Alcatel-Lucent’s specialist move symbolic of changed market dynamics: Ovum

Ron Kline claims the move will allow it to focus on Cloud and large-scale Internet providers

Alcatel-Lucent’s strategic shift from telecom network equipment provider (NEP) to IP networking and ultra-broadband access specialist is indicative of the high speed at which market dynamics have changed, according to Ovum.

The company’s network infrastructure principal analyst, Ron Kline, said it is the second company, following Nokia Siemes Networks, to reposition itself as a specialist.

This demonstrates the switch in a “market once dominated by large Tier-1 telecommunications providers that are its customers, but increasingly under siege by Internet content providers, NEPs based in the West that have been out-competed by Chinese vendors, most notably Huawei, and specialists,” he said.

Kline believes the decision will allow Alcatel-Lucent to focus on Cloud and large-scale Internet providers which are generating a growing portion of bandwidth demand.

It will also consolidate the company’s research and development (R&D) on high growth areas.

At the same time, Kline said leaving behind legacy technologies markets will be difficult, as will finding a buyer for its Submarine Network Solutions, with the probability of regulatory hurdles.

Number crunching

Based on Ovum’s quarterly market share research, Alcatel-Lucent’s IP and WDM products performed well, but rapidly declining revenues in SDH/SONET and DCS led to lower margins and market share.

Alcatel-Lucent saw $US2.1 billion in revenues over the last four quarters for an increase of 2.3 per cent year-over-year (YoY). Its broadband access revenues dropped two per cent to just over $US1bn during the same time frame.

Ovum also claims Alcatel-Lucent’s optical network equipment revenues fell 28 per cent over the last year, while its converged packet optical (CPO) equipment grew 15 per cent.

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