France's Alcatel and Lucent announced definitive plans to merge yesterday, a move that is sure to reverberate across the entire vendor community. You can bet that everyone from the smaller OEMs to major vendors like Ericsson are contemplating their futures and next acquisition moves.
It's been a long time since we've seen a merger of this magnitude in the vendor community. Like the operator community, equipment vendors are seeing growing competition from some non-traditional players such as Chinese vendors Huawei Technologies and ZTE, which are undercutting the competition to win some big contracts around the globe. And as IP technology becomes more prevalent in telecom networks, vendors such as Cisco Systems are making more inroads into the network.
It won't be surprising to hear talk of another big vendor merger in the works, but history has shown that equipment mergers are extremely complex, primarily because vendors compete in a global marketplace and are merging with companies from other countries. It's very difficult to integrate varying corporate cultures and have agreement in a "merger of equals." Remember the failed handset joint ventures between Dutch company Philips and Lucent and QUALCOMM and Japan's Sony? It will be interesting to see how Lucent navigates through the French culture, which as we all know is very protectionist, especially with its language. New CEO Pat Russo doesn't even speak French!
It should make for interesting fodder at the CTIA show this week. See you there! - Lynnette