Lucent Lights Up LambdaUnite
Lucent sources in Europe confirm the plan, but U.S. spokesperson Wendy Zajack will only say that Lucent plans a major rollout "sometime within the next few weeks."
The announcement is bound to be met with wide interest, since the LambdaUnite MultiService Switch is among the first of Lucent's next-generation optical products, which were announced this past fall (see Lucent Unveils Product Lineup). Lucent is apparently counting on these new offerings to help move it significantly toward its goal of becoming profitable this year (see Can Lucent Make It?).
It's not clear whether the announcement also will include the rollout of Lucent's newly enhanced TMX 880 Multiservice Xchange Switch, a platform equipped with MPLS (multiprotocol lable switching) meant to work alongside the company's GX 550 and CBX 500 ATM switches -- the ones Lucent inherited with its purchase of Ascend. When Lucent made its next-generation product presentation last fall, it said the TMX 880 also would be released in January, featuring "optical core interfaces available in controlled introduction."
The TMX 880 will compete with products from Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Équipe Communications Corp., Marconi PLC (Nasdaq/London: MONI), and other vendors seeking to unify legacy Asynchronous Transfer Mode (ATM) networks with Internet Protocol (IP) via Multiprotocol Label Switching (MPLS). (See The Great ATM Switch Blitz.)
The news will be big for Lucent, but judging by industry response to Lucent's earnings report Tuesday, it had better include word of new customers along with product specs.
"This will be a good test of customer commitment to Lucent," says Bill Lesieur, director of Technology Business Research Inc., a research firm. "They have to come through with customer acceptance."
"[We] believe contract traction with next-gen products is needed to validate the company's product and technology roadmap... Investors are likely to begin focusing on Lucent's contract traction with next-generation products," writes Alkesh Shah of Morgan Stanley Dean Witter & Co. in a note to clients this week. "Lucent has disclosed scant details on their progress at carriers."
Lucent seems aware that it's under pressure to produce customers. The company has said it's trialing the LambdaUnite switch in at least two undisclosed locations.
But just how strong a competitor will the LambdaUnite be? Lucent's been cagey with details of the switch. Here's what's known: It combines Sonet and SDH add/drop multiplexing with crossconnect capabilities. It will switch 10- and 40-Gbit/s connections across metro and core links. It sports initial capacity of 1.28 Tbit/s. (A later iteration, the LambdaManager, will be much larger, supporting up to 10 Tbit/s.)
The LambdaUnite apparently evolved from the company's WaveStar Bandwidth Manager and LambdaRouter product lines, and it is set to compete head to head with Ciena Corp. (Nasdaq: CIEN) and its CoreDirector and, to a lesser extent, with Tellium Inc. (Nasdaq: TELM).
Most analysts hold little hope that Lucent will make a major impact against Ciena. For one thing, they're late to a market that's tough to penetrate (see No Riches From Optical Switches ). And they're coming up against an incumbent with an established first-mover advantage with incumbent carriers.
Some say the LambaUnite's parentage could work against it. "We believe that the company will find it difficult to generate significant revenues and profitability from these platforms," write students at MIT's Sloan School of Management in a research note issued in December. The note says the company's long absence from the optical switching market and small success with the LambdaRouter don't offer much hope for its new line, although it is possible Lucent will break with its past.
Most are skeptical this could happen, however. "It would be remarkable if Lucent came out with a product anytime soon that could compete with Ciena," says Mark Lutkowitz, VP of optical networking research at Communications Industry Researchers Inc. (CIR). Lutkowitz says Lucent would be better off focusing on areas where it has a hope of winning big.
That may mean getting out of optical altogether. "Their optical products have always been adequate to sub-par. They ought to OEM like there's no tomorrow," he asserts, "and get rid of any residual arrogance regarding developing things themselves."
Others agree: "Lucent's a services company. They need to reassess the value of their organization and especially the services side. Overseas, Lucent is a prime contractor," says Frank Dzubeck, president of Communications Network Architects, a consultancy.
On the plus side, though, Lucent may have surprises in store for the naysayers. During last fall's presentation, the company made clear that its customer base would be globally focused, and customer wins have been heavy in Asia-Pacific and Europe over the past few months. If the LambdaUnite can demonstrate substantial Sonet (Synchronous Optical NETwork) and SDH (Synchronous Digital Hierarchy) grooming capabilities, it just might win over some customers that would otherwise turn to Ciena.
Depending on what it has to say next week, Lucent also could gain some ground against another potential competitor in this space, Nortel Networks Corp. (NYSE/Toronto: NT), whose Optera Connect HDX platform is also late to market compared to Ciena. Unable to provide solid evidence of customer acceptance, Nortel has suffered criticism that it's only trying to make a good show, that the HDX is nowhere near ready for shipment. Rumor has it that size, scaleability, and power requirements are still being worked out.
— Mary Jander, Senior Editor, Light Reading