[3/2/98 LAN Times article on LU. ASND references]
Excerpt: "Ascend Communications Inc.'s Vice President of Marketing
Bob Macklin also said Lucent is two years to three years
away from being one of the major players in the ATM
market. Macklin said that as service providers begin to gain
more revenue from data rather than voice, hardware-based
suppliers will gain a greater share of the market. "We'll either
become bigger competitors or closer partners, he said.""
wcmh.com./lantimes/98/98mar/803a018a.html
Expanded Q&A with Lucent's Richard McGinn
Company Profile: Convergence rings Lucent's bell
Q&A: Richard McGinn,
chairman, president, and
CEO of Lucent
COMPANY PROFILE: Lucent Technologies
Convergence rings
Lucent's bell
Billion-dollar 'startup' reaches out past telecom gear
to enter data networking. Cisco's unconcerned, but IS
is intrigued
By Stephen Lawton
hen Lucent
Technologies Inc. was
formed in 1996 from the
networking, telephony, and
research divisions of AT&T,
it began life as one of the
world's top 50 grossing
companies. Today this $27
billion "startup" is fighting for
market share on two fronts,
keeping one eye on its
lucrative telecommunications
equipment business while the
other watches
data-networking hotshots
such as Cisco Systems Inc.
The question isn't whether Murray Hill, N.J.-based Lucent,
four times the size of San Jose, Calif.-based Cisco Systems
Inc., can crush the networking giant under its collective
mass. Rather, the question is whether Lucent can marshal its
forces and take Cisco on head-to-head for business from
corporate IS managers. That arena represents a
battleground on which the products, sales cycles, and
marketing strategies vary significantly from the traditional
market of telephony service providers.
Only now is Lucent starting to deliver on its enterprise and
carrier-class ATM offerings unveiled six months ago. Its
gigabit-Ethernet acquisition, Prominet Corp., has been
shipping products for several months but that market is best
described as embryonic. For a company the size of Lucent,
enterprise networking revenues are Lilliputian compared to
service-provider revenues.
Don Listwin, senior vice president of Cisco's
service-provider business line, said he doesn't consider
Lucent a first-line competitor, an honor he reserves for two
Canadian companies: ATM vendor Newbridge Networks
Corp. of Kanata, Ontario, and Northern Telecom (Nortel)
of Brampton, Ontario. However, he expects Lucent to
become a more noteworthy competitor as voice and data
networks merge and Lucent can compete based more on its
traditional strengths.
In fact, Cisco isn't willing to shoot both barrels at Lucent,
said Listwin. He said that the companies are discussing a
strategic partnership for Lucent's voice products. Similar
discussions, he said, are also being held with Nortel, Alcatel
Telecom and NEC Corp.
Lucent's biggest challenge in the enterprise networking arena
is mind share, said Bill O'Shea, president of Lucent's
Network Products Group. He acknowledged that Lucent
often isn't on the radar scope for enterprise ATM switches,
although it does well in the service-provider market.
O'Shea said the company's future success in the enterprise
market is tied to its service-provider business. "Today," he
said, "large companies have lots of people twiddling around
with modem pools. Calls should be terminated at the service
providers, who would just send streams of packets to the
companies." As this service-provider market grows, he
expects to see corresponding growth in demand for Lucent
products from the enterprise market.
John Morency, a principal at Renaissance Worldwide Inc., a
technology consultancy in Newton, Mass., said that two key
components that are missing from Lucent's product suite are
an integrated software architecture that defines how
multiservice systems can be implemented and managed, and
a software-management platform similar to 3Com Corp.'s
TranscendWare or Cisco's Resource Manager.
O'Shea said that such software is in the works and should
be available laterthis year.
Ascend Communications Inc.'s Vice President of Marketing
Bob Macklin also said Lucent is two years to three years
away from being one of the major players in the ATM
market. Macklin said that as service providers begin to gain
more revenue from data rather than voice, hardware-based
suppliers will gain a greater share of the market. "We'll either
become bigger competitors or closer partners, he said."
The Nortel challenge
Renaissance Worldwide's Morency said that although
Nortel can build out from its Meridian telephony system, it
must still use its relationships to address the LAN. Lucent's
O'Shea agreed, noting that Nortel's recent announcement of
creating a business group targeting the enterprise is
essentially the same strategy that Lucent is pursuing.
Unlike Lucent, Nortel's Enterprise Data Networks business
group, bolstered by its Simi Valley, Calif.-based Micom
remote-access operation, already has an established position
in the voice-over-IP market.
"[Lucent] has a good position in the carrier-class ATM
[market], but in the enterprise, that's a different picture," said
F. William Conner, president of the Nortel business group.
Conner said that Nortel already earns close to $785 million
in enterprise revenues.
Both Lucent and Nortel plan to use their partners to address
LAN workgroups and departments for basic infrastructure
products such as hubs and switches. For this segment,
Nortel resells Cabletron Systems Inc. products, whereas
Lucent partners with Bay Networks Inc.
The prevailing opinion in the telecommunications and
data-networking markets is that the convergence of voice
and data isn't a question of "if," but of "when."
Lucent Chairman, President, and CEO Richard McGinn
believes that within the next "several years"--he didn't say
exactly how many--the vast majority of WANs and LANs
will be converged.
MCI Corp.'s Vint Cerf, senior vice president of Internet
architecture and engineering, said that within 10 years, 90
percent of the information going over the carriers' long
distance lines will be packet data, including packetized
voice.
Kanematsu USA Inc., the New York-based division of one
of Japan's largest trading companies, is a firm believer in
convergence. Last year the company began using Lucent's
Internet Telephony Server and now has cut its long-distance
costs by some 60 percent to 70 percent, according to
George Emmett, assistant manager of communications in the
IS department at Kanematsu.
But those gains have not translated into convergence on the
LAN. Emmett said that Kanematsu has no immediate plans
to implement Lucent's LAN technology, nor does he believe
that Lucent's strategy will affect his LAN plans.
Joe Gallo, vice president and CTO of Communications
Beyond Boundaries Corp., an integrator in Oakland, Calif.,
has helped a number of clients who had Lucent bid on their
data networking and voice-over-IP needs.
Gallo said Lucent sells its offerings as "the only game in
town," a marketing approach which implies to potential
customers that other vendors' products might not work with
the Lucent products. That is not the case because Lucent's
offerings are standards-based, he said.
Despite the company's sales approach, which Gallo said can
irritate some customers, the "products are stable from a
reliability standpoint. Everyone I know who has Lucent
products likes them."
One reason for Lucent's lack of recognition among IS
managers, according to Tom Nolle, a principal at Cimi
Corp., a consultancy in Voorhees, N.J., is that the company
markets its products to them the same way it does to
telecommunications managers. He characterized that
approach as "too slow [and] too conservative. Lucent's No.
1 priority must be mind share," he said.
Two areas in which Lucent products are lacking are
management tools and the interface, Gallo said. "Lucent
needs to add class-of-service tools," he said, as well as
open its user interface so that users can customize it more
efficiently.
Gallo finds the so-called "coming" convergence of voice and
data amusing. He noted that digital voice has been
transmitted over long-distance lines since the mid-1960s
when Lucent was a part of AT&T. The change, he said, is
that today "MIS is getting into the telephony business."
And, in Lucent's case, vice versa. |
