LU nice article. Here's another: LU may have some good things to say tomorrow.
APRIL 22, 2003
PREVIOUS NEWS ANALYSIS
Lucent Services Take a Baby Step
--------------------------------------------------------------------------------
Lucent Technologies Inc. (NYSE: LU - message board) has taken a small step toward expanding its services business. Today, Corrigent Systems Inc., a startup making packet-ADM (add/drop multiplexer) transport gear for metropolitan networks, announced a non-exclusive deal with Lucent Worldwide Services to install and support its gear.
According to the arrangement, Lucent will provide site surveys, equipment installation, and final acceptance testing, for Corrigent's family of CM-100 products.
The deal hints at Lucent's move to build a bigger services business, though the fact that it picked a small startup with few customers is a bit curious.
Financially, this deal won’t mean big bucks for Lucent. Corrigent still hasn’t won a paying customer since coming out of stealth mode over a year ago. Shane Eleniak, vice president of sales for Corrigent, says the company is in a number of lab trials with Tier 1 carriers, but it hasn’t been deployed in field trials yet.
“Corrigent is a baby step in the right direction,” says Steven Levy, an analyst with Lehman Brothers, who covers Lucent. “But it’s a small startup, so I don’t think it’s going to become a large revenue stream for them.”
One of Lucent’s main objectives is to expand its services business to include more third-party manufacturers. As of the last fiscal year, 90 percent of the gear being serviced by Lucent’s service organization has been Lucent equipment, says Levy.
To date Lucent has tapped only a small portion of the $40 billion addressable telecom services market, adds Levy. It has already begun work on this, by adding some other third-party vendors to its roster. Back in January, it announced it would service and resell wireless gear from Cisco Systems Inc. (Nasdaq: CSCO - message board) (see Lucent & Cisco: Together at Last ). The company has also been rumored to be working on a similar contract with Juniper Networks Inc. (Nasdaq: JNPR - message board) for its routing portfolio (see Is a Lucent/Juniper Deal in the Works? ).
Stephen Loudermilk, a spokesman for Lucent, says that many more service contracts will be announced soon. He also says that much more attention will be given to this business unit later this week during the company’s quarterly conference call.
Loudermilk is quick to point out that not every service contract will result in a reseller deal. For now, the Corrigent/Lucent partnership does not have a reseller component. Given the fact that Corrigent’s CM-100 competes against Lucent’s Metropolis DMX product, the likelihood of a reseller deal is slim.
“There is an overlap in our product offerings with respect to Corrigent,” he says. “But we’re in the business of making money from the services and installation of other companies’ products. The product organization and the services group are completely separate.”
Even without a reseller agreement, the service partnership could help Corrigent win new business, especially with Tier 1 incumbent carriers. The 100-person company says it will give customers the choice between their service and support and subcontracting that out to Lucent.
— Marguerite Reardon, Senior Editor, Light Reading |
