Service, not bandwidth, determines customer charges, and Lucent Technologies is putting together a service provider bundle for ISPs and ASPs in Asia, riding on the strength of their optical networks and cybercarrier solutions.
HONGKONG - Lucent has announced that they will still be selling their GSM, CDMA and DWDM equipment where the cash register rings the loudest (accounting for more than two-third of their estimated US$28 billion revenue stream after deducting the power, microelectronics and enterprise divisions), but the cybercarrier solutions tone was unmistakably louder during a two-day media briefing held in Hong Kong today.
The world's largest telco equipment vendor is reshaping itself because they see an "economy of light" future, as Bill Allard puts it, with frictionless transactions, and the best opportunity lies in the network hosting market.
The COO of Lucent's service provider networks explained that telcos, ISPs and ASPs want flexible products to meet the ever-changing consumer demands and they can't wait - nor do they have the resources - to build new networks to cater for these services. They would prefer to outsource the product to data centers which are custom-built to offer on-demand rich content in a reliable manner.
Going where the light is
Going by the data center build-outs announced so far, Lucent may have hit on an opportunistic bulls eye. NTT announced in May that it is partnering Computer Associates for its data centers; in March, Qwest revealed that it is partnering with IBM to build and run 28 data centers; Cable & Wireless and Compaq have announced a global ASP initiative; Intel revealed plans to spend over US$1 billion on 12 new data centers; GlobalCenter expands data center footprint, adding 150,000 sq ft in 2000; New World Cyberbase to invest US$800 million to build 10 data centers; UUNet invests US$100 million to build seven new data centers and expand existing facilities; and AT&T and BT's Concert to invest US$2 billion to build 14 data centers.
Lucent has even thrown in financing and risk-sharing services, integrated technology, customer marketing support programs, fast-start business and professional consulting services and enabling application development.
At first glance, all this sounds rather EDS-ish and I don't blame you. Bill Allard, who was deputy managing director of EDS Australia, answers to current and former boss Mike Butcher, president of International Operations for Lucent and ex-president of EDS Australia and New Zealand. In Asia Pacific, Paul Higgs, the vice president of Lucent's NetworkCare Professional Services is also an ex-EDS.
And they have ex-SAS expertise in David Spear, vice-president of Lucent's InterNetworking and Switching Solution Groups and ex-Kenan know-how in Raghav Sahgal, vice president of Lucent's Software Products Group.
Their expertise of handling partners such as Sun Microsystems, EMC, IBM, Fujitsu and LG will be invaluable as Lucent taps their domain knowledge to the cybercarrier market.
All this came about because the network is becoming less of an asset and more of a commodity, and as Lew Wilks, Qwest's president of multimedia and Internet markets put it succinctly: "For every $1 in hosting revenue, we get from $4 to $7 in network revenue, and hosting will be our single most important business."
As more carriers offer similar type of capabilities and capacities, the key differentiator will lie in services and how much consumers are willing to pay for them.