Who killed Lucent?

Alcatel Lucent
Now everyone at the world has been knowing Lucent's acquisition by Alcatel, or anyway, you can say it a merge. Who turned the telecom vendor giant into a prey? Who is the root cause killer of Lucent? Of course, not Alcatel.

When I graduated from PKU and joined China Telecom to start my job career at 1997, Lucent, not long time after the spin-off from AT&T, is the superstar of the stock market and one of the top telecom vendors in the world, full of respects and honors from the industry, along with the upsoaring stock price. Their employees are very proud of their titles and name cards. The red circle logo was the image of success and high stability, reliability. At that time Cisco was merely a challenger with something called "IP" technologies. One of my friends who was going to do an interview at Cisco China offices told me: "I was going to interview to a small company, named Cisco…".

Around 1997, China Telecom was contructing their backbone transmission networks with ATM technology, while Lucent was the sole supplier by its 500 and 9000 series products. The Chinanet, part of the Internet, run on the ATM anf FrameRelay layers. In fact, there were two main voices of the future of the telecom network at the world, one was that IP would dominate everything, while another is that ATM could provide more reliable and flexible services while IP was only one of its services.

The deviation of IP and ATM placed Lucent at the cross road of their technologies and products, ie actually their future. Lucent made its choice by acquiring Ascend with about 9B$ at June 1999. I do believe that's the turning point to Lucent. Their investment and gambling on ATM killed Lucent at last. (similar case to Nortel. Nortel chose to acquire Bay Networks. None of them, those "telecom giants" started any actions to merge/buy/stop Cisco.) 🙂

At Lightreading message board, this topic got a few discussion. I try to paste them as the below:

[Flam] In other words, the bell-heads killed Lucent.I worked for several years very closely with a certified Bell-head (He was a BL Fellow, and his name is on the plaques which used to decorate the lobbies).
He could not "get" IP and what was more, refused to bother. In his mindset, anything which wasn't circuit switched, and had at least 2 boards for fail over, wasn't telco class. When told that IP didn't need to do it this way, he would smirk and continue whatever it was that he was doing. and this was in mid 2000, well into the slide.And it was an IP product. And it sucked. But for management, it was good, because Certified Bellhead had blessed it.

[Brahmos] They did try something like GSR in holmdel if what I saw was right. but with a pathetically small and inexperienced team to develop the prototype. too little and too late. all the peer-reviewed papers in the world dont add up to a good timely product the market wants. ALA is probably going to nuke most of LU products and cut deep into LU ranks.

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3 Responses to Who killed Lucent?

  1. McGinn says:

    What kill Lucent is all the bad decision of funding small telecom operators with equipments and bad loans. Also what kill LU is their bad decision on OC-48 vs OC-192. Customers and after customers dumping OC-48 and go with OC-192. LU ends up with a big warehouse full of obsolete expensive OC-48 hardware.

  2. zhaol says:

    I agree to you in general. At post-2000 age, the fiber-optic and SDH market shrinked quickly, besides China was still paving their fiber-opotic SDH loops. Their Cajun IP switches could not compete against Cisco, Juniper and others at the growning enterprise IP market. So the major direction decision on ATM/IP might be the root-cause, IMHO. 🙂

  3. zhaol says:

    interesting discussion from spelurker :

    > similar case to Nortel. Nortel chose to acquire Bay Networks.
    > None of them, those “telecom giants” started any actions to merge/buy/stop Cisco.

    Interesting argument. But totally wrong. Bay was the obvious competitor to Cisco, with first or second place market share in many product areas. Unfortunately their technology was growing older and Nortel didn’t know what to do about it.

    Likewise, Lucent started a HUGE buying spree in the IP space. But since the only large company they ended up with was Ascend/Cascade, the bulk of their sales force didn’t know much about IP, and was unwilling to risk putting it in their customer networks. Political infighting at all levels guaranteed that the IP products never saw the light of day, or were even integrated with each other.

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