Lucent Gears Up for Product Blitz
Industry observers speculate the company is preparing to announce two new products
November 6, 2001
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 ).