Lucent looks to tap enterprises - again

Three years after spinning off its enterprise operations into a new company called Avaya Inc., Lucent Technologies Inc. is looking to re-engage with corporations through partnerships and indirect channels.

Lucent is awakening a global business partner program that company officials say has been dormant of late. The company is looking to tap new markets and sources of revenue to complement the direct relationships it has with the 30 to 50 biggest carriers in the world that make up the majority of its sales.

"Lucent has had some dark times recently, and they're looking for new opportunities," says Michael Doherty, research director for Ovum Ltd.

"They do carriers very well, but not other [markets] very well," he adds.

Although the partnership program's primary market is alternative service providers, corporations are second on the list and their contribution to revenue is expected to grow, says Frank Farese, vice president of Lucent's global business partners program.

"We get great access to the enterprise through partners," Farese says.

Lucent began to formalize its business partner program about six months ago with a US$40 million investment and an infusion of about 210 employees, Farese says. Alliances and indirect channels quietly racked up between $450 million and $550 million in revenue for Lucent last year, or about 4 percent of the company's overall revenue.

This year the unit is expected to accumulate between $550 million and $750 million, he says.

Seventy-five percent of that coming from alternative service providers with the remainder deriving from corporations, government, storage and cable providers, Farese says.

The impetus to formalize the partnership program was not only to grow that 4 percent figure, but to tap the full sales potential of products that Lucent has sold chiefly to service providers, says Mark Wilson, vice president of sales and marketing within the global business partner program. Demand for products such as Lucent's VitalSuite performance management software and OptiStar storage networking switch is building among companies, Wilson says.

"There's a bigger addressable market in the enterprise space," he says.

VitalSuite can tap into a $800 million worldwide market and give Concord Communications Inc.'s network performance reporting software a run for its money, the Lucent officials say. OptiStar can address a $270 million Fibre Channel over IP SONET/synchronous digital hierarchy storage edge switch market led by Computer Network Technologies Inc., the company says.

Lucent's partner in attacking the enterprise storage market is McData Corp. The telecom vendor also has partnerships with enterprise giants IBM Corp. and Sun Microsystems Inc. for metropolitan optical, messaging and customer care sales opportunities.

Lucent even has an arrangement with Avaya to offer ATM connectivity for call center applications, an interesting turn of events, considering that Lucent jettisoned its enterprise operations years earlier in an effort to focus exclusively on the service provider market. That event gave birth to Avaya.

What goes around comes around, Ovum's Doherty says.

"That's this crazy world that we live in," he says. "We've come full circle. Nothing surprises me these days."

Lucent plans to expand the partnership strategy into the mobility, services and messaging markets next year, Farese says. This will add $300 million in revenue, making the global partnership program a $1 billion operation within Lucent, he says.

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