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Lucent-Alcatel: Is it a good merger?

Apr 13, 20062 mins
Mergers and AcquisitionsNetworkingWAN

* The effect megamergers have on the corporate network

Looks like we’re headed for the Merger-of-the-Month Club in the telecommunications industry. Last month, on the service provider side of the house, AT&T and BellSouth announced their impending nuptials. And by now you surely would have heard about the proposed coupling of Lucent and Alcatel on the equipment side.

When we invited you to comment on the AT&T and BellSouth merger in the online discussion at Webtorials, the commentary was overwhelmingly negative. Few of those commenting saw this as a good move either for corporate end-users or the industry.

Being eternal optimists – otherwise we wouldn’t be in the crazy world of being independent analysts – we can see an upside. In particular, this will enable corporate users to have more products available for one-stop shopping, and the two companies do complement each other nicely. But as the corporate cultures of the two are concerned, we’ll reserve comment.

But we have some rather serious reservations and questions about the effect of the Lucent-Alcatel merger in the corporate telecommunications market. Our joint-venture analyst organization, Kubernan, focuses on innovation. It’s obvious that the amount of innovation in a company tends – with very rare exceptions – to be inversely proportional to the size of the organization. Just look at the speed of telecommunications development pre- and post-divestiture. Q.E.D.

We also have a concern about the impact of a combined Lucent-Alcatel on mergers between telecom equipment user organizations. As each equipment provider becomes larger and is better able to provide an entire product set, the impetus for each to follow standards as opposed to developing their own proprietary architectures diminishes. Thus, it may become increasingly difficult for two customer organizations to merge their operations when each has chosen a different mega-supplier for their network infrastructure.

Once again, we invite you to share your thoughts with us on this topic at the Webtorials “News and Issues” discussion pages here. You may review the 30-plus comments that were posted about AT&T and BellSouth, plus chime in about Lucent and Alcatel in a new thread.

Jim has a broad background in the IT industry. This includes serving as a software engineer, an engineering manager for high-speed data services for a major network service provider, a product manager for network hardware, a network manager at two Fortune 500 companies, and the principal of a consulting organization. In addition, Jim has created software tools for designing customer networks for a major network service provider and directed and performed market research at a major industry analyst firm. Jim’s current interests include both cloud networking and application and service delivery. Jim has a Ph.D. in Mathematics from Boston University.

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