On the surface, Lucent Technologies' acquisition of Ascend Communications last week looks to be merely a shot at Cisco Systems' dominant position in the industry, one that should be of importance only to ISPs and telephone companies. But after you look at the resulting possibilities and general industry trends, you will begin to see that this acquisition is just the latest development in a quickly consolidating marketplace. And though corporations won't be a direct customer of this development yet, it will cause them to reconsider the importance of bandwidth.
For years now, corporate users have been waiting (and planning) for voice and data to come together in one network. Unfortunately, voice and data have rarely coexisted. In most corporations, these roles have even been managed by different departments. Even with increased enthusiasm for data pipes due to the Internet, many corporations still haven't been able to meet on how to merge the two pipes. The voice people have been mildly humoured by the concept, and the data managers have sweated blood trying to integrate the two. Even with the promise of voice over IP, most corporations have found the lack of quality and general challenges of integration compelling enough to once again dismiss this concept. So voice and data pipes have continued to remain separate.
Now that Lucent has snatched up Ascend, it is clear that it wants to change that approach. Rather than mirror the strategies of Cisco, 3Com, and other data-oriented leaders, Lucent wants to take a different path.
For one, Lucent's genesis as a 1996 spin-off from Ma Bell gives the company credibility on the voice side. Now, with the Ascend acquisition, Lucent has the capability to transform its voice pipes into data pipes. So instead of pushing the rope like many data-driven vendors have been forced to do, Lucent can pull the large telecom vendors along.
It is these elements that make Lucent's acquisition exciting, as well as the company's timing. Until a few months ago, Lucent was restricted from making such a large acquisition. But fortunately for Lucent, many telecom players are now rebuilding their infrastructures for the next millennium. They are looking at how to handle more information than just voice on their current voice networks. As such, large key vendors will look to Lucent for ways to transform their networks into this more encompassing offering.
And this is a game in which the size and breadth of offerings is very important. Even Cisco, with $US9 billion in revenue, will have an uphill battle, because with the Ascend acquisition, Lucent joins Nortel Networks as the default vendor of choice for telecom companies.
With two proven vendors now getting closer to offering complete solutions, telecom companies will move more aggressively on their plans to morph voice networks into data-capable solutions. And it will be just a few years before these newly rebuilt telecom infrastructures are offered in many possible corporate solutions. But due to existing corporate structures of voice management in one department and data in another, leveraging these developing competitive offerings will be difficult for many corporations.
As a result of growing demands for bandwidth, the corporate organisation will need to fundamentally change in the next few years. As traditional voice vendors begin to offer an increasing array of data-capable features, corporations need to be structured to best leverage these new competitive options. That means networks, regardless of traffic type, will need to be managed by one group -- probably the IT department. Voice will finally become yet another data type for these growing networks.
It is the acquisitions of companies such as Ascend that are making these "voice is just another type of data" visions possible. And this is a very exciting area that has developed in the past two years, and it will continue to accelerate in the next few years. So don't think that the Ascend deal is the end of this industry trend; it is just a significant step.
Still, corporations are going to have to ready their networks to take advantage of this trend. So start your engines.
Do you have both voice and data network management in one department? Are your processes for buying voice and data equipment related? Send me your comments.
Mark Tebbe is the president of Lante, an electronic-commerce consulting and integration company that serves clients worldwide, including several high-tech companies