Lucent Unveils Product Lineup

Lucent Technologies Inc. (NYSE: LU) today revealed its strategic product lineup, including new optical products officials say could produce as much as one quarter of the company's revenues for fiscal 2002.

In a session with Wall Street analysts lasting over two hours, execs were optimistic about the telecom market, despite recent setbacks.

"This is clearly a challenging environment, but it's a large market, and it will grow again in the long term," said Bill O'Shea, president of Bell Labs and executive VP of corporate strategy and business development.

He and other presenters said carriers will spend roughly $212 billion on their networks next year. To take advantage of the market, Lucent's reorganized around two key product groups, INS (integrated network solutions -- or wireline gear) and wireless equipment.

Janet Davidson, president of the INS division, further detailed several key areas within the overall market for wireline gear, which she says represents an $80 billion market opportunity in 2002. These areas include the core optical sector, itself expected to generate $16 billion next year.

During the presentations, Lucent execs confirmed expectations that had been grinding in the rumor mill for several days (see Lucent Gears Up for Product Blitz ). These included the release of a series of new products for the optical core and edge, including the following:

  • LambdaXtreme: Lucent’s first ultra-long-haul optical system supporting 128 10-Gbit/s channels for a total capacity of 1.28 Tbit/s, or sixty-four 40-Gbit/s channels for a capacity of 2.56 Tbit/s. This product is based on Raman amplification, and Lucent claims its first release, due out in March 2002, will support distances up to 4,000 kilometers without regeneration for 10-Gbit/s wavelengths, and 1,000 km without regeneration for 40-Gbit/s wavelengths. A later release, due out at an unspecified date, will support 3,000 km for 40-Gbit/s channels without regeneration, Lucent says.

    The LambdaXtreme won’t supersede Lucent’s existing long-haul optical line, which includes the WaveStar series. But the distances it supports should enable Lucent to compete against products from Corvis Corp. (Nasdaq: CORV) and a host of vendors gearing up for ultra-long-haul networking.

  • LambdaUnite and LambdaManager: These combination crossconnect/ADM systems are designed to compete against the CoreDirector platform from Ciena Corp. (Nasdaq: CIEN). LambdaUnite is designed for small central offices and is slated to ship in January; LambdaManager is a redundant system geared to large facilities and is slated to ship in May.

  • TMX880 Multiservice Xchange Switch: Due in January, this product is Lucent's answer to products such as the 7670 Routing Switch Platform from Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and the 3200 from Équipe Communications Corp., which support ATM and IP in a single platform with MPLS (see Alcatel ATM Switch Steps Up). The new platform also supersedes the older MSC 25000 core ATM switch, which Lucent has discontinued (see Lucent Bags High-End Switch). "Given the retraction in the core, we found that the sweet spot was a gigabit switch, not a terabit switch," Davidson said, noting that the new switch also came about because Lucent saw it was crucial to feature MPLS as early as possible.

    Officials confirmed that the TMX880 hardware is based in part on technology from Nexabit, a startup Lucent acquired in 1999. The software is derived from the same programs Lucent uses in its multiservice ATM and frame relay switches.

    Besides these announcements, Davidson reiterated announcement of the MetroDMX and MetroDMXpress platforms, which combine digital crossconnect and Sonet ADM functions in one box. Also shipping is the Metro EON DWDM platform, a metro box that Davidson says automatically fits ring configurations and integrates its amplifiers inside the box to avoid upgrade problems.

    Davidson also said that Lucent is upgrading its GX 550 and CBX 500 Multiservice ATM/frame relay switches with software that increases reliability and density. One card, due out in December, will increase GX performance 400 percent, she said. The GX is also set to get gigabit Ethernet connectivity during the first half of 2002, and both GX and CBX will get packet-over-Sonet in the same timeframe.

    Analysts on today's call expressed concerns that Lucent is simply recycling its older technologies into so-called new products. Officials countered with acknowledgements that indeed they were reusing gear, but they said there were enough features to call everything "new."

    "We're not just rehashing old stuff," Davidson said. The LambdaXtreme, for instance, uses patented techniques that haven't been incorporated elsewhere.

    Wall Streeters were also concerned that even though Lucent may have its optical lineup assembled, it's behind the curve set by competitors. The Navis network management platform, for instance, which has been revamped to manage all of Lucent's INS and wireless gear, is only just now entering the OSMINE process of certification at Telcordia Technologies Inc. That process, which is a prerequisite for selling to the RBOCs, is notorious for taking many months to complete. In contrast, Nortel Networks Corp. (NYSE/Toronto: NT) just announced that its Optera platform has been certified for OSMINE use (see Nortel's Optera Gets Osminated).

    One analyst also questioned whether Lucent was ready to face an increased focus on routing devices at the edge of the network, which he said would be the inevitable outcome of revamped metro networks. Janet Davidson answered that Lucent was well prepared with a full line of products to cope with any changes to carrier networks.

    — Mary Jander, Senior Editor, Light Reading
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    PantomineHorse 12/4/2012 | 7:36:00 PM
    re: Lucent Unveils Product Lineup My p.m. and I discussed Lucent today. He's studied LU carefully, does significant research (independent from my own), and has often countervailing viewpoints (from mine). He now considers this a turnaround play. So do I.

    Sure, there is a lot wrong with company and under normal circumstance never thought in a millions years to go within a light year next to it.

    These are not "normal circumstances". In this new era, there must be survivors and old-line (yes out-of-touch, out-to-lunch) companies (include RBOCs among these) have the gov't pulling for them. Unfortunately, that is the momentum of the day, to this industry's detriment.

    I posted recently that the gov't would not let this one go down (and got some s**t in response), but taking a 2nd look at the prevailing sentiment (w/i and w/o telecomm), there's sufficient confirmation of this.

    My circle & I consider LU a focus topic and probable investment, subject to standard DD.

    Again, the fundamental change for us -- previously, we would have ignored LU completely.
    RouteThis 12/4/2012 | 7:35:54 PM
    re: Lucent Unveils Product Lineup Laserman...

    I appreciate your comments, but I would seriously question your "They know software better than any one" comment. I have more respect for Juniper and Cisco's ability to come out with good code than I ever would for Lucent. Then again, I have worked primarily with the former Cascade equipment....so you may be referring to some other part of their product line.

    I would change your comment to..

    1. They're closer to carriers than anyone
    2. They invent/manufacture many of the things that carriers want
    3. Their NMS/OSS team has done good work on some product lines.

    ...however, it might be more appropriately said that they "used to" know carriers and used to invent great stuff.

    Do you seriously think that all of the Bell Labs geniuses are still there....I doubt it. Most probably moved on to the startups where the real innovation is taking place these days.

    Its all about execution....nowadays these guys just don't execute.
    Big Ed 12/4/2012 | 7:35:41 PM
    re: Lucent Unveils Product Lineup I could see why some of the boys took him for snobby. He had a quiet way about him, a walk and a talk that just wasn't normal around here. He strolled, like a man in a park without a care or a worry in the world, like he had on an invisible coat that would shield him from this place. Yeah, I think it would be fair to say... I liked Toll Booth Willy from the start.
    optical_leaders 12/4/2012 | 7:35:16 PM
    re: Lucent Unveils Product Lineup You obviously do not work for LU I take it - who says the start ups are the innovators??

    Have not seen anything out there that will challenge the new LU optical portfolio especially on the optical transport side...

    RouteThis 12/4/2012 | 7:35:15 PM
    re: Lucent Unveils Product Lineup optical_leaders,

    No, I "obviously" do not work for Lucent - why would I want to work for a carcass (Look it up on websters.com...carcass - "Remains from which the substance or character is gone: the carcass of a once glorious empire")

    I was referring soleley to their lack of innovation on the ATM switch/former Cascade line or in the edge/core router market for that matter.

    I'll be the first to admit that I do not know the optical side of things - perhaps Lucent is doing good things there - but can they sell it or market it...that remains to be seen. Just because LU has a lab where they can throw a bazillion wavelengths over a fiber does not mean they'll ever make a dime off of it themselves.
    let-there-be-light 12/4/2012 | 7:35:14 PM
    re: Lucent Unveils Product Lineup Toll-booth-willy, keep the good stuff coming, but please navigate your destroyer away from these shores, you might smoke too much weed and decide to let off a couple of cruise missiles just for fun.

    I believe you if you say you invented network management (hey, You invented this universe). You go ahead and bless yourself, and don't forget all your children here on earth...
    edgygirl2001 12/4/2012 | 7:35:13 PM
    re: Lucent Unveils Product Lineup RouteThis,

    It seems that before the carriers/RBOCs would buy equipement from a vendor they want OSS support like OSMINE/Telecordia. Somewhere I read that it can cost more than $10 million to get all the proper certifications. How would startups keep aside so much money out of their financing rounds of 20-30 million range to pay for these certifications

    RouteThis 12/4/2012 | 7:35:08 PM
    re: Lucent Unveils Product Lineup edgygirl2001,

    Good question...yes, Telecordia OSS certification is critical to sell to the RBOCs, but you'd be surprised at who/what isn't certified

    (check out the recent ATM & IP Report that showed Alcatel, Cisco and Ericsson with no Telecordia certification on the multiservice ATM switches reviewed. Marconi is mentioned as being "In Progress" and Nortel is only "planning" to do so)

    Cisco has fought the need to work with Telecordia tooth and nail. That's because Telecordia has a stranglehold on the RBOC's and vendors - both only dealing with Telecordia because they currently must.

    Whether a vendor is a startup or a Cisco they only get certifications (to my knowledge) when there is an existing customer commitment. In other words - like everything else it comes down to $$$.

    So...while a startup like Wavesmith/Gotham/Equipe would not have buckets of cash sitting around waiting to be spent on Telecordia - they would do so if Verizon suddenly came knocking and said they'd buy $1 billion worth of gear if the vendors were certified for say the TIRKS, NMA and NCON Telecordia OSS's.

    The Big Boys do things the same way. They will only spend the money on Telecrodia if they already have significant commit's from the RBOCs.

    Cisco had a press release a few days ago saying they are going to sink "hundreds of millions of dollars" into developing an OSS (and NMS?) platform - possibly to put pressure on or even knock out Telecordia.

    (Lightreading - again...I'd like to see you guys do a story on this whole NMS/OSS/Telecordia debacle)
    charliwg 12/4/2012 | 7:31:46 PM
    re: Lucent Unveils Product Lineup Can some one tell me about how big the Raman amplifier market will be?
    broadbandboy 12/4/2012 | 7:31:32 PM
    re: Lucent Unveils Product Lineup RouteThis writes:

    "Telecordia OSS certification is critical to sell to the RBOCs, but you'd be surprised at who/what isn't certified. (check out the recent ATM & IP Report that showed Alcatel, Cisco and Ericsson with no Telecordia certification on the multiservice ATM switches reviewed. Marconi is mentioned as being "In Progress" and Nortel is only "planning" to do so)"

    RouteThis has told us who is NOT certified, but that begs the question, who does the ATM & IP Report say is certified? Someone in the ATM multiservice market must be?

    I'm not saying its a protection racket for incumbents, but it will be a tough mountain for startups to climb if they ever hope to sell to RBOCs.

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