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Lucent Invests in Conceptual R&D

Some quizzical eyebrows were raised last week after Lucent Technologies Inc. (NYSE: LU) and the Irish government announced an investment of €69 million in new facilities for “value-chain-driven research.” (see Bell Labs Plans New R&D in Ireland)

Common questions were:
  • What the heck is value-chain driven research anyhow?
  • Does Lucent really need to spend more on research and development right now, bearing in mind that it appears to be (a) shrinking and (b) continuing its policy of reselling other vendors’ products or acquiring companies to get its hands on new technology, rather than developing it in-house (see Lucent Buys Softswitch Vendor Telica for the latest example).
  • Shouldn’t Lucent be focusing its efforts on making better use of the research and development done by Bell Labs?

    The answer to the first question -- what the heck is value-chain-driven research -- appears to be key. Lucent isn’t talking about developing new products in Ireland. It’s talking about developing new approaches to the whole business of being a supplier to telecom operators.

    This includes avoiding duplication of development work in different product lines by adopting more modular designs –- with the goal of reducing the time it takes to adapt to new market requirements, and reaping economies of scale in production processes.

    “We’re trying to integrate the global requirements from the start, so we have one configurable product that could be easily tweaked,” says John Verdon, a Lucent spokesperson. For example, Lucent will aim to rationalize wireless base station designs so that they can be more easily adapted for different frequencies.

    The concept of value-chain-driven research also includes designing products with a much longer life expectancy, so they can be upgraded or repurposed instead of being scrapped when they grow old and tired.

    Other vendors are working on similar ideas. When Cisco Systems Inc. (Nasdaq: CSCO) launched its CRS-1 core router in May, CEO John Chambers talked about it having a lifespan comparable to a telephone switch. “Once we put it in place, we don’t want to move it for one to two decades,” he said (see Carriers Weigh Savings With Cisco CRS-1).

    Lucent also appears to be responding to carriers’ calls for a different sort of relationship with their suppliers. BT Group plc (NYSE: BTY; London: BTA), for instance, has made it clear that it wants to move away from buying boxes; it wants to build long-term relationships with its suppliers. At one end of the food chain, BT wants to influence product development (see Agere Targets Resilience for example). At the other end of the food chain, BT wants suppliers to be involved in the management and maintenance of its networks (see BT Moves Ahead With Mega Project).

    The big question here is whether Lucent can respond to such challenges when it’s reselling other vendors’ products, outsourcing manufacturing, and often glossing over internal research and development in favor of acquiring new technologies from other companies.

    Can 120 researchers in Ireland help address this issue? More raising of quizzical eyebrows may be in order.

    – Nicole Willing, Reporter, Light Reading

  • Dr,Q 12/5/2012 | 1:28:42 AM
    re: Lucent Invests in Conceptual R&D I don't have a basis for comparing whether the product development processes used at Lucent are better or worse than at other large companies [comments from anyone with Nortel or Alcatel etc backgroud welcomed here]. I do know the processes were poor, and were routinely criticized by internal customers (who had the most visibility to them). I would bet a quarter that Lucent's processes rate worse than most.
    I will say that in my experience selling to Alcatel (Richardson TX) that they seemed from the outside to have had excellent product development and roll-out processes. (Alcatels in Europe were an entirely different story.)
    The three roots of the problem, which I recognized very early on in my Bell Labs days, were
    1) Nobody is really in charge -- meaning that there are lots of small groups in the middle & lower level (engineering, marketing, manufacturing, product planning, etc) that think they know what should be done, and attempt to take action on their own because of lack of clear decisions and direction from above.
    2) Clear decisions about new products were not made and communicated effectively from the top, fostering the small groups mentioned above to act on their own, believing that eventually some partial instructions would come down from above and they (the small groups) would have to race double time to catch up for the time lost while upper management piddled around (not) making the decisions.
    3) Communication between groups in different tribes (marketing, engineering, research, etc) was exceeding poor, making coordination of product development and rollout very difficult, and creating an enormous amount of pot holes/land mines.

    [Note to Milano - I can be pretty cogent when sober.]

    - Dr.Q
    flam 12/5/2012 | 1:28:42 AM
    re: Lucent Invests in Conceptual R&D Find the Lucent E-level with ties to Ireland and you've solved the mystery.

    BL China was started by Carl Hsu.
    BL India was started by an Indian guy - name escapes me.

    Much as like to make fun of Lucent E-vil Levels, this looks like a good deal for the Lu - $69 mill for doing nutin! Ah, now we know where next quarter's profit is gonna come from ...
    flam 12/5/2012 | 1:28:41 AM
    re: Lucent Invests in Conceptual R&D
    3) Communication between groups in different tribes (marketing, engineering, research, etc) was exceeding poor, making coordination of product development and rollout very difficult, and creating an enormous amount of pot holes/land mines.


    Remind me how many layers there were between the customer and the engineers - if I remember correctly it was 5 or 6. Each of those layers added and deleted information as they pleased. In the case of security there was a Bell Labs knowitall in system engineering who would create requirements off the top of his head to make the product more secure. Last I heard that was making "usability" very interesting for the poor slobs in deployment ...

    sigint 12/5/2012 | 1:28:40 AM
    re: Lucent Invests in Conceptual R&D flam:
    BL India was started by an Indian guy - name escapes me.
    ______________________________________________

    Arun Netravali

    flam:
    Much as like to make fun of Lucent E-vil Levels, this looks like a good deal for the Lu - $69 mill for doing nutin!
    _________________________________________________

    I'm not sure if you're implying that the LU india office does nutin. They maintain the spaghetti code in the Ascend box, which is surely not nutin!!! How much that's worth, I don't know ....
    digerato 12/5/2012 | 1:28:38 AM
    re: Lucent Invests in Conceptual R&D The last thing Lucent needs right now is more R&D. It needs to figure out how to get products that customers want to buy to market.

    I always laughed when reading the old LU tagline of "Bell Labs Innovations" -- as if that made an ounce of difference to its actual business of selling the same tired old products (think: 5E) while it told everyone how innovative it was.

    Of course, when they finally did get that Bell Labs "core" router out there, it sucked ass so badly that it sank without trace.

    For all those LU retirees out there, I sincerely hope that this R&D facility also comes with a product marketing department that listens to what customers want and has the clout to get the R&D orgs to deliver it.

    Digerato
    digerato 12/5/2012 | 1:28:38 AM
    re: Lucent Invests in Conceptual R&D "Clear decisions about new products were not made and communicated effectively from the top, fostering the small groups mentioned above to act on their own, believing that eventually some partial instructions would come down from above and they (the small groups) would have to race double time to catch up for the time lost while upper management piddled around (not) making the decisions."

    Good lord! You mean that people who get closer to customers on a daily basis than top management of LU are trying to get things done inside Lucent? Sounds like there's hope yet... maybe some of them will actually succeed!

    Digerato
    flam 12/5/2012 | 1:28:31 AM
    re: Lucent Invests in Conceptual R&D No, not Arun Netravali. It was definitely someone else. AFAIK, Arun was not particularly interested in the India location.

    As for the $69mil, that was in reference to the article ... the irish are forking over that cash to Lucent. Nothing to do with the gawdawful Ascend code.
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