Lucent looks to jump-start its
corporate business
By Wylie Wong
Staff Writer, CNET News.com
December 2, 1999, 5:15 p.m. PT
Lucent Technologies hopes to jump-start its corporate networking
equipment business with new technology that competes directly with
rivals Cisco Systems, Nortel Networks and others.
Lucent, best known for its hardware for phone companies and Internet service
providers, has struggled to gain a foothold in the corporate market dominated
by established data networking equipment players such as 3Com and
Cabletron Systems.
But next month, Lucent will ship a new high-speed routing switch that it hopes
will propel sales and allow it to better compete with established networking
companies as well as with start-ups such as Foundry Networks and Extreme
Networks that sell similar equipment.
"Lucent has had products, but they have not
executed very well in their positioning, marketing
and sales," Infonetics Research analyst Mike
McConnell said. "They're beginning to articulate how
they're going to compete in this space. They're
trying to come out with a cohesive story. And this
[new product] is building it."
Last month, Lucent chief executive Richard McGinn
admitted the firm's corporate networking sales have
been disappointing, despite a push that includes
acquisitions of several data networking companies,
including Prominet and Xedia.
Lucent claims only 2 percent of the market for
corporate network switches, selling $71 million
worth of equipment in the third quarter, according to
analyst firm International Data Corp.
Cisco, which makes Catalyst switches, leads the
market with 49 percent market share and $1.9
billion in sales during the third quarter. 3Com is a
distant second with 12 percent and $473 million in
revenue, while Nortel garnered 10 percent, and
Cabletron 6 percent in the third quarter.
Corporate networking equipment allows businesses to connect PCs and
servers along a local network to share files and applications.
In addition to its networking equipment, Lucent's enterprise unit also features
low-end PBX phone switches, an internal telephone system that connects a
company's telephone extensions with an outside network.
Lucent's latest switching device, called the Cajun P880, supports so-called
convergence networks that support voice, video and data on a single pipe,
according to the company. The device also lets network administrators
reserve network bandwidth to ensure that specific applications are available
during high-traffic times, executives said.
"This product fits nicely with their portfolio," IDC analyst Esmeralda Silva said.
"If you look at the platform people are asking for, it's big performance with
gigabit Ethernet."
Nortel executives, who consider Cisco the company's top rival, scoffed at
Lucent's latest effort. Nortel in June released a high-speed routing switch,
called the Accelar 8100, aimed to connect PCs within an office to a network. In
the first quarter of 2000, Nortel plans to release the Accelar 8600 routing
device that connects the networks of a series of offices or buildings together.
"If you look at performance, we're still better than they are. They're playing
catch-up. Just look at their market share," said Luc Roy, product marketing
director for Nortel's enterprise networking systems.
Analysts believe Lucent can still do well in the corporate market, especially
when the demand for Internet-based networks that can handle both voice and
data increases.
"It's very difficult to get into the enterprise market if you're not already an
incumbent vendor. Cisco, Nortel, 3Com and Cabletron all have an installed
base," Silva said.
But Lucent should be able to leverage its traditional strengths, such as its call
center equipment and professional services organization, to sell to the
corporate market, she said.
"When voice and data come together, it's an opportunity for Lucent," Silva
said. "They can have a complete solution, rather than just selling point
products."
Infonetics Research's McConnell said Lucent's product announcement shows
that the company is committed to the market. "They haven't made an
announcement in a while," he said. "This market is moving really quickly and
they need to keep innovating and come out with new products. They just
haven't put the resources to put that message across to users."
In a recent survey of businesses, McConnell found that Lucent is barely on
many a network administrator's radar screen.
When he asked them who they would buy their future networking equipment
from, Lucent ranked 10th, behind market leaders Cisco, 3Com, Cabletron and
Nortel, as well as Intel and Hewlett-Packard.
"The market is not conceiving Lucent as a player," McConnell said. "They have
a lot of work to do."
Related news stories
? Lucent optical router ups high-capacity ante November 9, 1999
? Nortel looks to salvage sinking market share November 9, 1999
? Lucent shrinks in Cisco's networking shadow November 12, 1999
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