Gary,
I have to say that bill c. has reason to be quite offended at the patronizing tone you have taken toward him in your recent posts. Furthermore, even if your basic supposition that Cisco has full acces without royalty to all of Lucent's patents is correct - and I will check tomorrow - the real key in optical equipment is implementing the concepts of the patents into working reliable end equipment. Using your logic, since LU has access to all of Cisco's patents, they will have no problem implementing a fully compatible BGP implementation. Optical technology is no less complex and has the added complication of being very difficult to test vis a vis failure rates. Because of this most carriers will put new equipment in test for a very long time before committing it to production networks.
Now with regard to Pat's defense of Lucent's position of strength vis a vis optical networking, I'm sure she would have added further comment if allowed by the space restrictions of the interview. Let me add some comments:
1. Lucent has over 5,000 engineers working in the optical field while Cisco has just over 900 people, only some of whom are engineers. I would wager that the majority of LU's optical patents were filed by employees still with LU. For basic science, LU is an extraordinarily attractive employer.
2. Lucent will have optical equipment sales of over $3 Billion in CY99, on YoY growth of over 60%. Cisco is touting a stretch goal of $500M in CY00, a time frame when LU's sales are expected to be better than $4.5B.
3. Lucent has a full line of optical equipment, including DWDM and SDH, used by thousands of carrier customers in the core of their networks. Cisco does not have DWDM and does not have SDH products and while they tout about 100 customers only 10 or so are actually using the products in production networks.
4. Lucent's equipment is NEBS compliant, a iron-clad requirement for selling to RBOCs and the established IXCs. Cerent is not NEBS compliant.
5. Based on discussions with Mr. Stanzione, I believe the R&D dollars spent by LU on optical technologies are more than 20% of total - this is about $750M. This would be nearly half of Cisco's entire R&D budget.
I believe that Cisco will have terrific growth out of its optical initiative and will, one day, be an important alternative supplier. I do not believe that Cisco has a chance of threatening LU (or NT for that matter) for leadership in this field. It is amusing that you are so critical of Ms. Russo's comments, when Cisco consistently makes unsupported, self-serving comments about other companies acquisitions.
BTW we are long CSCO and very long LU. |
