The Alcatel and Lucent Merger: No Cisco Killer Here

Our industry relishes in looking for the latest Cisco-killer. Usually we're left hypothesizing about Juniper's next move or about Huawei-3Com, but now we've got an even better dark-horse to pin our hopes on ??? the $13 billion Alcatel-Lucent merger.

Nancy Goring reports how the merger could boost Alcatel-Lucent's enterprise profile. She quotes Camille Mendler, an analyst at the Yankee Group, as noting that the merger would help "propel the Alcatel brand into the North American enterprise market." Gartner analyst Steve Blood chimes in saying that both Alcatel and Lucent have been anxious to expand their enterprise businesses. While long time consultant Tom Nolle notes that a merger could offer Alcatel the benefit of Lucent's strong sales force.

The thing is neither Alcatel nor Lucent hold a sizeable enterprise presence within the US neither in routing nor in PBXs nor in any of the areas of security, switching, and infrastructure equipment that Cisco sells into the enterprise.

The merger does pose a challenge to Cisco, but not in the enterprise. The home market will be one critical area. It's a big area for Cisco with its Linksys division and Cisco's acquisition of Scientific-America. It's also an area where Alcatel invested heavily in, buying into 2Wire.

Wireless is another critical area. "From a wireless perspective, a combined Lucent and Alcatel would be a clear global number two behind Ericsson. It would be number one in CDMA and be approaching a 10 percent share in GSM, with strong momentum in the key emerging market opportunities. In W-CDMA it would have strong account presence in Cingular Wireless LLC and Orange SA as well as good prospects in China, Russia, and India. And it would also have a presence in WiMax," says Patrick Donegan, senior analyst at HeavyReading in an article published in LightReading .As for the enterprise? Don't bet that any sort of surgery will prep the new Alcatel-Lucent for the enterprise. "Two guys with broken legs tied together don't walk any better," says Zeus Kerravala, vice president, at the Yankee Group.