It was interesting to see a recent Dell'Oro report (Routers Report 3Q09) that illustrated that Alcatel-Lucent is gaining market share in the edge router market. Typically, the edge routing market has been a two-horse race between Cisco and its Sunnyvale, Ca. neighbor Juniper. Dell'Oro revealed in its Q3 2009 Routers Report that now Alcatel-Lucent increased its market share four percentage points year-over-year. One notable sub-segment growth area for Alcatel-Lucent was the edge router market where it gained 4.8 percentage points year-over-year. At the same time, the all-mighty Cisco's market share fell four percent. A key contributor to that success is Alca-Lu's 7750 edge routing product. Looking beyond the edge, Alcatel-Lucent will leverage its new 100 Gbps line card to target core routing opportunities.
Of course, we should remember that Alcatel-Lucent, whose edge market share was next to nil in 2004, did not get there on its own. Instead, the legacy Alcatel effectively bought its way into the routing world through its acquisition of a start-up, TiMetra, which was led by Basil Alwan, the current President of Alcatel-Lucent's IP activities. When I think about it, the idea of Alcatel-Lucent and the former Alcatel buying its way into new markets is nothing new for Alcatel--it's a legacy that extends back into the mid 80s.
In the mid-1980s, Alcatel's parent company CGE purchased the former telecom assets of ITT. Interestingly, Western Electric (the forerunner to the former Lucent Technologies) sold its International Western Electric Company subsidiary to ITT Corporation in 1925. To enhance its U.S. presence, Alcatel acquired the former DSC with its Litespan product and a steady stream of accounts (also another product of an acquisition DSC made in telecom valley father's Don Green's Optilink in the early 1990s). Prior to acquiring DSC, Alcatel primarily sold long-haul equipment in the U.S.
But let's come back to TiMetra for a minute.
When I was a staff editor working at the legacy Telecommunications Magazine in 2003, I remember joining fellow editor Sam Masud in supporting the pick of TiMetra as one of our 10 Coolest Companies of 2003 issue. While the legacy Alcatel was a relative newcomer to the routing market when it bought out the former TiMetra Networks in 2003, unlike many of the other startups that came out during the Internet boom/bust, they actually came with some decent funding ($57 million) and two customers.
Okay, Masergy and an unnamed data center service provider weren't exactly tier one carriers, but if anything they provided a rehearsal for eventually bigger tier one deployments with Cox, Orange and Qwest to name a few. Interestingly, the day we put that particular issue to bed, Alcatel announced it would buy TiMetra for $150 million in stock. And after seeing many of my hot startup picks from the late 1990s and early 2000s fall to either bankruptcy, break up or vanish, it's refreshing to now see that one acquisition by a major vendor this decade has been put to good use.
Of course, Cisco and Juniper aren't going to let Alcatel-Lucent get the best of them. Still, the Franco-American vendor's success should at least wake Cisco and Juniper up to the fact that Alcatel-Lucent is a credible competitor that's not shy about muscling its way to battle their respective routing empires. --Sean