their strength is the sales channel.

They could OEM boxes (fro example from several of the excellent start-ups which have spun out of Lucent) and create a nice profitable & symbiotic relationship with these young companies who have no sales channel - nor the support structure to support any large scale service provider network.

Instead Lucent remains stagnant and lost in the confusion of the recent telecom shuffle.

Where there is confusion there is opportunity - that is if one has management with any vision.
Litewave 12/4/2012 | 10:10:08 PM
re: Lucent Dabbles in IP Services Does this AccessPoint 1500 box have any routing hardware?

The Xedia box attempted to compete against vendors like Packeteer and Sitara in the edge "packet/rate shaping/QOS" game.

Unlike Packeteer, Xedia's differentiator was that you didn't need a Cisco box attached to your rate shapping box (but it infact had very minimal Routing capability).

Looks like Lucent's managed to screw things up yet again.
Belzebutt 12/4/2012 | 10:10:08 PM
re: Lucent Dabbles in IP Services Does this AccessPoint 1500 box have any routing hardware? What protocols does it support (for real, not just on the spec sheet)? With all the emphasis on subscribers and VPNs, I was actually thinking of the NT Contivity while reading the article, not Shasta.
Peter Heywood 12/4/2012 | 10:09:38 PM
re: Lucent Dabbles in IP Services This note came in from someone having trouble posting it himself:

In Marguerite Reardon's article on "Lucent dabbles in IP services", she states that the Nexabit IP router project was cancelled 1 year after Lucent purchased it. This is entirely untrue. That project was never actually cancelled. (they were still adding MPLS features up until the day it was folded into the TMX880 project.) Please correct the article accordingly -- there is no need to cause an unsubstantiated concern amoung the few customers of that product.
dsb 12/4/2012 | 10:09:30 PM
re: Lucent Dabbles in IP Services It's run by the old boy network:
Bill O'shea
Ritch McGinn
Pat Russo.

It's more important to keep the old boy network running than to provide new technology...
dsb 12/4/2012 | 10:09:30 PM
re: Lucent Dabbles in IP Services It was cancelled about 3 years ago...
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