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All eyes on Alcatel-Lucent merger

Alcatel-based enterprises in wait-and-see mode after Lucent merger.

By Phil Hochmuth, Network World
April 10, 2006 12:07 AM ET

Network World - With the mega-merger of Lucent and Alcatel in the books, corporate users of Alcatel voice and data gear say the deal could be a boon for the French vendor's market presence in the United States.

In addition to merging a plethora of carrier access, edge, backbone and optical product lines, the Alcatel-Lucent merger creates an interesting package of IP voice, switching, routing and security products. But with Lucent mostly out of the enterprise business since 2000, and Alcatel's scant market share, some observers question whether the merger will be just a blip on the screen for large IT buyers.

Lucent and Alcatel agreed last week to a $13.4 billion merger, in which Lucent CEO Patricia Russo would become the head of the joined company. But the deal - called a merger of equals - is essentially a buyout of Lucent by Alcatel, which has almost twice the market value of its U.S. rival.

"The Lucent footprint could help Alcatel a little in the U.S., but it's not like Lucent is that well known to U.S. enterprises either," says Zeus Kerravala, an analyst with The Yankee Group. "The Lucent brand has been gone from the enterprise for so long, it might not give Alcatel much of a boost."

If a company is going to go through a process and end up picking Alcatel, Kerravala says, "it's going to be because the [buyer] has done their due diligence and found some feature or benefit from Alcatel," and not because of name recognition or marketing.

Price and performance are the reasons users would install Alcatel gear in the United States.

"I'm just waiting with interest to see what's going to happen" to Alcatel's enterprise business after the merger, says David Happala, network technician for the Crosby Independent School District, which is near Houston.

Three years ago, the school district standardized on Alcatel OmniSwitch Layer 3 Gigabit Ethernet backbone and 10/100/1000Mbps wiring closet switches, when Happala was looking to build a district-wide Gigabit Ethernet WAN with fiber provided by the local cable TV provider.

"I liked what Alcatel was doing at the time with Layer 3 and Layer 4 switching," Happala says. "Cisco was doing it too, but it was too expensive. When we put our requirements out for bid, Alcatel came in at one-third of the cost of the Cisco bid."

Lucent for years was a well-known corporate brand, with its Definity PBX and Cajun line of LAN switches, but the vendor spun off all product lines with the divestiture of Avaya in 2000. (Avaya has since stopped selling data products).

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