Alcatel-Lucent NGN/IMS Rationalization: Greater Than Sum of Parts

| Aug 5, 2008 | IP Services Infrastructure | Competitive Intelligence Report

| Analyst: Joe McGarvey

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate/High

Event Summary

August 5, 2008 - Alcatel-Lucent has completed the heavy lifting portion of its NGN/IMS rationalization plan. All products have been renamed and repositioned to reflect the long-term portfolio of the equipment maker. In addition, the company has identified those products that are not in the company’s long-term plans and will eventually migrate to a common platform. The resulting portfolio is more than a mix of products from the former Alcatel and former Lucent, as the company took the opportunity to blend functionality from different components to create what amounts to new IMS offerings.

Analytical Summary

• Current Perspective: Positive on Alcatel-Lucent’s completion of its NGN/IMS product rationalization exercise, as the conclusion of the lengthy and complex project will enable the company to divert additional resources toward the pursuit of sales opportunities, as well as provide development teams with a clear roadmap to follow over the next couple of years. Moreover, the labors of the past few quarters have resulted in the construction of an overall IMS portfolio that blends the best attributes of the two product lines to create a solution that is more than simply a “best of breed” amalgamation of the former product families. As part of the rationalization process, Alcatel-Lucent took the opportunity to revamp some of its previous approaches to IMS and to create new products by blending some of the best attributes of former Alcatel and former Lucent equipment.

• Vendor Importance: High to Alcatel-Lucent, as the company’s IMS portfolio constitutes a significant portion of the company’s IP transformation strategy. In addition to representing the future session control mechanism for conversational multimedia services going forward, Alcatel-Lucent’s IMS portfolio is an essential component of the company’s overall Service Delivery Environment (SDE) strategy. In addition, several IMS-based enablers, such as presence and location servers, as well as policy control engines, can also be utilized by non-IMS-based services, such as IPTV. Without an updated and comprehensive IMS portfolio, Alcatel-Lucent’s entire IP transformation story would be a few chapters short of completion.

• Market Impact: Moderate to high on competitors in the IP services infrastructure market, as the completion of the Alcatel-Lucent rationalization project means that the window of opportunity opened up by the company’s preoccupation (perceived and real) with the rationalization is nearly closed. While competitors may still get some traction out of the fact that Alcatel-Lucent will be supporting platforms that will not carry over in their present form to a future portfolio, the playing field, for the most part, has been leveled.

Recommended Competitor Actions

• Ericsson rightfully promotes its leadership credentials in the IMS segment by citing its deployment success – more than 50 IMS system contracts for commercial launch. However, the company needs to add more meat to this differentiator by providing additional information about the scope and sophistication of these deployments. A novel data point might be an estimate of the number of subscribers that are supported through IMS deployments involving Ericsson equipment.

• Nokia Siemens Networks (NSN) should continue to concentrate on emphasizing its subscriber data management (SDM) component, acquired through the recent purchase of Apertio. Subscriber data is emerging as one of the key assets that facilities-based carriers can leverage to ward off challenges from Internet-based service providers. NSN needs to continue to show customers how its solution tackles this important task.

• Huawei needs to continue to participate in standards bodies and interoperability events. Through demonstrations of compatibility, Huawei will help to dispel the mostly fictional notion that the company is merely a price disruptor and its technology is inferior to North American and European equipment providers’ technologies.

• Nortel needs to press its biggest differentiator in the IMS market to this point: the company’s early acceptance of open industry standard hardware. The company should highlight the IMS components it has already ported to ATCA and provide a roadmap for the remaining pieces of its portfolio.

• Cisco needs to revamp its IMS marketing message. Though the company discontinued development of the session control technology it acquired though the purchase of dynamicsoft, company officials claim that the enterprise equipment giant is delivering IMS-based session control components. Cisco needs to identify where this technology is coming from and how it will be implemented into its softswitch product family.

Recommended End User Actions

• Current Alcatel-Lucent customers that have deployed equipment, such as Alcatel’s session control technology, that is not on the long-term IMS roadmap need detailed information about the manner in which these products will be supported and eventually transition to a common platform. The carrier should get assurances that these products will not essentially stagnant, development wise, before they are ported to a common platform.

• Potential Alcatel-Lucent IMS customers need to make sure that the company’s product development efforts are not diluted due to the need to support multiple products, including several that are not part of the future roadmap. These carriers need assurances that Alcatel-Lucent can enhance and evolve products at the same pace of rivals that did not need to rationalize product portfolios.

• All carriers should require equipment makers to demonstrate a detailed NGN-to-IMS evolution strategy. It is imperative for service providers to adopt IMS in a pragmatic manner – following the demand for services by customers. Equipment makers must demonstrate that their IMS portfolios can be adopted in a random manner, rather than forcing customers to follow a regimented adoption scenario.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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