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Alcatel-Lucent Enterprise's Great Escape
A year ago it seemed to me that Will You Still Love Me Tomorrow expressed what Alcatel-Lucent Enterprise would be asking its customers and partners as it transitioned to an independent company. Now it's the soundtrack of the Great Escape that's running through my mind.
If Alcatel-Lucent Enterprise couldn't find a place within Alcatel-Lucent (ALU), it probably wouldn't have fared any better as part of Nokalu, Alukia, or whatever the combined Alcatel-Lucent-Nokia will call itself. Since neither Nokia nor ALU has a prominent position in the enterprise market, Alcatel-Lucent Enterprise would continue to be marginalized in the combined company. Now fully independent for about six months, Alcatel-Lucent Enterprise has made a great escape indeed.
Given that ALU so recently exited the enterprise market, it's surprising that it just introduced an enterprise communications platform. And given that Alcatel-Lucent Enterprise so recently separated from a parent company focused on the telco market, it's equally surprising that it's making modest but steady progress selling hosted UC platforms to service providers.
Look Inward First
ALU, you will recall, spun its enterprise division off a year ago, selling an 85% stake to private investment firm China Huaxin. At a recent partner event, Alcatel-Lucent Enterprise CEO Michel Emelianoff characterized 2014 as predominantly inward-focused for the company. Layoffs were minimal -- the workforce is about 2,700 today, compared with 2,800 last year. And the leadership team remains the same. But the newly independent company needed to set up administrative divisions (such as IT, HR, and finance), do some minor restructuring (such as moving the regional HQ in Asia from Singapore to Shanghai), and rejigger its supply chain. In the U.S., the networking division needed to apply for National Security Agency clearance, which it subsequently received. It had to spend time reassuring major customers and partners that the spinoff wouldn't have a negative impact on them. And it needed to come up with a new corporate name -- a rebranding effort for which it hired an agency but since postponed, in part because the company has the rights to the Alcatel-Lucent Enterprise name through 2015.
It didn't help that one major partner (NextiraOne) was in the throes of its own post-acquisition issues and not bringing in as many deals as usual. Between this and acquisition-related issues, Emelianoff described Alcatel-Lucent Enterprise's business as hit hard early in the year, better later, and ending slightly down overall in 2014. The company is targeting 15% growth in 2015 and to this end will hire about 100 new sales reps.
Since the spinoff, we've seen some comparably minor additions to the Alcatel-Lucent Enterprise product lineup. OpenTouch Team Share, a team collaboration service that competes against Cisco Spark and Unify Circuit, was added to the Personal Cloud suite of services, though it won't be GA until later this year. A new high-end desk phone that supports real-time video was introduced, as was a low-cost device previously offered only in China and now sold globally. There's a new deskset dock for mobile devices that I'm pretty sure is OEMed from Invoxia. And a new call shift feature uses QR and NFC codes to either transfer calls in progress from desk phone to mobile to another desk phone or transfer a user's entire UC profile from desk phone to a conference room phone or other device.
We've seen some equally minor subtractions, too, like OpenTouch Video Store, which Alcatel-Lucent Enterprise confirmed for me is no longer on offer; VitalSuite, performance management software that transferred over to ALU; and deletions in the contact center portfolio. "We are getting rid of solutions based on Genesys," said Philippe Bletterie, director of customer service solutions, at the partner event. Genesys 8 and Genesys Compact Edition are no longer in the portfolio. OpenTouch Customer Service has become its flagship contact center solution for large enterprises, and -- with upcoming enhancements that help it better scale down -- will soon be positioned in the midmarket as well.
Perhaps the most interesting headway Alcatel-Lucent Enterprise has made is in cloud-based services. OpenTouch Enterprise Cloud and OpenTouch Office Cloud, the platforms on which providers can build hosted UC and hosted contact center services, have been around for three years now. Over the past year, Alcatel-Lucent Enterprise has been tweaking both cloud platforms to make them more interesting to service provider partners. These tweaks include deployment automation and multi-tenancy, as well as eliminating both the minimum number of users a provider needs to sign up and the minimum contract period and exit fees for enterprise subscribers.
About 15 or so providers currently offer cloud-based UC services based on the OpenTouch cloud platforms. Among them are NextiraOne in France, Telefonica in Spain, and Icon Cloud Solutions in the U.S. (Kudos to Icon for making the pricing of its UC services completely transparent.) Of course, 15 providers is a drop in the bucket compared with Cisco, which at last count has nearly 100 providers offering hosted UC services based on Hosted Collaboration Solution (HCS). Going forward, Alcatel-Lucent Enterprise will need to build on the comparably modest momentum its cloud UC platform has had over the past three years.
From Cohorts to Competitors
As Alcatel-Lucent Enterprise targets service providers, its erstwhile parent that discarded it to get out of the enterprise market has just launched an enterprise UC solution. Rapport for Enterprise's core communications software is based on the IP Multimedia Subsystem (IMS) platform ALU sells to carriers, but has been virtualized and otherwise modified for enterprise deployment. It runs on off-the-shelf services, provides a full set of voice, video, chat, and conferencing capabilities, and can either be deployed on its own or overlay an existing on-prem UC system.
Rapport relies on a considerable amount of third-party components. These include AVST voicemail, AudioCodes gateways, CounterPath soft phone, and Mitel IP phones and conferencing devices. It strikes me that ALU could have delivered most of these components based on its own technology if it had ... oh, I don't know ... maybe an enterprise division? But as far as I can tell, Alcatel-Lucent Enterprise has had no hand in developing Rapport.
At first blush, it seems like ALU and Alcatel-Lucent Enterprise are about to square off in the enterprise comms market, competing against each other for the same set of customers. This might in fact happen in time, but for now Rapport will impact only the highest of the high end of the enterprise market. This is because it's targeted at businesses with a minimum of 50,000 employees. And its support for network functions virtualization, IMS integration, and VoLTE services will speak more to telcos targeting large enterprises than enterprise buyers themselves (see related story, Large Enterprise as Carrier.
If ALU decides to take Rapport down market it might in fact compete directly with the company in which it still retains a 15% stake. And it might once again play a role in an enterprise communications market that it walked away from a year ago. But until then, Rapport will join a market niche for super high-end carrier-class solutions currently occupied by Mitel Clearspan and Unify OpenScape Voice.