A private equity firm, Permira, is believed to be the leading (though not the highest) bidder to acquire Alcatel-Lucent's enterprise unit, according to Reuters. The report quotes unnamed sources as pegging the Permira bid at $1.3 billion.
Permira's website describes the company as "a European private equity firm with global reach." Of the 8 technology companies in its portfolio, probably the best-known, at least in the US, is Freescale semiconductor. Past investments include Intelsat and Inmarsat.
The article also mentions that Siemens Enterprise is still in contention, but has dropped from the leading position that it was thought to have held earlier in the process. An ALU-SEN combination would create a global powerhouse but would do little to increase either's enterprise share in North America.
If ALU does go to a private equity firm, it'll go against the purported trend toward consolidation in the enterprise communications market--an opportunity to reduce the number of vendors in the space will have been missed. But, contrary to what Marty Parker wrote here this week, it's not clear to me how much the industry really is consolidating.
Obviously, there was one big piece of consolidation when Avaya bought Nortel. But the cast of seemingly-thousands that fight it out below the top tier hasn't shrunk much, nor has their collective share of the pie shrunk at all.
Marty cites Eastern Management's report that showed Cisco and Avaya together hold almost 60% of the market (Avaya meaning Avaya+Nortel). But look at this chart that Allan Sulkin presented at VoiceCon Orlando 2006:
For the year Allan was reporting on (USA, 2005), Avaya+Nortel+Cisco had 66% of the market. You had Siemens, NEC and Mitel each with 7%; NEC and Mitel are pretty close to that figure in Eastern Management's latest numbers (which cover North America), while SEN shows a major hit--though you're dealing with two different researchers and therefore two different methodologies, so maybe the dropoff for Siemens wasn't as dramatic as it appears. Nevertheless, the period between the two reports encompasses the time of greatest uncertainty for SEN, i.e., the period between the Siemens AG spinoff of SEN (in 2005) and the Gores Group acquisition (in 2008). This would be the time when SEN took its greatest hit, as customers remained unsure of its ultimate fate.
Bottom-line, though, is that there's a top tier that's unlikely to consolidate any further (Avaya won't buy Cisco nor vice versa); this top tier owns somewhere in the neighborhood of 60% of the market. And then there's everybody else, which is where you'd think the consolidation would be picking up, but isn't, really. 3Com essentially exited the space when it sold to HP, which killed the IP telephony product lines--and that's about it. If ALU enterprise and SEN don't combine, as seems likely, we'll see a market that's essentially as fragmented as ever.
