Found a nice post on the Alcatel takeover of LU and implications for Q on the Motley Fool thread, complements
of BRational.
Yes, this is about Lucent goes to Paris— and the conversion of Alcatel.
As has been suggested on this board, the first thought I had when I saw the news was that
this really shakes up the stakes in the wireless network infrastructure market, giving Alcatel
a potent new weapon, and CDMA a most unlikely possible advocate (one I had
predicted a few months back, in boards.fool.com.
1. Alcatel is an also-ran in wireless infrastructure, though it's a powerhouse in wireline and
fiberoptics, with very strong global presence. In wireless, it has played a small role in
Europe, mostly in France and other francophone (French-speaking) countries, and in
some French-orbiting nations with historic ties to France. It is not a powerhouse in GSM,
though it has a respectable brand in GSM handsets in Europe. It is not a powerhouse in
w-cdma, which is why it has been a prime advocate of the move to create a
free-to-low-royalty for w-cdma (I reported on that in a post on IPR at
boards.fool.com, and it has no CDMA whatsoever.
2. With Nokia and Ericsson slogging it out to get w-cdma contracts, mostly selling to
service providers for whom they had set up existing GSM networks, Alcatel does not
have much of a competitive position.
3. Nokia has virtually no CDMA infrastructure, other than of the W-variety (and we know
how well that works…); Ericsson on the other hand had a great CDMA infrastructure
division, which they acquired from Qualcomm. However, Ericsson has so much vested
interest in the GSM view of the world that they have not allowed their CDMA division to
compete for 3G contracts. It seems Ericsson bought it for the CDMA technology that
might go into the W- version, and to show a complete range of capabilities (and to settle
an IPR infringement battle), then limited its 3G role only to those operators who already
had 2G CDMA.
4. How does Siemens compete? Try TD-SCDMA. And Alcatel? Create yet another
CDMA flavor (or is it “parfum”)? Now we know. They can have the real deal, and
instantly become the numero un de la CDMA. And, unlike Ericsson, and Nokia, they
have nothing to lose, and everything to gain! They have no real vested interest in w-cdma,
had opposed adopting it as a 3G standard, and had been playing the Euro-solidarity card
to gain a role in it.
5. Will Alcatel kill off or at least let decay Lucent's global position in CDMA? After all,
they were interested in the fiberoptic stuff. No way! Lucent is the powerhouse in CDMA
network infrastructure. If you check the CDG list of CDMA2000 deployments
(http://www.cdg.org/3GPavilion/info.asp), Lucent is the leader. Lucent does not have
much by way of GSM; they had predicated their wireless business on CDMA. Alcatel
certainly recognizes the value of that asset!
6. What can Alcatel do that Lucent or Motorola couldn't? Alcatel is in the Euro-club; they
have access to European operators; they should welcome and will seize the opportunity to
have something that is clearly differentiated from Nokia and Ericsson, who have not been
too generous about sharing the sandbox. They will sell to some French operator, and
could always run it themselves if need be. Alcatel also has a very strong global presence,
which benefits greatly from France's role in international diplomacy, and the francophone
legacy in many states around the world.
Bottom line: this could be good for CDMA, and at least introduces an element of
uncertainty with a potentially positive outcome. Any fear that Alcatel would buy Lucent to
kill off its CDMA division makes no sense at all, for it defies rationality—given the value of
the contracts and relationships already in hand, the value of the likely future contracts, and
the value of the technological know-how that Lucent has in this domain (which Alcatel
could leverage into w-cdma contracts as well).
Enough to make Jorma choke on his escargots. |
