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Optical/IP

Lucent Gears Up for Product Blitz

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 ).

“There’s no question that long-haul transport is a weak market right now,” says Schafer. “But after it bottoms out, carriers are going to start buying new gear, and they will want the next generation of equipment. The games that Nortel and Lucent have played in the past, where they cut prices to win deals, won’t work anymore.”

Lucent’s competitors say that it will take more than speeds and feeds to win the notice of carriers these days, especially with so many players offering products in this category.

“With the current downturn in the economy, we’re seeing carriers focus more on cost and return on investment,” says Corvis’s Smith. “Their priority is coming up with a workable business solution that meets specific needs, like reduced provisioning time or ease of installation. Traditionally, we haven’t seen Lucent address these kinds of issues in previous products.”

The company is also rumored to be introducing a new ATM/MPLS switch to the market this week. This is not too surprising, given the fact that Lucent recently discontinued its MSC 25000 core ATM switch, in the hopes of building a newer box that also supports MPLS and IP in a single unit (see Lucent Bags High-End Switch). The rumor floating around for the past few months has been that Lucent is scrapping its older design for an entirely new product.

Sources close to the company say that the new product, called the TMX 8800, is based on the technology from a terabit routing startup called Nexabit Networks that Lucent acquired back in the summer of 1999. Lucent paid some $750 million for the company, which at that point had no real product to show for its efforts. A year later, founder Mukesh Chatter left, along with most of the original engineering team (see Lucent Faces "Exodus of Nexabit Staff"). The project has been relatively quiet ever since, with no word on a planned terabit IP router.

The new TMX 8800 will supposedly use the IP hardware technology from Nexabit with software added to run Navis iOperations software -- Lucent’s network management software -- as well as software to interwork between PNNI (private network-to-network interface) and MPLS, say sources. It will likely face competition from the 3200 from Équipe Communications Corp., the 7670 Routing Switch Platform (RSP) from Alcatel, the MGX 8850 from Cisco, and the Passport 15000 from Nortel (see Alcatel ATM Switch Steps Up). But the real question is: When will Lucent actually have either of these products available for the market? Once upon a time, the company tried to one-up Ciena by announcing a big leap in long-haul DWDM technology several years before it could actually deliver it (see The Last Laugh Is On Lucent). It's to be hoped that the new Lucent won't try the same trick again.

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com

Want to know more? This very topic is the subject of a couple of sessions at Lightspeed Europe,Light Reading’s annual conference, on December 4-6, 2001, in London. For details, see: Long-Haul DWDM and ATM Upgrade

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flanker 12/4/2012 | 7:37:39 PM
re: Lucent Gears Up for Product Blitz I don't think Lucent is introducing the next gen DWDM solution simply to compete in the ULH sector, which is crowded.

They had to do it, because their competitors were saying LU's OLS gear was 1998 technology. It's embarrassing that LU took this long to introduce a ULH product, since competitors have been on the market for over 12 months.

Now they are in a hole because the LU product isnt even deployed on a major network.

flanker 12/4/2012 | 7:37:39 PM
re: Lucent Gears Up for Product Blitz I don't think Lucent is introdcuing the next gen DWDM solution simply to compete in the ULH sector, which is crowded.

They had to do it, because their competitors were saying LU's OLS gear was 1998 technology. It's embarrassing that LU took this long to introduce a ULH product, since competitors have been on the market for over 12 months.

Now they are in a hole because the LU product isnt even deployed on a major network.

lighten up!! 12/4/2012 | 7:37:35 PM
re: Lucent Gears Up for Product Blitz Sometimes getting out way ahead of the market may not be the right thing, especially in a down turn. The ultra-long haul market has a long way to go (no pun intended) and there's going to be plenty of opportunities when the market is ripe. Not too many service providers are bragging about their terabit capacities these days. Look at the overbuilds and look at the price of their stocks.. That should say something. Hence, I would not count Lucent out just because they were not in any ultra-long haul networks first...
Harley 12/4/2012 | 7:37:34 PM
re: Lucent Gears Up for Product Blitz I am familiar with this product, as I had interviewed with this group in the past.

The product is/was called Lambda Xtreme, and it is as described in the article, but I thought the distances were to be longer, I could be wrong.

I'm surprised this team made it, I wasn't too impressed with their capabilities....
toll booth willy 12/4/2012 | 7:37:33 PM
re: Lucent Gears Up for Product Blitz You go LU
HarveyMudd 12/4/2012 | 7:37:28 PM
re: Lucent Gears Up for Product Blitz Lucent still has not learned a lesson in the art of delivering product on time.

Cisco is the only company company in the world that is capable of delivering product in any field of its choice. When other companies struggle, Lucent can quickly deliver.

Lucent's main problem has been its incompetent management and too many managers with no clear cut cut responsibilities.

Lucen's marketing organization simply stinks. It has no attractive marketing plans. There is too much in-house breeding. The company has abondoned aggreessive hiring plan from out-side.

Lucent's management is not listening to utside forces.

Lucent is not able to capitalize on its imense knowledge of the carrier's space.
optical_guy 12/4/2012 | 7:37:26 PM
re: Lucent Gears Up for Product Blitz I think its too early to even say that they are late to the game....they still might not even be in it yet. An announcement does not a product make and LU is fairly famous for their slideware...verus actual hardware.
Photonboat 12/4/2012 | 7:37:25 PM
re: Lucent Gears Up for Product Blitz I've always wondered why they didn't at least try to at least tout vaporware in ULH. They've been doing research for years in this area. (The little Lucent museum at Murray Hill has a picture of Mollenauer from 1980 working in a lab on solitons).

If Lucent has a focus, what is it? Sounds like they are still trying to be all things to all carriers, from selling DSL products (Stinger line) to ULH systems. While still getting revenues from DACS3...

What should they focus on?
Light_Path 12/4/2012 | 7:37:24 PM
re: Lucent Gears Up for Product Blitz LU will launch new vaporware soon. They have told potential customers that it will not be ready to ship until 2003.

Who is really in the ULH (or ELH) game? Nortel (Qtera is dead), Corvis, Cisco (15808 line), Ciena (no 10Gb/s @2000 km)?

Who is for real and who is vapor?
LP
puddnhead_wilson 12/4/2012 | 7:37:24 PM
re: Lucent Gears Up for Product Blitz >Sometimes getting out way ahead of the market may not be the right thing, especially in a down turn.

LOL -- oh yeah, it's better to spend the same developmetn cost and effort to produce a me-too product & recoup less of your investment on it because you can't charge any kind of premium for it, since your customers can just go someplace else to getr an equivalent product -- if you can sell it at all, given a glut of supply, compunded by the fact that competing products are already proven in the field and debugged.

Ah yes, it is MUCH better to be late to market! <g>

>there's going to be plenty of opportunities when the market is ripe

Did you listen to Ciena's last confrernce call? This market is as ripe as a pumpkin from halloween. You know what? When Halloween comes around again, people are going to be buying NEW, DIFFERENT pumpkins, not looking for remainders from the 2001 crop.</g>
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