Lucent: The Cisco Of The Future?
zdnet.com
By Tom Steinert-Threlkeld, Inter@ctive Week, June 5, 1998
Lucent Technologies Inc. has become everyone's favorite
communications networking company.
On a good day, its market value - currently at $93.4 billion
- exceeds that of AT&T Corp., the company that two
years ago was its parent.
It also is popular to portray Lucent as an up-and-coming player in data
networking. The idea: that a company creating highly complex and reliable
networks in traditional telephony could bring the same consistency and quality
to the Internet and other data networks.
Lucent has shown its willingness to buy into the data networking game, with its
acquisitions of Livingston Enterprises Inc., Prominet Corp. and Yurie Systems
Inc. That brings in the door everything from remote access equipment to
high-speed local network switches.
The great value of its stock also leads to the expectation that there will be
more to come. Recently, speculation centered on its possible interest in Bay
Networks Inc., a classic maker of routers and hubs for the Internet and
corporate networks. As October draws near, Lucent's name will be attached
to just about any imaginable data networking target. At that point, Lucent will
be free to complete "pooling of interest" mergers, avoiding taxes.
But Lucent already is showing that it has more on its mind than simply selling
boxes. Sure, the electronic switch has been its mainstay. But now, the
company is making a big push into software. Last fall, it created a
communications software division that will try to develop advanced
capabilities for managing and monitoring networks, providing intelligent
services and helping companies use data networks.
To that end, it created an Internet software unit that is quietly gearing up. Its
known products are a firewall to protect data housed on company computers
and a directory server that lets companies authenticate proper users and, as
need be, bill them for services rendered.
Not well-known is the expansion of the unit's interest into more mainstream
Net businesses. This month, it will start rolling out a variety of virtual private
network capabilities. Also on tap: electronic commerce software for
corporations to build applications that run on IBM Corp., Microsoft Corp.,
Netscape Communications Corp. and Open Market Inc. platforms.
Its ambition, typical of the aggressiveness it has displayed since spinning off
from AT&T, is to position itself as the "thought leader in how to do [all] this
more efficiently," says Duane Elmquist, vice president in charge of the Internet
software unit.
It would like, for instance, to provide Internet service providers (ISPs) all the
network knowledge and services needed for them to deliver services to their
corporate customers and assure high-quality execution. While it may start out
targeting a lot of this at communications providers, such as ISPs, the company
simultaneously wants to (a) "get closer to the desktop," as Elmquist puts it;
and (b) become regarded as the No. 1 Internet software company. That
combination of objectives, along with the fact that Lucent clearly has been
talking to almost everyone under the sun, may shed some light on why its
name even came up as a possible purchaser of Netscape, during its recent
celebrated financial woes. Data Networking Systems President Bill O'Shea,
for instance, made it indelibly clear that Lucent is interested not so much in
acquiring great products or services, as great minds. Netscape's legions of
programmers include many of the Net's best tech heads.
But Lucent's ambitions in data networking still are trying to create a clear path
to the future. Sprint Corp.'s unveiling this week of an Integrated On-Demand
Network was instructive. Nowhere to be heard at the announcement was
Rich McGinn or any other top executive of Lucent.
Instead, on videotape while traveling in China, was John Chambers, chief executive and president of Cisco Systems Inc. Cisco will provide the switches at the edge of Sprint's network as well as the hubs on business premises and in people's homes that would let them combine everything from videoconferences to voice calls to Web transfers into bit streams pouring onto its net.
All those bit streams would move in Asynchronous Transfer Mode (ATM), a technology that chops data up into cells of a fixed length. And even there, Lucent was not present. The ATM switches are provided by Northern Telecom Inc., which has achieved dominance in providing these switches of the future, for an era when voice is just another type of data. [Now, don't you think LU wants Cascade/ASND really badly...]
Cisco's prospects got rubbed a bit raw in April when its frame relay switches were in the eye of the storm in AT&T's daylong data network outage. But that's in the past. Now, Cisco's chances of becoming the Lucent of the future still seem to be picking up steam faster than Lucent's hopes to be the Cisco of the future.
Lucent can be reached at www.lucent.com
AT&T can be reached at www.att.com
Netscape can be reached at www.netscape.com
Cisco can be reached at www.cisco.com
E-Mail Tom Steinert-Threlkeld
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