French giant set to unveil a new product roadmap that accounts for Lucent merger. IPTV strategy will be closely scrutinized

November 6, 2006

7 Min Read
Alcatel Preps New Tech Roadmap

The merger between Lucent Technologies Inc. (NYSE: LU) and Alcatel (NYSE: ALA; Paris: CGEP:PA) is close to moving to the next level, say industry sources. U.S. Presidential approval is expected in the next few weeks, and Alcatel is preparing a new product roadmap that shows how the two companies' product portfolios fit together, Light Reading has learned. (See Alcatel/Lucent Wait on W OK.)

The public unveiling of the new product roadmap is expected around November 15, say industry sources, implying that the company expects to see approval prior to that time. (See Alcatel, Lucent Seal Deal.)

Alcatel spokespeople deny any knowledge of "anything related to the portfolio," and say no decisions can be made about any rationalization of a combined Alcatel Lucent product set until the merger process is completed.

While many industry analysts believe it will be early December before the seal of approval is granted by the Committee on Foreign Investment in the United States (CFIUS), details in Lucent's filings with the Securities and Exchange Commission (SEC) suggest that the green light could come from the White House in mid-November. (See Alcatel/Lucent Wait on W OK.)

Alcatel is keeping quiet about ongoing negotiations with Lucent, and no details are currently available about the exact nature of Alcatel's new product roadmap, but it's clear there has been plenty of rigorous discussion between the two companies about product line rationalization once the merger is completed.

At the recent Broadband World Forum event in Paris, one Lucent executive, Broadband Solutions VP Rob Piconi, said the two vendors have been "working on planning since May." He said there "won't be many surprises -- a lot of things will make sense," though he added, with a smile, that "some decisions will be more interesting."

Piconi, though, wasn't aware of any set date for new product roadmap plans to be announced.

Watching wireless
The Alcatel/Lucent product portfolio decisions will have a major impact across the telecom world, with customers seeking assurance that their deployed technologies will be supported and developed, and rivals looking for weaknesses to exploit. (See Can Alcatel & Lucent Avoid an IMS Mess?)

In particular, the likes of Ericsson AB (Nasdaq: ERIC), Nokia Corp. (NYSE: NOK), and Siemens Communications Group will be keen to see how the pair will deal with its wireless infrastructure portfolio. (See Nokia, Siemens Create Networks Giant.)

Alcatel has its own selection of base stations plus the UMTS access equipment recently acquired from Nortel Networks Ltd. , and Lucent has both GSM and CDMA equipment, giving the two companies a combined base station portfolio that, some industry experts believe, includes nearly 50 separate products, a very large number for any company to manage. (See Alcatel Snags Nortel 3G Unit.)

While Lucent has struggled to make inroads in the UMTS market, it has a major account under its belt at Cingular Wireless , which will be seeking assurances that its own investment and network strategy won't be compromised by any product rationalization decisions. (See Lucent Expands Cingular and Lucent Grabs Cingular Action.)

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Investigating IPTV
Another interesting areas where customers and rivals will be keen to learn about the Alcatel Lucent roadmap is IPTV, where the merged company will have a strong, high-profile partnership and an in-house development it dare not decommission. (See Alcatel/Lucent Decide on New Name.)

Alcatel, having attempted to go it alone in the TV-over-broadband sector with its Open Media Suite solution, finally caved in to carrier demand in February 2005 and hooked up with Microsoft Corp. (Nasdaq: MSFT), which has been chosen by a host of Tier 1 carriers to provide its IPTV platform. (See Alcatel, Microsoft Confirm IPTV Deal, Reliance Steps Up IPTV Plans, Microsoft Wins IPTV Deal at DT, Alcatel Lands TDC IPTV Deal, Microsoft Wins at BT, SBC Awards Microsoft $400M IPTV Deal , BellSouth Trials Microsoft's IPTV, Microsoft IPTV: Now That's Italian!, and Alcatel Unveils Open Media Suite.)

In Europe in particular, Alcatel has been busy brokering deals that include Microsoft's wide-ranging solution, which embraces middleware, video servers, and content protection.

But despite its success in attracting large carrier customers, Microsoft's IPTV platform has encountered numerous teething problems and delays, most publicly at Swisscom AG (NYSE: SCM), though the software giant insists its technology is not the cause of carriers' problems. (See Swisscom Finally Launches IPTV and Microsoft Says Middleware Not a Problem.)

Lucent, meanwhile, has had a number of IPTV partnerships during the past few years, most notably with Orca Interactive Ltd. but also including a short-lived relationship with Microsoft. The vendor landed on its feet earlier this year when it struck a deal with Spanish giant Telefónica SA (NYSE: TEF) to take control of, and further develop, the carrier's Imagenio IPTV middleware platform. (See Lucent, Telefonica Team on IPTV and Orca's Not Blubbering.)

That IPTV delivery system, developed in-house by Telefónica, underpins the carrier's service in Spain, which has nearly 300,000 customers, and in the Czech Republic, where Telefónica O2 Czech Republic recently launched its O2TV service, while there are plans to introduce the technology into the carrier's Latin American operations. (See O2 Czech Updates on IPTV.)That makes the platform strategically and politically important for Alcatel Lucent, especially as Lucent has now integrated the Imagenio middleware into a broader, IMS-friendly IPTV service delivery system it calls MiViewTV. (See Lucent Unveils MiViewTV.)

It is also an IPTV platform that is already handling hundreds of thousands of users, while the Microsoft platform, in terms of commercial deployments, is still taking baby steps at Swisscom, AT&T Inc. (NYSE: T), Deutsche Telekom AG (NYSE: DT), and T-Online International AG 's French operation, Club Internet . (See Club Internet Unveils IPTV .)

As with many areas of the combined business, Alcatel Lucent may need to support multiple options to keep existing customers happy, though such an approach could eat into the vendor's planned operating expense savings, which many analysts feel are quite conservative at the stated $1.7 billion over three years.

And keeping its options open in the IPTV sector might be wise, especially if Microsoft encounters any more major difficulties with its big carrier clients. In a column first published earlier this year, Heavy Reading senior analyst Rick Thompson noted that the Microsoft partnership has "served [Alcatel] well to date, but it could be dangerously close to the software giant if execution becomes a problem. It has its own software in its back pocket if things go awry, and long-term options with the Lucent/Orca partnership and newly defined Lucent/Telefónica relationship given the pending ALA/LU merger." (See IPTV MiddleWARs: Far From Over.)

For its part, Microsoft's IPTV team is playing it cool regarding the Alcatel Lucent merger. When asked recently about the potential impact of the merger on its relationship with Alcatel, Hemang Mehta, Microsoft TV's product management director, told Light Reading: "We don't see that the work Lucent is doing will impact very much on what we are doing." He added: "Ensuring that customers have a choice is a good thing."

And there's no shortage of choice in the IPTV middleware sector. Other players in that hot zone include Dreampark AB , Infogate Online Ltd. , Kasenna Inc. , Minerva Networks Inc. , Orca, Thomson S.A. (NYSE: TMS; Euronext Paris: 18453), NDS Ltd. , and Siemens Communications. (See Thomson Fuses VOIP & IPTV, Latens, Minerva Show Off, SES Uses NDS Middleware, Siemens Wins IPTV Deal, Orca Extends IPTV Alliance, iVisjon Uses Dreampark for IPTV, Infogate Partners With Accedo, and Kasenna Intros Middleware.)

And to add to that list, Espial Group Inc. has just announced it is pitching its new product as a new alternative to Microsoft's IPTV platform. (See Espial Joins IPTV Middleware Madness.)

— Ray Le Maistre, International News Editor, Light Reading

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