Alcatel-Lucent Technology Symposium: Revenue Diversification Not a Shift Plan Pillar, but a Fourth Leg of the Stool?

Jason Marcheck

Jason Marcheck

Summary Bullets:

  • Alcatel-Lucent, like most network equipment suppliers, realizes that it needs to look beyond telecom network operators for long-term growth and viability.
  • Alcatel-Lucent’s work with partners such as Accenture helps the vendor overcome a lack of name recognition outside telecom.
  • The obvious downside of a partnership strategy is that partners can be, and often are, promiscuous.

“We want to be promiscuous.” (The name of the speaker, along with their company affiliation, has been removed to protect their reputation.)

That’s a quote from Alcatel-Lucent’s recently concluded Technology Symposium, held in New Jersey on November 11-13. Aside from giving the artist drawing a storyboard summary of the session (seen below) an awkward moment when pondering how to fit that into the picture, it gave the audience a clear view of how big companies view partnerships: there are many possibilities out there, and many of them want to get in bed with each other, metaphorically speaking.

ALU Tech Image #2Source: dpict, Alcatel-Lucent

However, to focus on the fact that partnerships are almost never non-exclusive would be to sell short Alcatel-Lucent’s endeavor with Accenture (and other partners), and potentially miss the point of Alcatel-Lucent’s push into the extra-large enterprise (XLE) market in general.

The Big Picture

We all know that Alcatel-Lucent sold off most of its enterprise assets several years back. XLE is not about shucking the tenets of the “Shift Plan” that call for focus and re-entering the enterprise market. It is about moving its existing product lines beyond the increasingly narrow bounds of the telecom operator market and tapping into the growing need for telecom-grade networking across a variety of industries. We know what those industries are: smart grid, transport, healthcare, public safety. We also know who else is trying this: Ericsson, Huawei, Nokia, to name only Alcatel-Lucent’s most direct competitors. Simply put, in order to grow revenues and stay relevant, traditional telecom vendors must find out a way to target customers in these verticals. (By the way, for those keeping score, this lines up nicely with the “Innovation,” “Transformation” and “Growth” pillars that CEO Michel Combes began the conference by outlining in “The Shift Plan – The Next Chapter.”

The Elephant in the Room

Of course, tapping those customers and growing those revenues is easier said than done when few outside of telecom know who you are. Here’s where Accenture comes in. IT networking shops across all the aforementioned verticals know who Accenture is. Accenture can get Alcatel-Lucent invited to the parties… and it can do the SI work on all that networking gear that these companies need. So, yes, while Accenture will work with other vendors, and Alcatel-Lucent will work with other IT consultancies, Alcatel-Lucent and Accenture will have shared business units within each company. Per Alcatel-Lucent, this will streamline important things such as pricing, procurement, fulfillment, and other processes that can bog less structured partnerships down. That means efficiencies that other, less committed, partnerships might not be able to affect. It will also give both Alcatel-Lucent and Accenture a valid claim to a “best-of-breed ecosystem,” which in layman’s terms means, “Everyone at this table knows what they are talking about.” According to the survey research that we do, sourcing shops at big companies like that type of thing and the name recognition Accenture brings (not to mention “best of breed” messaging) could position this as a solid alternative to buying your way into IT integration.

Call it the virtue of promiscuity.

About Jason Marcheck
Jason is Research Director for the Current Analysis Service Provider Infrastructure service. Jason and his analyst team monitor and evaluate activities in the markets for Digital Media, Fixed Access, IP Services, Mobile Access, and Transport and Routing Infrastructure, Telecom Vendor Services, and the Service Enablement Ecosystem.

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