* Lucent's focus on convergence
It takes approximately 26 nautical miles to turn an ocean liner or a tanker vessel at sea. The task of turning around a corporation such as Lucent is no less abiding. 2003 has been a transitional year for Lucent and now the company is looking forward to becoming a leading integrator for the service provider industry, with a growing focus on the enterprise, particularly the public sector.
Lucent’s current status and future directions were presented early in March, at an event in Boston that coincided, almost to the hour, with HP’s analyst event focused on the management aspect of its Adaptive Enterprise initiative. Lucent’s Chairman and CEO Pat Russo began by enumerating the improvements of Lucent’s financial performance during 2003, which included a reduction of total expenses by $5.6 billion to $2.87 billion, an increase in gross margin rate by 18% to 31%, and a cut in net loss from $11.8 billion to $770 million. She then turned her presentation to Lucent’s strategy of expanding its share of the network integration market.
The key to Lucent’s business strategy is the convergence of communication services and technologies. With the motto “Any Service to Any Device,” Lucent intends to seek opportunities in both wireline and wireless market segments, especially as these converge.
In Lucent’s vision of the future, the user will be able to seamlessly access communications-based services at work, home, and in transit. To achieve this, Lucent differentiates itself from competitors with its advanced science and technology research asset Bell Labs. Bell Labs boasts 30,000 patents, including a recent patent for Quality of Service on VoIP transmissions, as well as technology trademarks, such as its Ocelot optimization service, which helps to determine the best configuration for a wireless network without additional capital expenditures by the service provider.
Through its innovations, Lucent hopes to outdistance its competitors for market leadership in converged communications – including wireless/wireline, VoIP and traditional voice. From the buyer’s perspective, the ultimate goal of all these innovations and investments is to enable Lucent to deliver solutions requiring lower capital investment and operating expenditures than its competitors.
A number of presentations identified network and infrastructure management as an area for growth, but the issue was generally “glanced over” by the speakers, although VitalSuite was available as one of the product demos.
Lucent has an extensive management portfolio including Navis, which is targeted at the service provider community, and VitalSuite and VitalQIP, its respective performance management and IP address management tools aimed at enterprise customers. A version of VitalSuite is also available for service providers.
Both VitalSuite and VitalQIP can deliver a solid foundation for building towards Lucent’s broader vision. And in fact, Lucent has recently introduced some significant VoIP management capabilities for VitalSuite.
However, to truly succeed in its network integration goals, Lucent will need to continue to up the ante in its software investments. There is another area of convergence that is even broader and more all encompassing than VoIP or wireless – and that’s the gradually converging business models between enterprises and service providers. This has been written about extensively in these columns, and is too complex to honor in a sentence or two, but the bottom line is that both enterprises and service providers will need to measure, justify and proactively market services to their client/”customers.” They must also meet SLAs to show value, and manage dramatic dependencies on other “service providers” to deliver on meaningful business value.
Moreover, while enterprise services are application-oriented, service providers will need to step up increasingly to application-responsive SLAs, or be replaced by more willing and flexible partners by demanding CIOs.
Lucent is in an excellent position to provide management and direction for this, even grander type of convergence as an extension of its role as integrator. But to do so means an intense and realistic focus on management software – both for its own devices and for multi-vendor infrastructures, in effective partnership with the broader management community.
