A merger between Lucent Technologies and Alcatel could boost the profile of products Alcatel sells to enterprises in the US, according to analysts.
"Alcatel has a strong line of IP PBXs out there but they're not really on the radar screen in North America," an analyst at Yankee Group, Camille Mendler, said. "A merger would help propel the Alcatel brand into the North American enterprise market."
Lucent and Alcatel issued a statement saying that they were discussing a merger of equals. The companies went through a similar round of talks in 2001 that ultimately fell through.
Both companies were anxious to expand their enterprise businesses, Gartner analyst, Steve Blood, said.
Lucent spun off its enterprise products into Avaya and would have liked to buy that business back but can't afford to, he said.
Alcatel had been eager to grow its enterprise business, specifically in North America, but had really struggled against its main competitors in that space, Cisco Systems, Nortel Networks and Avaya, he said.
A merger could offer Alcatel the benefit of Lucent's strong sales force, which has an understanding of the US market, chief executive at consulting and analyst firm Cimi, Tom Nolle, said.
The question of how to brand a combined Lucent and Alcatel would be a particularly difficult for the enterprise business, many analysts said.
"I'm not of the view that among the enterprise buyer the Lucent brand at this point is significantly stronger than the Alcatel brand," Nolle said.
Lucent invested a lot to create the Avaya brand and that process might have undermined the Lucent brand within the enterprise, he said. However, in their operator businesses, Lucent's brand was strongest in North America and Alcatel's was stronger in Europe.
Despite signs that both companies were interested in strengthening their enterprises businesses, therre was a danger that the segment could struggle in such a large merger, Blood said.
Alcatel's enterprise organisation currently made up just 10 per cent of its business, he said.
"I could see how it could add value but I could also see how it might just get lost," he said.
Vendors that have made a name selling to the operator community may be growing increasingly interested in branching out into enterprise products. Ericsson recently completed its purchase of Marconi, helping to broaden its portfolio of products to sell to businesses.
Blood expects to see other vendors such as Nokia consider acquisitions that might propel them further into the enterprise market.