Birds of a feather stick together

So now the equipment vendors are deck-chair shuffling too – great for the lawyers and investment bankers, but according to Frank d’Amelio, Lucent’s COO, it is the telco operators that are really calling for this deal!  When asked why mergers in the telecoms equipment industry made sense, he offered the answer, “The customers suggests what the vendors should do … purchasing power comes with being big”.

But this raises a number of questions.  Firstly, if the US Congress gets all agitated and anxious about a Dubai company being the effective owner of some of its major sea ports – what about a French business effectively gaining a grip over the US’s computer ports?   And that great technology hot-house of Bell Labs – surely that national security treasure cannot be allowed to fall into the hands of a not entirely reliable “old” European nation?

What the top-nobs at both Lucent and Alcatel seem to be ignoring is the fact that the world is achanging and that the emerging appetite by communities for OPLANs that serve their own benefit means that many of “tomorrow’s customers” for equipment are likely to be new entities other than the old telco regime.  “Being big” may not be the only game in town in the future.  But not only that – instead of the cosy-cartel of a few national carriers and their parasitic telco-competitors, there are now going to be hundreds if not thousands or even millions of OPLANs all being potential buyers.  They will be looking for a totally different type of supplier and support and indeed, product.  It looks like there are many start-ups who resognise this and are readying to fulfill that market need.  Take a look at Vyatta (www.vyatta.com) – a West Coast US venture producing open-source routers with the aim of having the same performance as the Cisco equivalent at one fifth the cost!  Or there is PacketFront (wwwpacketfront.com ) who have developed an OPLAN ‘network edge’ product which these network-centric big-boys cannot compete with.

So I not sure how La AlcaLuce will benefit innovation in this new world!  But the big question is what does Cisco do?  It’s number one in telco vendor turnover ($130bn+).   Will it follow the fashion and try and mate with one of today’s other big vendors or will it let the dinosaurs do their dance while they bring their resources into the new OPLAN world by courting the likes of Packetfront and Vyatta.  I know what I would do but I am not sure their investors will tolerate the apparent threat to short-term earnings that such an adventurous strategy might cause.  We wait and see with baited breath.

 

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