Clouds and Chips

Alcatel-Lucent is working to improve its position in the enterprise with an OmniSwitch story that links to its carrier cloud story, a combination it calls “Mesh”.  The step is a smart one because the cloud is the largest driver of data center change, but it’s just a bit late in the market timing because enterprises rated this sort of thing more important six months ago than they do today.  It’s not that cloud isn’t important, but that enterprises have reported having to do a lot more to go from a cloud hope to a cloud realization.  In our fall survey we found that cloud futures were slightly less likely to influence buyers of data center switching than in the spring survey.

The issue with enterprises and the cloud in data center switching procurement isn’t the only cloud issue.  Enterprises are rethinking just what they’d do with cloud computing and how much of it would likely happen.  The leading edge of this position is taken by companies who are deciding that if they use cloud technology to create application mash-ups, they can personalize stuff for workers, add new cloud-hosted productivity elements, and preserve much of their current IT infrastructure—software and hardware.  In fact, the average enterprise no longer believes that “private clouds” mean buying something new or changing their data center architecture.  The consistent broadening of cloud positioning has something to do with this, I’m sure; you can’t say that everything is a cloud (in effect) without enveloping the present as well as the future.  But…it’s also true that early hybrid cloud projects have demonstrated that it’s hard to create applications that really elastically move from data center to cloud unless you use componentized software and SOA, in which case you can likely do it without changing your current IT if you are SOA-ized already.

In the carrier space, Verizon has announced that it’s upgrading FiOS infrastructure to be 100G capable in about a half-dozen cities.  This doesn’t necessarily mean that FiOS to the customer will be any faster, and interestingly the same day this news came out another story on the fact that UK users aren’t adopting the highest broadband service speeds available.  For services over 25 Mbps, only 4% have subscribed even though the services are offered to nearly 60% of the market.  This is fairly consistent with US experience where there’s evidence that offering fast broadband may be a competitive advantage but despite that few will actually take it.  Operators in our survey tell us that customers are now and have always been clustered at the low end of the broadband service range.  The lowest price is the best answer.  I think that also argues against the view that offering premium handling for broadband traffic like video has much of a future; people will simply take best-efforts unless it’s truly awful, in which case they’ll change providers.

Consumerization is hitting the tech space overall, and the impact is drifting down the food chain toward the semi-and-silicon space.  Lam Research is buying Novellus, both makers of technology used in chip production.  The goal is to provide a framework for creating faster, better, but predominately cheaper chips as technology focuses more on inexpensive consumer devices that can’t sustain high semi prices.  So is this consolidation?  Sure, though it’s also likely that in the near term it’s a competitive push-back against Applied Materials, who has been a strong player in the space.



A Transformational Rumor

If we had to pick the parameters of a really big rumor in networking it would be hard to top the one that started circulating Monday afternoon.  Verizon, says the rumor, may buy Netflix!  Here’s a telco, one with FTTH and telco TV, picking up an OTT video player!  Is this the beginning of the Great Era of All-Internet-Everything?  Well, you can probably guess that while I’m not ruling out the rumor, I’m skeptical about the interpretation.

I’ve been blogging for a couple of days now about the issues with wireline services in general, and Verizon’s business shifts in particular.  The summation of my position is that only TV viewing can justify a loop, that DSL can’t support TV viewing all that well, and that Verizon’s deal with the cable consortium for spectrum in return for resale rights may indicate that Verizon itself is thinking about exiting the DSL business.  Instead they’d focus on FiOS where they’ve already deployed it, let the copper plant rust in place and try to shift its users to remarketed CATV.

OK, you can see how this latest story might play into that view.  Look at Friday’s blog:  First you develop your own media properties into something that you can leverage outside your own footprint, essentially disintermediating other LECs.  That gives you a plausible revenue stream with lower capex.  How do you suppose Netflix would fit into that model?   This is what I’ve been worried about.  If broadband ROI falls and OTT opportunity rises, then operators start thinking “Hey, I could be a contender if I were an OTT!”  I don’t think Verizon plans to exit the physical part of the network, but it darn sure sounds like they plan to exit some of it, and to confound their Great Rival AT&T by selling Netflix over AT&T pipes.  Of course this rumor would have to be real, first, and would have to end up in a deal that passed regulatory muster second.  Both might not happen.

If you give me credit for predicting this one, then perhaps you’ll indulge me on my view of the evolution of “networking”.  We are at the end of the push-bits-for-a-profit period.  We are at the beginning of the “fulfill user desires directly for a profit” period.  Thus, what vendors produce that fulfills the latter is what will keep their lights on.  I’m not saying that the network isn’t an essential pipe for delivering stuff, but I am saying that you can’t be in the delivery business while others are fulfilling the retail demand.  If the rumor is true, that’s the message loud and (hopefully) clear.  The profit in network equipment has to be created by creating a more affirmative link between the network and the source of profit.  Carrying the water (or bits) isn’t enough.  The vendors have to climb the stack up to where profits are generated, which is hard.  They also have to link their successes in the service-layer space with their network technology so they can move the big iron and generate revenues.  Service layers are differentiators but they’re not, for the box players of today, replacements for the old transport/connectivity market.


Adtran and HP: Wrong Moves?

Adtran is going to buy NSN’s wireline broadband business, a move that I think shows a lot about the space overall.  Obviously you don’t make a compelling offer to sell a business that’s got nowhere to go but up, and even outside the US wireline broadband is in trouble.  I wonder if Adtran isn’t admitting that it’s in DEEP trouble here in the US too.  The company hasn’t been turning in bad numbers but the bloom has long been off the DSL rose here unless you presume that there’s going to be continued upgrades to the outside plant to shorten the loop.  Some operators told me that they’ve concluded that running DSL at rates approaching 50 Mbps incurs most of the cost of FTTH, largely because you can’t really leverage loop plant by shortening unless the initial aggregation point for the copper is pretty close to the home.

The big problem is that you have to put a DSLAM where there’s loops to attach to it, and if the loops were initially thousands of feet long they likely don’t converge at a convenient point short of their current point of concentration, which is usually too far for high-speed DSL.  If you try to redirect the loops you’re pulling copper along new paths, which is crazy given that you can pull fiber.  If you accept lower density with loop connection, you have to run too many fiber DSLAMs and you have too low utilization.  The point is simple; only TV delivery is profitable in wireline, and we can’t easily do TV delivery in even HD mode much less 3D and still do broadband on long-loop DSL.  So NSN is smart dumping its wireline assets and Adtran may be signaling some real problems.

Some will say that the solution to all of this is streaming TV, but I’m a skeptic here.  If you have high-quality broadband you can surely stream TV, but if getting high-quality broadband means FTTH then you can deliver channelized TV too and that’s more dependably profitable.  The goal of TV isn’t to justify IP deployments, after all, it’s to entertain people.  Most of them want a multi-channel experience.

HP has some news too; it’s discontinuing its current TouchPad line as promised but it’s making WebOS open-source and it says it will release a tablet based on WebOS in 2013.  That seems like “there’ll be a pie in the sky by and by” to me; safely beyond the current planning horizon and possibly beyond Whitman’s tenure at HP.  Why?  Because nothing she can do will restore the luster of HP fast enough.  To bet on open-source and not on Android is just crazy unless you think that somehow you’re going to sponsor WebOS more than Google sponsors Android.  After an MMI buy?

The data center is where HP has to shine; Leo was right about that.  Wrong about how to be a success there, though.  A single app doesn’t make you a data center player.  HP has a good asset story in the data center but their lack of a convincing cloud strategy has really hurt them.  That lack would be understandable if everyone had jumped out early and claimed all the good defensible positions, but in our fall survey we found that only 11% of enterprise technologists said they could confidently articulate ANYONE’s cloud strategy fully.  Furthermore, almost 90% said that they believed that the popular view of the cloud was inaccurate.  So here’s the cloud, the most important philosophical concept in all of IT, with a wide-open space where vendor engagement and articulation should be, and HP decides to be a lukewarm follower?  Gosh, “clouds are artifacts of alien zombies” would have been more exciting, or at least press-worthy, and that’s what HP needs now.  You can’t lead a market from a position of invisibility.



Wireline: Too Many Hands, Not Enough Pockets

Some of the changes in networking that are looming on the horizon may start a lot closer to the couch if you read the right hints from current trends.  The battle between Google and Apple for TV position may be driving some other players to change their plans.  For example, Verizon has been offering more streaming-media-friendliness in FiOS and there are now indications that it may also be planning to push a Hulu- or Netflix-like offering outside its territory.  It may be that we’re seeing the entertainment video space at the beginning of a period of major change, but that’s not necessarily going to mean a victory for IPTV or streaming media.

All of this starts with the fact that wireline is seriously non-profitable already and likely to get worse.  Operators face the stark choice of a major plan revamp to shorten the loops radically or replace them with fiber, something that some operators could do in a pinch but that others simply can’t contemplate.  Verizon’s cable deal suggests that it may have a middle-ground approach, which is to cede customers it can’t afford to upgrade to fiber.  The FCC’s regulations this year—neutrality and perhaps more important Connect America put operators in a pinch to improve broadband when copper and DSL are likely to be stretched.  So our change starts with pipe issues.

Then there’s the Google and Apple stuff.  Operators are doubly injured, from their perspective, by the launching of what are effectively Internet TV broadcasters.  They carry traffic with no incremental compensation and their own media opportunities are undermined.  Streaming will not likely match the content of traditional linear TV for a decade or more, but it will tap off premium channel subscriptions, extra rooms, etc, not to mention the more price-sensitive tier.

So the reaction of operators is simple, at least in plan.  First you develop your own media properties into something that you can leverage outside your own footprint, essentially disintermediating other LECs.  That gives you a plausible revenue stream with lower capex.  Second, you deploy premium loop, meaning fiber, where you can justify it and then you do a partnership with cable companies, actually hoping that this partnership will give you a retail markup on their services and convince marginal customers of yours to flee to them.

The obvious question here is whether all of this creates a sustainable broadband market.  I’ve noted for some time that DSL was not competitive with CATV cable for multi-service delivery.  U-verse is a dumb idea that eventually has to fall on capacity versus cost problems.  At this point, I don’t think common carriers can refresh their plan with cable any more than with fiber, even though the pass cost for CATV is less.  Thus, what we are surely going to see is that operators will actively try to flee serving the bottom of the DSL customer list and make up the revenue loss in mobile or out-of-area streaming.  Focus on streaming only exacerbates the capacity problems and low revenue per bit of Internet broadband, and that could discourage plant upgrading, which would lead to greater congestion.

The point I’m making here is that the problems of the online ecosystem are real; they’re already impacting very basic business decisions that will govern how the Internet works in the future.  Regulations can’t compel businesses to lose money; they’ll just fold up.  Connect America can’t subsidize everything; there can be no contributions into the program if nobody can offer service without subsidization by the same program you expect them to contribute to.  Will carriers pull loops out of the ground?  No, but what’s surely going to happen is that more unprofitable areas will be sold off to other players who are small enough to qualify for RUS subsidies.  That again builds up the pool of carriers who take rather than contribute.  In short, this isn’t a good thing we’re seeing.



A Warning Signal on Mobile/Carrier Capex

I’ve talked about the profit problems of network operators for years now, simply because they’ve talked to me about those problems for years.  In rough terms, revenue per bit has declined by 50% per year for five and a half years running, and this decline means that profits on infrastructure have dropped sharply even though operators have put price pressure on vendors.  All of the challenges of networking that we hear about, including Ciena’s miss yesterday, can be directly attributed to the simple fact that you can’t pay more to produce something that keeps selling for less and less.

Today, Morgan Stanley bucked a shaky consensus that wireless profits too were under pressure but still above ground, saying that their model shows that post-pay ARPU for the US giants will likely trend negative by the end of 2012.  With seven-plus-year financial inertia to contend with, operators can draw the curves themselves based on their inside numbers, and it’s clear that they can see where they end up.  The AT&T drive to consolidate via T-Mobile is, as I’ve said, an indication that economies of scale are now required in wireless, which isn’t the sign of a market with profit growth still baked in.

Another interesting data point is Verizon’s deal with the cable guys.  The latest speculation on the Street is that what Verizon will do next will be a shocker; they’ll start reselling cable broadband and TV even inside their own region!  Why?  Because the profit on DSL is simply not there, and FiOS can’t be made profitable for any more of their footprint than the current 20-million-homes-passed target, at least under the current price scenarios.  I’ve noted for some time that the real competition between carrier and cableco wasn’t fiber versus cable but cable versus DSL, and pressure from the FCC to upspeed the baseline broadband rates is only going to make DSL harder to justify.

Some of the Street speculates that Verizon might then shift to using their extra spectrum to replace DSL with wireless, but I think that’s a misunderstanding of intent.  It would only hasten the price commoditization of wireless.  What I think Verizon is doing is replacing “wire” wireline, meaning copper and DSL with…nothing.  They’d love all those customers to shift to cable because they can’t service them profitably.  After all, hasn’t Verizon been selling off areas where there was limited upside for copper loop already?

From an equipment vendor perspective this is alarming, not that equipment vendors haven’t been reading the tea leaves on this for half a decade already.  The drive to exploit marginally free bandwidth has created enormous profits for a few VCs and early investors, but it’s destabilized the underlying bit industry.  Operators have seen this coming and worked to gain traction in those new higher-layer services but without any real vendor support.  Now, our survey says, it’s right on the edge of too late, and the Street’s indicators seem to back this up.  We are going to see a major shift in capex next year, a shift toward cloud and IT equipment and away from transport and connection.  What will be hit the most, says our model with striking irony, is routing.  Most valuable Internet traffic today is metro, which is optics and switching.  Yet Ciena shows that’s no great business either.  So where do operators invest?  Where it makes them money, which is up above and not in the network.  Our model says this will be visible even next year and a juggernaut trend in 2013.


A Duel of Cloud Visions

Cisco is making a big play in the cloud, or for the cloud, with CloudVerse, an architecture that in some ways has the same goals as the one that Alcatel-Lucent announced last month (CloudBand).  Everyone is trying to get a place in the cloud, hoping in part no doubt that the inherent fuzziness of the cloud will admit them.  Cisco, though, has more credentials in the space than most and so you have to take their approach seriously.

In functional ingredient terms, everyone has to build the same cloud.  Clouds are a system for creating a sharable (multi-tenant, in public cloud instances) pool of resources, of assigning those resources to applications/users, and of managing the process to insure efficiency and cost-effectiveness.  In practical terms, what separates cloud players is what they can offer that’s special within this mix and how broadly they can cover the missions.  The former gives them differentiation and may assign a service target (one that values the special something) and the latter gives comfort to buyers who doubt their own skills.  These days, that’s pretty much everyone.

Cisco’s secret sauce in the cloud is completeness of solution, in my view.  Cisco has every piece of technology you need for cloud-building, including the servers.  Where Alcatel-Lucent focuses on data center interconnect because it can’t populate a data center, Cisco can articulate a simple story.  Clouds start with big resource pools that we can build, and grow out through big networks that we can also build.  Yes, Cisco needs to articulate the cloud story better to align its capabilities with the real business trends, but they have an easy story to create and sell.  If they get good at it, it will put a LOT more pressure on competitors to do something smart on their own, and precious few network vendors can realistically match Cisco’s scope.  With HP in management ruins and IBM out of networking at least in terms of having their own products, Cisco may be the only one-stop shop in the cloud mall.

Arch-rival Juniper is taking the other approach, the “cloud secret sauce” with its new drive to promote data center fabrics as the logical heart of the cloud.  This story also has inherent strength since clearly a cloud has to start with a resource pool, but like Alcatel-Lucent’s CloudBand the Juniper tale needs more collateral to be as effective as a potential Cisco story.  The challenge for Juniper is articulating a cloud position that their fabric can be the centerpiece for, as Alcatel-Lucent’s is to articulate the overall scheme of cloud services that justifies and empowers their interconnect vision.  What this says is that cloud positions have to be holistic; if they aren’t naturally complete in a product sense then they have to be complete in a vision sense.  That fits with the fact that cloud prospects, particularly network operators or other public cloud-builders, want a strategy that they can drop in with a minimum of extra integration effort and delay.

I think everyone in the cloud space is minimizing the most important truth about the cloud, and that’s the fact that the cloud isn’t about an alternative to enterprise data centers at all.  The real notion of the cloud has been transformed by usage and expectation now, transformed into a vision of a flexible and elastic and universally available pool of knowledge and compute power.  Yes, in theory, that new pool could be used to implement the old stuff, but more than that it could transform how we use computing and information, coupling it more tightly to our behavior.  Yes, I know this is my usual “mobility/behavior” theme, but the fact is that where work and workers can be concentrated into buildings the notion of ubiquity of availability of IT resources becomes rather lame; they already are by virtue of having limited the scope of the use of the resources.  What makes the cloud different is that it’s not requiring massing up humans to justify it; instead it’s presuming they are distributed and that’s clearly the case.

The jury is still out on just what “distribution vehicle” will drive all of this, or whether a single driver is even necessary.  You can say this is about smartphones or tablets or game consoles or anything else and be wrong, I think.  This is really about the notion of a general set of information appliances that become more integrated with our lives and work practices, and that are agents for a new model of information empowerment.  This shift will generate a lot of winners, and losers too.  Which camp will you be in, Dear Vendor?



Facing Up to Transformative Times

It’s a kind of day of change in technology, particularly if you believe some of the speculation that’s floating around.  Certainly 2011 has been a challenging year for vendors, and it may be that the challenges will be only more formidable in 2012.  Given that, it wouldn’t be surprising if we saw some dramatic market shifts, and vendor actions.

Microsoft’s move with Verizon to make the Xbox into an STB is pretty obviously a move to make the box more populist.  Kinect has certainly made it into a leading game platform but there’s a limited market for games, particularly in terms of demographics.  Microsoft wants the Xbox to be an entertainment hub, something that would validate the fond hope of everyone in the PC space that a computer would become a fixture in every living room.  A big part of this move is that Microsoft knows that gaming is shifting more to portable devices and Microsoft certainly has its own aspirations with phones and tablets.  Why create cross-currents that could erode you own product lines?  Get one product family safely out of the way of evolution for the other.

Staying with tablets and cross-currents for the moment, Dell has dropped its Slate family after having laid a tablet egg with it.  The problem I think Dell had (and continues to have) is that it’s so worried about its PC sales that it’s apologetic about positioning anything that might impact the PC even a little bit.  On the one hand, it didn’t want to miss the tablet revolution, but on the other it didn’t want to overhang its laptop business.  So it fumbled with both hands, I guess.  They never really did anything with Slate other than say they had it, which was hardly an inspirational marketing tactic.  Now they’re out of tablets and they’ve called their marketing into question.  They also are looking a bit like HP in terms of fumbling, which isn’t a role model I think they wanted to adopt.

I’m hearing a lot about how network vendors might be facing their own future changes this week.  NSN started a broader reconsideration of strategy with its decision to pull itself into a kind of marketing spear focused at the heart of mobility.  That aligns the company with the current capex focus, at least on the network equipment side.  Ericsson has arguably been gradually doing the same thing for years, focusing on mobile and professional services where margins are higher.  Now at least some Street analysts are suggesting that maybe Alcatel-Lucent is going to have to follow suit.

Ciena is kind of a poster child for the current issue set, ironically; it’s not a broad player but rather a player who adds capacity to a world that’s supposed to be starving for it.  So why then is it getting dissed by the Street?  Because margins stink, meaning profits.  Yes users want more Internet bits but they won’t pay for them, which means that there’s enormous price pressure on the producers of those bits and on the equipment they use.  The trend in networking, as I recount in more detail in the Annual Technology Forecast issue of Netwatcher this month, is to push traffic handling and capex downward to the lower layers because it’s cheaper there.  The whole of networking, in fact, is commoditizing.  Ciena, already in a spot that can’t be eliminated—you need bits—can’t be as profitable there.  So that’s why Alcatel-Lucent and Ericsson, and NSN can’t be bit-pushers either.

For Alcatel-Lucent, this could mean a spin-out of some of the lower-level technologies that are building revenue and engagement but not profit, but the problem with that is that Alcatel-Lucent’s strategic influence with buyers has literally been in a class by itself because of its product breadth.  Can they sustain that influence in the face of a constriction of product offerings?

The cloud is the common ground in this story.  NSN, by focusing on mobility, may have effectively abandoned it.  Ericsson has abandoned it.  Alcatel-Lucent just embraced it, but not as fully as I believe they need to.  The cloud is likely to be the first new capex focus in networking, but it’s a focus that’s not as much on network equipment as on IT—servers and software and storage.  Network vendors need to have a place in the cloud or they all end up squabbling over RAN scraps, and mobile bit-pushing will commoditize as inevitably as wireline has.

While Alcatel-Lucent’s cloud strategy could be interesting, Cisco and Juniper are really the players to watch here.  They’re the guys with the most at stake, after all.  IP, the mainstay of both companies, is commoditizing and traffic is migrating downward in terms of handling, toward Ethernet and optics.  Something has to be done for these guys.  Cisco has servers and all of the pieces of the cloud, and so could be the vendor who manages to create a cloud story that’s network-empowering.  Juniper has no servers and it has the narrowest product portfolio of all of the network vendors.  That’s hurting the company in terms of strategic engagement.  In our most recent survey, Juniper stands alone at the bottom of that chart.  So the question is first whether a network-friendly vision of the cloud can be created at all.  If it can, will Cisco have a better shot given that it has all the pieces, or will Juniper have a better shot given that it has all the motivation (or should)?


SAP and the Cloud

SAP announced it was buying a US web/cloud software company (SuccessFactors) that provides human resource management and productivity tools, a move to boost its total cloud repertoire and thus be more competitive as a cloud provider.  The decision shows that the SaaS business is starting to create problems with product scope that didn’t exist for hosted software, and that’s an important shift in my view.  It shows that the adoption model for SaaS is one of one-stop-shop even when the same buyers have rejected that notion as unnecessary in their data centers.

Our surveys suggest that there are a couple of reasons for this change.  First, nearly everyone in the buyer space says that the fewer cloud providers you have, the better.  It’s not a matter of economy of scale, it’s a matter of minimizing integration and support issues, they say.  The second point is that there is a different buyer constituency for SaaS than for installable software.  Two-thirds of all SaaS buys are directly driven by operations personnel and not by IT, and these people frankly don’t give a hoot what earlier IT practices were.

SuccessFactors has a cloud-coupled architecture and a core product set, and it’s reasonable to wonder whether SAP intends to roll some of its stuff into the SuccessFactor framework, to roll a version of SuccessFactors into hosted form, or to just keep the two elements separate.  It seems to me that succeeding in human resources planning with the M&A doesn’t leverage the cost enough.  Making the software hosted moves backward from the benefit, so it’s likely that over time SAP intends to make this the packaging for a broader set of tools targeted (as SuccessFactors is) primarily at SMBs.  This would set SAP up for the growth opportunity the cloud represents.

That’s a reflection of something I’ve also picked up in surveys, which is that the important market in cloud computing isn’t IaaS even though that’s where more than 60% of current spending is focused.  Higher-layer services do more for the user and so justify higher prices and profits.  You can’t replace IT and support functions with IaaS, only hardware servers.  You can replace both with SaaS, and that’s what users are now finding interesting.

This suggests that in the long run the operational benefits of the cloud may be more significant than the equipment economies.  This again favors PaaS and SaaS services because it’s hard to create cloud operational benefits when the cloud provider doesn’t supply the operating software.  It also means that service-layer tools for the cloud will have to do more to enhance operations.  Support economies of scale are something cloud hardware/software providers haven’t really spent much time promoting, likely because they’ve not spent much time addressing them!

Alcatel-Lucent and HP Buff Up Their Cloud

Alcatel-Lucent continues to develop their cloud vision, announcing a partnership with HP that demonstrates Data Center Network Connect and CloudBand.  From a business perspective it’s a win for both companies.  HP needs (badly needs, in fact) a relevant public cloud position that integrates networking and computing, because of its competition with Cisco.  Alcatel-Lucent needs a cloud strategy for operators, one that can provide cloud services in the traditional way but also host features and content—on computers.

I noted in Netwatcher, our technology journal, last month that network vendors needed to take a more affirmative position in the cloud.  Not only is it the core driver for enterprise network investment, it’s the biggest new focus of capex and infrastructure planning for network operators.  Most vendors have at least some product foundation for a cloud position, and at least two (Cisco and Juniper) have more pieces to the cloud puzzle than Alcatel-Lucent.  So why has Alcatel-Lucent managed to get its story out?  We even wrote about a possible Juniper cloud position back in the spring, one that would have leveraged their QFabric and PTX, and nothing came of it.  Could it be that Alcatel-Lucent is starting to think holistically?

In our fall survey, operators and enterprises both complained that their vendors were stuck selling piece parts instead of solutions.  When buyers are faced with major transformational pressure on their own revenue side, they want products that combine to address those pressures and they don’t want to have to guess on whether the blue blocks connect with the green ones.  So Alcatel-Lucent’s biggest victory here may be that it’s finally talking the right talk.  If the company can now link their cloud story to Application Enablement in a convincing way, they could be promoting the whole ecosystem.

They also need to drive the bus on the HP relationship because HP is hardly the darling of the corporate world when it comes to business strategy these days.  HP has data center switching but nothing that measures up to what Cisco or Juniper can offer, and that creates a vulnerability for Alcatel-Lucent’s strategy of data center connection.  I’ve already noted that Juniper could have done something pretty interesting in this space almost nine months ago, and in theory they could still work quickly to make a counter-splash.  Cisco, having the computer technology as well as switching, could do even better.  That means that Alcatel-Lucent can’t stand still with this story.  Good job so far; now don’t blow the goal-line play.