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Alcatel-Lucent is betting its future on cloud, SDN, NFV, and LTE
Alcatel-Lucent is betting its future on cloud, SDN, NFV, and LTE
Alcatel-Lucent is betting its future on cloud, SDN, NFV, and LTE
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Alcatel-Lucent is betting its future on cloud, SDN, NFV, and LTE


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  • 1. TBR 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 Author: Chris Antlitz (, Analyst, Networking and Mobility Practice TBR Perspective 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. Event Overview 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.
  • 2. TBR 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
  • 3. TBR LTE overlay is becoming a popular method for deploying LTE, and Alcatel-Lucent is focusing on this opportunity exclusively. A market for multimode RAN will remain, as demonstrated by the raft of network modernization activity secured by Ericsson and Huawei in Europe over the past few years, but the reality is that more operators are showing a preference to getting LTE in the field as soon as possible to obtain a market advantage. Operators are also looking to accelerate their shift away from legacy technologies to hasten the move to a flat, all-IP architecture, which is more efficient and scalable than circuit switched architecture. The new value creation model emerging in North America, facilitated by LTE, leads operators in other regions to strongly consider LTE, and they view the technology as a means of not only reducing opex, but also of driving revenue. Alcatel-Lucent is unique in its go-to-market approach for LTE, whereby the company positions itself as a specialist rather than a generalist in RAN technology. This differs from how its competitors position, as they are more focused on the single RAN opportunity. Alcatel-Lucent’s LTE strategy resonates with key operators around the world and recently led to big contract wins from Sprint, Telefonica in Spain and China Mobile. Lean on Bell Labs to backfill innovation pipeline and drive customer engagement Shifting R&D spend away from supporting legacy (2G and 3G RAN) and noncore technologies (application enablement and mobile commerce) and into next-gen areas will enable Alcatel-Lucent to hone its focus and more rapidly assimilate into the new paradigm. Cloud, SDN, NFV and LTE are key focus areas that will benefit from this allocation shift. Bell Labs actively engages with operators and other industry participants to trial cloud, SDN, NFV and small cells, and these engagements are starting to convert into commercial contracts. Alcatel-Lucent is unlikely to engage in M&A, but more partnerships are expected Combes made it clear that Alcatel-Lucent possesses all of the components necessary to be successful within the new market paradigm and that it is not necessary for the company to pursue M&A. For the time being, AlcatelLucent will focus on divesting noncore assets to raise cash to fund the Shift Plan and R&D efforts. Though M&A is on the backburner for now, Alcatel-Lucent will continue to forge partnerships to access new markets and enhance offerings. The recent tie-ups with Qualcomm and Orange in the areas of small cells and FTTx, respectively, exemplify the types of arrangements the company is looking to enter. Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. For more information please visit ©2013 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.