Lucent and 3GSM WCDMA
Unstrung's take (3 articles) on Lucent in the 3GSM WCDMA infra game ...
>> Lucent's 3G Bit Part
Justin Springham
Unstrung
06.03.03
unstrung.com
Lucent Technologies Inc. (NYSE: LU) is touting its new $45 million infrastructure deal with mmO2 plc as proof of its universal mobile telecommunications system (UMTS) pedigree; but analysts remain skeptical of its ability to compete for larger deals.
UMTS is the European third-generation network standard, which comprises a wideband-CDMA radio interface overlaid on an enhanced GSM core network. In theory, this system should provide data transfer speeds of up to 2 Mbit/s, although initial networks are much slower in everyday use.
Today’s announcement sees Lucent making a song and dance over its contract to "support" the carrier’s 3G rollout in the U.K., Ireland, and Germany. In reality, however, this is little more than an upgrade to the core network, as Nortel Networks Corp. (NYSE/Toronto: NT) has already won the major slice of the action. Last year Nortel sewed up the core network contract for the three countries, including delivery of base stations and unified packet IP core networks.
Lucent has been awarded the task of implementing its Packetstar software within mmO2’s ATM (Asynchronous Transfer Mode) networks. Sometimes referred to as cell relay, ATM uses short, fixed-length packets called cells for transport. Information is divided among these cells, transmitted, and then reassembled at their final destination. ATM aims to reduce infrastructure costs through efficient bandwidth management, operational simplicity, and the consolidation of overlay networks. It's the world's most widely deployed backbone technology.
According to Lucent spokeswoman Emily Baxter, the project has commenced deployment and is evidence that the company does have a credible UMTS offering. “It follows our previous announcement in January with Orange," she tells Unstrung.”
Back in March, CEO Patricia Russo told Unstrung that Lucent's UMTS offering is suited to such multivendor contracts (see Lucent Sticking With UMTS).
Analysts remain unconvinced. IDC’s senior research analyst Paolo Pescatore plays down any suggestion of the vendor hitting the big time with this win. “They haven’t been able to capture enough share of the European market, and that is an opportunity which has been lost,” he believes. “They will certainly welcome the money, but you cannot put mmO2 in the same league as Vodafone and Orange. They are a minor player in the German market and have recently fallen back in the U.K.”
The win leaves Lucent still searching for its first full-scale UMTS network contract. Previous trials with T-Mobile International AG and Telefónica Móviles SA are yet to bear fruit (see 'Lucent Faces UMTS Crunch' below). <<
>> Lucent Faces UMTS Crunch
Ray Le Maistre
Cannes, France
3GSM Congress
Unstrung
02.19.03
unstrung.com
Lucent Technologies Inc. (NYSE: LU) is approaching make-or-break point in its attempt to convince mobile operators that it has a credible UMTS story (see 'Lucent Harbors UMTS Hope' below).
A pilot trial of the vendor's WCDMA products -- and its enterprise-focused business case -- by No. 1 Spanish mobile operator Telefónica Móviles SA is to be extended from Lucent and Moviles folk to include up to 200 hombres from Spanish companies during March and April.
"This pilot has had three stages," John Leonard, mobile business strategy and planning director at Lucent, tells Unstrung in overcast Cannes. "The first was to prove to Moviles that we had a business model that could work for them, and agree on the scope of the pilot. Then we had to deploy the core and edge infrastructure to create as real a network environment as possible, and have our staff and Moviles people testing the system to access their relevant corporate intranet."
Now, says Leonard, systems integrator Accenture is to help about 200 users from four or five Spanish enterprises join the pilot program and use the Lucent-supplied PCMCIA cards in their laptops to test the network and its capabilities in real business situations.
It is the results of this third stage of the trial that will determine whether Lucent has a credible proposition for UMTS license-holders. If the enterprise users encounter problems securely accessing their intranets, that will discourage Moviles from taking things any further. Likewise, if the pilot is technically successful but offers little or nothing in the way of benefits to those users, then Lucent's business case -- that enterprise users can deliver sufficient revenue to make a WCDMA deployment worthwhile -- will be discredited.
In the meantime, Lucent has a similar operation in the early stage of development with Germany's leading operator T-Mobile AG.
Leonard, naturally, puts a brave face on Lucent's UMTS prospects, saying that the company's experience in spread spectrum technology development and management makes it well suited to help carriers into the 3G world, whether with a WCDMA or CDMA2000 evolution strategy.
However, Leonard does admit that Lucent faces a large obstacle to adoption by UMTS license holders. "We have a very small GSM footprint, and this industry is all about [carrier/vendor] relationships."
A point backed by IDC wireless and mobile network infrastructure research manager Shiv Bakhshi. The natural thing for operators to do is pick up the phone and talk to their existing network equipment suppliers, he says. For many GSM operators holding a UMTS license, that means the calls will be made to the likes of LM Ericsson (Nasdaq: ERICY ) and Nokia Corp. (NYSE: NOK), among others.
But for Lucent, the phone isn't yet ringing off the hook. <<
>> Lucent Harbors UMTS Hope
Ray Le Maistre
Unstrung
12.09.02
unstrung.com
Lucent Technologies Inc. (NYSE: LU) came out fighting today at an analyst conference, talking of a return to profitability and banging its UMTS drum.
The company has been focusing on "near-term opportunities" for the past 18 months or so, targeting the large service providers with a more focused approach, stated CFO Frank D'Amelio at the Lehman Brothers T3 conference in Orlando today. "It hasn't been easy, but it has been rewarding. The wheels have wobbled but they haven't fallen off," he proclaimed, in a neatly packaged soundbite.
The Lehman telecom team believes that part of this new focus will include partnerships to fill in holes where Lucent no longer has a product line. The analysts think Lucent will be open to working with companies that have been traditionally viewed as major rivals, such as Cisco Systems Inc. (Nasdaq: CSCO - message board) for IP routers -- a possible relationship highlighted by Unstrung a few months back.
In the meantime, Lucent's wireless wing is banking on a continuing prominent role in the CDMA infrastructure market, worth about $12.7 billion in 2002 and set to rise to $13.8 billion in 2005, according to Lucent estimates. According to the soon-to-be-available Wireless Oracle report on the global CDMA equipment market, Lucent is currently the market leader, with about 46 percent of the market, and has won almost half of the announced contracts for CDMA 20001xRTT networks (worth $11.5 billion in total).
In addition to this dominant position, the company also has strong ambitions in UMTS. According to the Lehman analysts, it does not forecast any revenues from this line of business in its 2003 financial year (October 2002 to September 20, 2003) -- but it is planning a new "attack strategy" for this market.
To date, Lucent has tried to convince wireless carriers with 3G UMTS licenses that it can help them deliver early 3G revenues from business users, and it's still banging that drum (see Lucent Smells Demand for Data). This is based on a strategy of refusing to wait for handsets and instead developing PCMCIA cards with partners to deliver WCDMA network infrastructure and cards for laptops, allowing high-speed data access for "road warriors" (see Novatel, Lucent Team on UMTS). Lucent has been trialing this concept with Spanish incumbent Telefónica Móviles SA and other companies this year.
"For a mass consumer-market launch, the operators need a variety of affordable, reliable handsets that can be offered at a reasonable price, and they need them in millions, not thousands. We don't think this will happen until the second half of 2004 or even 2005," Carlos Mira, the president of Lucent's Mobility Europe business unit, told Unstrung earlier this autumn.
"So handsets are driving the timescales for the carriers that are focused on the consumer markets. But 3G is all about data, and enterprise users want greater access speeds than those offered by GPRS, which is good for transaction-based services. Enterprise users need more, and our solution offers them this to their laptops. They don't even need to learn how to use a new device or work with different applications," added Mira.
But it seems this message has failed to win carrier support. Hence the need for a new (currently unexplained) strategy -- which could simply be a more aggressive promotion of the same story.
Even without UMTS revenues in the current fiscal year, D'Amelio is still bullish about Lucent's prospects of breaking even at $2.5 billion in revenue per quarter from all business lines. "We will return to profitability," he told the T3 delegates. "We have unparalleled network know-how, and aim to be the leading supplier of network equipment to operators," he stated, adding that Lucent's aim is to help carriers reduce operational costs and maximize revenues.
"I am making no predictions," D'Amelio declared, "but it's clear this market will come back." We know that's a kinda wooly statement, but that's still a prediction, isn't it?
Still, he was on a roll. "It's a case of when, not if. The global telecom market is worth $125 billion, and the underlying traffic demand is still rising." There are 1.1 billion wireless subscribers in the world today, according to D'Amelio, and this number will rise to 1.6 billion by 2005. "The overcapacity in networks will be used up, and capex will stabilize and eventually rise at mid-single-digit growth levels," he predicted (while making no predictions, of course).
From talking to operator customers, Lucent believes capex levels will return to be 15 percent to 20 percent of service revenues, and that capex will be driven by operators looking to create new services and drive revenues while reducing operational costs. <<
- Eric - |
