Gary,
You analysis makes sense if we are talking about a commodity business where switching suppliers is as easy as going to Safeway instead of Lucky for your groceries. But we are talking about the carrier networking market, and there are some very significant differences.
For a service provider, switching equipment vendors is a very difficult undertaking. Your engineers have to be retrained, new processes defined and refined, not to mention new bugs to be found in the new vendor's equipment. You're throwing out the door many years of experience acquired from working with the old vendor's products. When AT&T dumped Stratacom ATM for Ascend, it was a very tumultuous decision for them. I can tell you that first hand. But they decided to do it because their ATM network was still in its infancy (only 8 ATM-equipped POP's), and they knew it would be impossible to switch once their ATM network grew bigger. Dissatisfied with Stratacom, it was now or never. So they bit the bullet and made the switch.
The AT&T switch to Ascend is the only example I'm aware of where a carrier switched ATM equipment providers. In networking, these kinds of vendor switches will be very rare, if they ever happen again at all.
So when Lucent makes a decision about which data switching vendor to buy, they are not only making a decision about technology--they're making a decision about which customers they want to have. For Ascend as we all know, the customer list is quite impressive and includes the most important carrier customers--AT&T, Williams, QWEST, NTT, UUNet(FR & RAS), GTE, etc.... For Newbridge, there are a much higher proportion of enterprise customers and much fewer carrier customers. Furthermore, Newbridge has not won a major new carrier contract for quite some time, I believe--most of their carrier customers were acquired years ago when the ATM market was in its infancy. The 90% of Newbridge's ATM revenues are from products that are more than three years old (i.e., the 36170). Their VIVID product is a disaster.
Many attribute Newbridge's poor performance of late to bad marketing. But Ascend's marketing is not much better, and look at all the new contracts they are raking in.
Once again, AT&T is the only example of a large service provider switching ATM equipment suppliers. Having seen how difficult it is to get a service providers to switch equipment, then how can Lucent expect to win new new contracts away from Ascend and Stratacom with an inferior Newbridge product? The same question can be applied to remote access switches, where Lucent's Livingston division has utterly failed to convince any carriers to switch to its product. Same for Frame Relay.
IMO, Lucent will make a strong bid (at least one for one stock exchange) to buy Ascend before the end of the month. The question is, will Mory accept Lucent's offer?
bucky89 |
