Lucent and Wireless?????
wirelessweek.com
Lucent Promises More Growth, R&D
By Monica Alleven
MURRAY HILL, N.J.--The best is yet to come.
That's the message from Lucent, which recently hosted its annual meetings with analysts and media at its sprawling campus here. The $38 billion company, once the stodgy old equipment arm of AT&T Corp., has transformed itself into a sizzling, techno-savvy beast, growing exponentially since its initial public offering in April 1996. Along the way, the company has muscled up with 29 acquisitions while maintaining close ties to Bell Labs, the Nobel Prize laureate-producing research division. In 1999, Lucent announced more than 148 contracts, and its revenue grew 20.4 percent. Not bad for a 3-year-old.
One of Lucent's hottest growth areas is wireless, a business AT&T actually considered getting out of in the early '90s. Luckily for Lucent, it didn't. Wireless accounted for more than $5.5 billion in contract wins in 1999 alone. Led by wireless guru Jim Brewington, Lucent's wireless division has managed to outdo Ericsson in TDMA infrastructure in North America, and Lucent remains the worldwide leader in CDMA infrastructure, with 46 percent market share. Lucent even has some contract wins in the Ericsson-dominated GSM market. The wireless market is steadily growing, and Lucent is gaining ground in key areas such as Asia, Central America, Latin America and the Middle East.
Where does Lucent go next? Today, 95 percent of wireless network traffic is voice, and that traffic is increasing. But by 2005, Lucent expects 50 percent of the traffic will be data, as wireless increasingly is used to access the Internet. That means Lucent has to be on the cutting edge of next-generation technologies.
"We're investing a ton of money in third generation, and we're on schedule with our third-generation development," says Brewington, president of Lucent's Network Wireless Group. (In fact, Brewington claims the title of biggest spender at Lucent, where wireless R&D is approaching the $2 billion mark. At a recent meeting, colleagues teased him by playing Peggy Lee's "Big Spender" song.)
Brewington, a wireless enthusiast who says his passion over the development of a wireless base station once tested a marriage, promises even more wireless breakthroughs to come. The company has third-generation trials now under way in all the major wireless technologies, including an important Universal Mobile Telecommunications System trial with Japan's NTT DoCoMo.
Yet Lucent isn't without its challenges, both within wireless and in other business areas. Lucent executives, without specifying a time frame, have told analysts their goal is to make Lucent the No. 1 global provider of wireless infrastructure--but stealing market share away from Ericsson and other competitors won't be easy. Ericsson still dominates in GSM, the technology used across Europe. Other competitors are vying for wireless business, too, including Nortel Networks, Nokia and Siemens--and rival Motorola has a partnership with IP powerhouse Cisco Systems.
In other areas, Lucent's enterprise data division has "flatlined" while other segments are growing. In enterprise data, "we're an afterthought," says Lucent Chairman and CEO Richard McGinn, making an analogy between Lucent's standing in the enterprise market to the credits of a movie: "We're down there along with best boy and key grip."
But he says Lucent won't try to "out-Cisco Cisco," its biggest rival in the enterprise networking and voice-over-IP markets. Instead, Lucent will focus on up-and-coming areas such as optical networking.
Meanwhile, many Wall Street analysts are optimistic about Lucent's long-term wireless outlook. ABN-AMRO analysts estimate dramatic growth--40 percent to 50 percent growth in fiscal 2000.
Lehman Brothers analyst Tim Luke agrees Lucent is on a winning path. "They're very well placed in wireless; they're being very competitive in vendor financing," he says.
No doubt, wireless infrastructure will be play a key role in Lucent's future. Fortunately, AT&T didn't scrap that wireless business after all. |
