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7 ways Alcatel-Lucent hopes to change the conversation

New president of Alcatel-Lucent Enterprise looks to lift fortunes with focus on key market niches in Ethernet switching, data centers

By , Network World
March 20, 2012 03:10 PM ET

Network World - A favorite marketing tagline for Alcatel-Lucent Enterprise is "Change the Conversation."

But Alcatel-Lucent doesn't come up much in conversations about leading Ethernet switching vendors.

Maintaining flat revenue share over the past three years hasn't helped the company on that front. But Alcatel-Lucent nevertheless remains bullish on its prospects, and in gaining share in its strategic markets, based on fourth-quarter and full-year 2011 results.

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Alcatel-Lucent saw its enterprise LAN revenue grow 4% in Q4 and 7.3% for the full year. Wireless LAN revenue grew 31.6% in Q4 and 66.7% for the full year of 2011.

In Layer 2/3 switching specifically, Dell'Oro Group found that Alcatel-Lucent grew 4.2% in Q4 and 6% for the full year. Market share, however, remained at 1.3% and has never exceeded 1.5% over the past three years, according to Dell'Oro.

Nonetheless, Alcatel-Lucent Enterprise's new president, Michel Emelianoff, has seven priorities in line for this year to build on the modest success of 2011:

• Accelerating initiatives around cloud.

• Targeting the converged campus LAN.

• Building up its presence in data center networking.

• Selling its switches in managed LAN services opportunities.

• Going after vertical markets, customers that are similar to small carriers.

• Bulking up its go-to-market capabilities in North America.

• Gaining market share in key niche market areas, like converged campus and data center.

"What's important to me is not to be the biggest player in the market, but one bringing value to customers in the areas where we decide to play," Emelianoff says. "There are multiple areas where we decide not to play because we don't think we are relevant and we don't think we can execute that well. So I prefer to be a niche player but a successful one that is able to deliver value and grow." 

Emelianoff's appointment to lead Alcatel-Lucent's enterprise group coincided with that group's sale of Genesys, its contact center business. There were rumblings that Alcatel-Lucent was looking to sell the Ethernet switching business as well, and Emelianoff did concede that the company was investigating "strategic options" for the entire unit for nine months.

But with the sale of Genesys and retention of the switching business, Alcatel-Lucent's enterprise networking business is ready to get down to business.

The trend among carriers to deliver cloud-based services presents an opportunity for Ethernet switch sales into those markets, Emelianoff says. Carriers are building large data centers as their cloud delivery infrastructures, and with cloud-based services like unified communications being delivered to corporations, Alcatel-Lucent is looking to be an integral part of that activity.

"We're accelerating our initiatives around the cloud," Emelianoff says.

Part and parcel of that is offering a compelling data center fabric switching portfolio, both for cloud service providers and for enterprises building private clouds. Emelianoff says Alcatel-Lucent has had some "very interesting traction" in the data center with its OmniSwitch 10000 core switch and OmniSwitch 6900 top-of-rack device, and the Application Fluent Network and pod and mesh architecture approach.

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