T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
TBR EVENT PERSPECTIVE
Alcatel-Lucent is betting its future on
cloud, SDN, NFV and LTE
Alcatel-Lucent 2013 Technology Symposium
Basking Ridge, N.J.
Nov. 13–15, 2013
Chris Antlitz (firstname.lastname@example.org), Analyst, Networking and Mobility Practice
According to Alcatel-Lucent executives, cloud, software-defined networking (SDN), network function virtualization
(NFV) and LTE represent a paradigm shift in the networking industry, and the company is transforming its portfolio,
go-to-market strategy and resource strategy to differentiate from the competition. Alcatel-Lucent is gaining
momentum in the marketplace, exemplified by its recent string of LTE wins and involvement in developing cloud,
SDN and NFV solutions with key customers.
Though the company’s seven-year journey has been and continues to be wrought with challenges, it appears the
new management regime, led by CEO Michel Combes, is finally making headway in stabilizing the company and
establishing a solid foundation for profitable, long-term growth. Alcatel-Lucent is regaining some of its nimbleness
now that it is addressing its structural issues and exiting noncore businesses as part of the Shift Plan restructuring
program, which enables the company to refocus its resources and attention to winning in the network of the
future. Alcatel-Lucent is proving that it has staying power in the market and that it is well positioned to capitalize
on the new market opportunities brought about by rapidly unfolding paradigm shifts.
More than 100 industry analysts, financial analysts and media personnel from around the world converged in
Basking Ridge, N.J., for Alcatel-Lucent’s annual Technology Symposium, where the telecom solutions giant laid out
its view of where the network technology industry is heading and demonstrated how the company is well
positioned to thrive amid this market shift.
Combes was first to take the stage. He discussed how the company lays a solid foundation for long-term growth
and meticulously outlined how Alcatel-Lucent’s disparate businesses and altered strategy position the company to
thrive amid monumental technological changes facing the industry, such as cloud, SDN and NFV.
Presentations from line-of-business heads, customer presentations and panel discussions with open Q&A sessions
followed Combes’ keynote. Cloud, SDN and NFV were hot topics at the event and were thoroughly covered in
executive presentations. Each of Alcatel-Lucent’s executives for its major lines of business, including Wireless
Access, IP Routing and Transport, IP Platforms and Fixed Access, took to the stage to cover how these domains are
evolving and how Alcatel-Lucent is adjusting its strategy to adapt to market changes. Several representatives from
operator customers — including Stephen Bye, chief technology officer and senior vice president of Technology
Development and Corporate Strategy at Sprint; Christine North, head of Business Improvement at British Telecom;
and Craig Cowden, senior vice president of Network Engineering, Operations and Business Enterprise Solutions at
Bright House Networks — also spoke on stage about how Alcatel-Lucent helps them achieve business success and
lay a solid foundation for growth.
Impact and Opportunities
Evolve software business
Alcatel-Lucent is evolving its software business from a primarily integrated hardware and software model to a pure
software and services model. Alcatel-Lucent wants to be the creator of software and either sell the licenses and
build a recurring stream of support revenue or provide access to the software via a subscription-based “as a
Service” model, similar to business models championed by companies such as Oracle and Amdocs, but with an
emphasis on leveraging open source and partnerships. While the traditional model will still be utilized using
Commercial-off-the-Shelf (COTS) hardware, Alcatel-Lucent is shifting to enable the company to better monetize its
software portfolio and more rapidly and cost effectively scale up this business. Alcatel-Lucent has made significant
headway in this area and is delivering Motive via a Software as a Service (SaaS) model; its IMS and VoLTE offerings
are also available by license. The goal is to have Alcatel-Lucent’s entire software portfolio running on virtual
machines within the next few years.
Become the ultrabroadband specialist
Federico Guillen, president of Alcatel-Lucent’s Fixed Business, pointed out that there is a symbiotic relationship
between fixed and wireless infrastructure and that the market is in the early stages of a huge revival in demand for
fixed infrastructure brought about by the need for converged, ultrabroadband networks. Guillen emphasized that
fixed infrastructure will remain an indispensable component in the architecture of broadband networks and that
Alcatel-Lucent’s leading positions in fixed access, wireless access, routers and transport best position the company
to provide end-to-end broadband solutions adaptable to any customer environment.
Major government-sponsored national broadband initiatives around the world will drive strong growth in fixed
technologies over the next decade. While LTE will play an integral role in bringing broadband to the masses,
Alcatel-Lucent appeals to operators with legacy copper plant and fiber deployments. Since deploying fiber is so
expensive, Alcatel-Lucent advocates that the most cost-effective way to get as much fiber in the field as possible
requires a hybrid model, whereby legacy lines are upgraded to VDSL2 or vectoring and fiber is rolled out
strategically as close to the copper access as possible to attain the most economical and fastest fixed-access
connection possible to the end user. Continued innovations in copper make Alcatel-Lucent confident that it can get
copper throughput up to 1Gbps in a few years, which is comparable to fiber speeds. Alcatel-Lucent’s unique
position as a provider of legacy copper and next-generation fiber access will enable the company to win the lion’s
share of these fixed broadband deployment opportunities.
Capitalize on LTE using overlay approach