By David P. Hamilton and Stephanie N. Mehta
Staff Reporters of The Wall Street Journal
Lucent Technologies Inc. agreed to purchase $500 million of computer servers
from Sun Microsystems Inc., part of a broader effort between the two companies
to speed the convergence of telecommunications and computer-networking
equipment.
Under the agreement, Lucent will base its wireless-network architecture,
called Flexent, on a new generation of Sun's low-end Netra servers. Lucent
helped Sun establish the specifications for the new Netra servers, which
haven't yet been released, and has agreed to buy at least $500 million of the
new machines over the next seven years.
In addition, Lucent and Sun have agreed to jointly develop hardware,
software and service "bundles" intended to help businesses quickly start up
electronic commerce. Such bundles will be sold by Lucent and consist of
software from both Lucent and the Sun-Netscape Alliance, an e-commerce
software venture of Sun and America Online Inc.
Lucent, based in Murray Hill, N.J., also plans to deploy some of its network
software on Sun servers and will work together with Sun to develop technology
that would make it possible to connect servers directly to optical
communications networks. Today, most servers aren't capable of directly
handling the high-speed data that flow across optical networks and instead
generally use slower streams of data that have been converted into electrical
form.
The Lucent deal is another sign of Sun's continued strength in the server
market. It also illustrates how computer makers such as Sun have targeted
telecommunications networks, hoping to replace dedicated telecommunications
switches with high-performance, general-purpose servers.
The partnership could also bolster Lucent's presence in the competitive
market for enterprise data networking. The company already sells corporate
phone systems and some networking gear to corporate clients. For the fiscal
year ended Sept. 30, revenue in its business-communications unit rose only 5%;
overall revenue for the fiscal year rose 20%.
Richard McGinn, Lucent's chairman and chief executive officer, said the
collaboration is going after fast-growing parts of the enterprise and carrier
space, such as gear to revamp wireless networks. "All the segments are growing
north of 20% a year," he said.
(END) DOW JONES NEWS 12-01-99
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