Alcatel-Lucent CTO Marcus Weldon was in a candid mood in the first of a two-part interview with European Communications on Wednesday.
“In the past we’ve been great at providing a vision but have been found lacking when it comes to executing it,” he said on the phone from Paris.
However, as the industry embarks on what the CTO believes is the start of a new 10 year technology cycle – kicked off by operators “revolutionizing” their core IP networks – A-L is intent on making up for lost time.
In short, it is hoping to break into the IP core router space, which according to Infonetics Research is part of a €11.7 billion global router and switch market.
The reason? “What I’m hearing from operators is that a large percentage of them feel, all at the same time, that their core IP networks are exhausting capacity,” said Weldon (pictured).
Driven by the well-documented increase in services such as video and cloud, research house Dell'Oro Group says operators are currently spending €3.2 billion on IP core routers to counter this threat.
“It’s revolution not evolution,” says Weldon when asked if in such straightened times operators are genuinely looking at increasing this spend.
The CTO cites Netflix as an example: “Despite having just 1.8 percent of subscribers and a business model that doesn’t provide much in the way of new content, Netflix accounts for 30 percent of traffic in the US – it will only take a couple more companies like that to completely exhaust networks.”
A-L has spent three years developing its answer; the 7950 XRS family of routers was unveiled last week promising to deliver five times the density of today’s core routers, eliminating the need to trade off capacity and capability, all while cutting power consumption by 66 percent.
Weldon’s candour returns when talking about the timing of the launch: “I’m not sure if it’s brilliant timing or a happy coincidence but we’ve done it at a defining moment for core IP capacity.”
Whatever the reason, the real battle starts now.
According to Infonetics, rivals Cisco (63 percent), Juniper (25.5 percent) and Huawei (seven percent) took nearly all of global core router revenue in Q1 this year.
So what impact does A-L think it can make on these three?
“It’s always hard to predict, but we want to be in the top three and for that we need to be getting above 10 percent of the market,” said Weldon.
With rumours of a pending EU investigation into Huawei for alleged illegal government subsidies floating around, it could be a good time for A-L to make its entrance into this space.
Weldon refused to be drawn on this, saying that bad mouthing the competition “usually comes back to haunt you”.
However, Infonetics analyst Michael Howard told European Communications that he certainly expects A-L to start eating into the share of the three market leaders.
Key to A-L's success is breaking the legacy sales contracts that operators are already committed to.
“A large chunk of [those contracts] will stay the same,” admitted Walden. “But I do believe that a significant number will move to embrace the revolution.”
Specifically, the CTO highlighted growth in the US. According to Infonetics, the North American router and switch market was up 27 percent quarter-on-quarter and up nine percent year-on-year between January and March.
This compared with an overall 14 percent decline in global sales.
A-L needs to hope word of a revolution will turn into real action.
The company is on a bad run – 2011 saw revenues decline 2.1 percent to €15.3 billion, while Q1 figures returned an annual decline of 12.3 percent.
Walden is certainly upbeat: “We have a great opportunity and a portfolio that is fighting fit.”