Ben Verwaayen, in an interview with the Financial Times, took responsibility for Alcatel-Lucent’s problems, which is fair given that he’s the CEO. My only issue is that I think he’s looking at the WRONG issues. Ben seems to think the problem was too much optimism two months ago. I think it was too much inertia two years ago.
Operators cite the need to build a flexible new web-service platform as their highest priority, and it’s really hard to find a player who brings more to that space than Alcatel-Lucent does. They have service layer technology, orchestration, content, cloud, you name it. And that may be part of the problem because they haven’t really named it. High Leverage Network is more about network than service layer. Two years ago, simply bundling all of their service assets into a single product with multiple faces would have made it clear to operators that they had a converged solution in the service layer, one that nobody at the time could match.
Today, operators are tired waiting for vendors. They see next-gen services as being built primarily using cloud technology, which makes them an IT play rather than a network play. By visualizing services as software applications running on clouds, operators create the model of the service layer they’ve wanted all along. They just need a way of coupling agile cloud-hosted features with the network. That’s a mission software-defined networking (SDN) is likely to fulfill. Alcatel-Lucent has no real position there, no story that links the network to the cloud. To be fair, other vendors have little in the way of public assets in that space either, but Alcatel-Lucent can’t move ahead in the market by arguing that they’re not really behind.
You have to cut costs if you can’t raise revenues, so Alcatel-Lucent will now do that. A bunch of good, valuable, people will have to find other jobs, and some of them probably could contribute to a position in cloud and SDN that would have saved, and still could save, jobs. You can’t make up for two years of inaction in two months, though, and it’s probably too late to change the cost measures that current profit balances dictate. It’s not too late to prevent more problems down the line. I’ve said it many times before but I have to say it now. You have to sing pretty in this market to win. Every player who expects their merits to surface spontaneously is in trouble.
Marissa Mayer is apparently making changes at Yahoo, but so far they seem to focus on how people eat and communicate more than what they produce. The new CEO has taken Google’s “free-cafeteria” approach and open collaboration into Yahoo in the hopes of creating a new atmosphere. That’s probably a smart move since it’s been a long time since Yahoo employees had much to look forward to, but it doesn’t obviate the need to do something revolutionary in a product/service sense. Right now, Mayer needs to quickly decide what unfulfilled needs exist in the industry and fill a couple of them. I continue to believe that the greatest opportunity available to Yahoo today is the potential service-layer partnership with the telcos. These people all want service-layer architecture and they’ve given up on the traditional equipment vendors. Why not then rely on Yahoo, who as an OTT pioneer certainly knows where things are in that business? Time is passing with this one, though. Operators, as I’ve noted above, have already started creating their own models, and once these projects advance far enough it will be hard to turn around and take a new path.
Finally in tech, Microsoft’s Outlook.com mail program may be a step in the right direction in changing hotmail, but it’s also perhaps too much of a step in Google’s direction. There are cosmetic differences between the two mail systems but nobody would be likely to find a compelling thing about Outlook.com that would switch them over from Gmail. Cloud-hosted office and communications services are fighting to create a cloud portal, fighting against players like Facebook or Twitter. You don’t win that sort of battle by imitating the other competitors. That’s Microsoft’s problem in a nutshell; they need to have something that’s not just “cloud email” but something that’s “cloud portal”. I think that the Outlook.com symbiosis with the rest of Office’s and Windows’ next-gen features is the key point and they can’t showcase that yet because it’s not ready. They should have waited. They’re offering users a hand to kiss instead of a marriage.