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Fred Knight
Fred Knight was part of the team that launched the VoiceCon Conference in 1990. He served as Program Chairman through...
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Fred Knight | August 01, 2008 |

 
   

What'dya Done for Me Lately?

What'dya Done for Me Lately? For some of the most storied names in telecommunications, yesterday was both an end and a beginning. The spin-off of Siemens Enterprise Networks (SEN) and a leadership shake-up at Alcatel-Lucent, both a long-time coming, are finally under way, and the ripple effects will be felt by many within our industry, and for some period of time.

For some of the most storied names in telecommunications, yesterday was both an end and a beginning. The spin-off of Siemens Enterprise Networks (SEN) and a leadership shake-up at Alcatel-Lucent, both a long-time coming, are finally under way, and the ripple effects will be felt by many within our industry, and for some period of time.

For some of the most storied names in telecommunications, yesterday was both an end and a beginning. The spin-off of Siemens Enterprise Networks (SEN) and a leadership shake-up at Alcatel-Lucent, both a long-time coming, are finally under way, and the ripple effects will be felt by many within our industry, and for some period of time.My colleague Eric Krapf has been doing a great job of reporting on these changes on this site, so I'll just recap the main events: First, Siemens Enterprise Networks (SEN), which has been seeking a buyer or partner for the better part of the past two years, has finally found one.

In a deal set to close by September 30, the controlling interest in Siemens Enterprise Networks has been sold to The Gores Group, a private equity firm. The portfolio of the Gores Group already includes Enterasys and SER Solutions, a firm specializing in contact centers, and Gores is now putting the three businesses--SEN, Enterasys and SER--into a single joint-venture organization.

SEN, while a major player globally, has had more than its share of troubles during much of the past decade. According to an article in Business Week, in the past two years alone, SEN lost more than $1.5 billion and cut more than 6,800 employees (the Business Week article is here).

Siemens's last major pop in North American market share came when it purchased the ROLM installed base from IBM about a decade ago. But the ROLM customers peeled off as their systems depreciated and Siemens' share began to slip...and slip...and slip. Siemens was never able to replace those customers, despite widespread acknowledgment that its HiPath technology was great (once it finally arrived), and despite innovations like OpenScape and the more recently announced UC Server.

While the Siemens name will still be affixed to the new joint venture, its role will undoubtedly change. Siemens, perhaps earlier than any of the other traditional PBX vendors, acknowledged the ways in which its world--and its markets--were changing. It announced OpenScape before any of its competitors had comparable offerings, it moved aggressively to work with Microsoft's Live Communications Server as a software platform and it was quicker than its peers to publicly embrace the shift in focus from hardware to software.

The new SEN is now teamed with Enterasys to offer an alternative to the Cisco monolith and, at least theoretically, it can focus on creating software-based products to fulfill the promise of Unified Communications.

I say "theoretically," because integrating the companies that comprise this new joint venture is bound to be tricky, and I'll bet dollars to donuts that Gores won't hang on to all of the SEN people. Hopefully, Gores won't throw out the baby with the bathwater, and those that remain will have both the talent and experience to carry Siemens' traditional strengths in real-time communications into the brave, new world of unified communications and applications.

And speaking of reductions-in-force, Alcatel-Lucent announced one of its own. It wasn't big in numbers, but it is big news in terms of the future of this company. The architects of the Alcatel-Lucent merger--Pat Russo, Serge Tchuruk and Henry Schacht--are stepping down over the next several months. Like the Siemens' news, this too has been a long-time coming.

It is never easy for giants to merge, and this particular merger has been as difficult as any in recent memory. Both companies are legendary (Lucent was the spinout of AT&T's equipment business), with close ties not only to their major customers but also to their respective national governments. Prior to this merger, while touted for their respective intellectual property, neither company was noted for agility, nimbleness or flexibility; that remains the case today.

Siemens. Alcatel. Lucent. Three companies that belong in the pantheon of what telecom once was. These companies continue to play an important role in today's market, but they can no longer rest on past glories. It's a "whad'ya done for me lately" kind of world, and its time for these companies to offer a convincing reply.



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