A year ago the Alcatel-Lucent enterprise division was on the auction block as the French technology company looked to generate cash for investment in its more profitable service provider infrastructure business. A deal with British private equity firm Premira Advisors for the enterprise division never materialized, and the company scaled back its plan to exit the market, selling just its Genesys contact center business to Permira (a deal that closed last month). Now Alcatel-Lucent is rededicating itself to making a go of its enterprise division.
Michel Emelianoff, who was named president of the Alcatel-Lucent enterprise division in January, spoke with SearchNetworking.com recently to discuss his company’s technology vision and how it will finally break into the North American enterprise networking market.
Alcatel-Lucent was reportedly trying to sell its enterprise business last year. Has ALU abandoned that effort?
Michel Emelianoff: We went through a strategic option process where we looked at the different options we had for the enterprise business. The result of that process was the decision to sell the Genesys contact center software business. That transaction was completed February 1 with the sale of Genesys technology to Permira. [We will] keep the rest of enterprise business within Alcatel-Lucent as a fully verticalized business. So we have the flexibility we need to move at the speed of the enterprise market and not the carrier market, while maintaining the opportunity to leverage bigger assets from Alcatel-Lucent. Two key areas here are innovations coming from Bell Labs that we can integrate into our own solutions. The second one is the ability leverage assets from the carrier division, where we see opportunity in the large enterprise space.
The Alcatel-Lucent enterprise division has traditionally done better outside of North America. What is your perspective on that?
Emelianoff: Overall when you look at our presence, the weakest region for us is North America. We've tried multiple things over the years and I think we're at the point where we've seen some things we think we can get traction on and others that are more difficult.
The area we seem be getting more traction is on the network side as opposed to the [unified] communications side. What we're doing is rebalancing the resources we have in North America towards more networking as opposed to communications. We're making changes in our organization to have resources in place from direct touch and resale standpoints that are more data-centric.
Number two, we're refocusing our channel recruitment efforts more toward data and with a particular angle along the lines of data center, where [we think] we can gain a lot of traction..
We seem to have finally made progress with some of the assets from the rest of Alcatel-Lucent from a go-to-market standpoint… focusing on very large enterprise customers in the areas of transportation, energy and government. When you look at the profile of these customers and their needs from a networking standpoint, they pretty much behave like a small service provider. The type of opportunity we have there is very large, end-to-end network transformation with a combination of technology coming from the carrier space and the enterprise space.
Where else would you like to build out the Alcatel-Lucent enterprise footprint in North America?
Emelianoff: If I look at the data business, what is interesting is, we have 70% of our data sales that are solution-led sales. We're not trying to compete at the box level or data sheet level. We are trying to go for opportunities that are solution led.
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The biggest bulk of our business from a solutions standpoint is coming from converged LAN, where we're really selling the value of having adaptive infrastructure to support real-time communications. Sometimes we sell the communications piece with the infrastructure. Sometimes the transactions are decoupled. But the value proposition is around being application-fluent and being able to optimize the delivery of critical conversations and communications across the network. That represents 42% of our data sales today.
The other one is data center, which represents about 10% of our sales when I look at full  numbers, whereas it was nearly zero in the past. Here we have an approach which is different from the Cisco approach, where they are trying to focus on an end-to-end [solution] covering servers, storage and switching. We're focused on where we can provide value with a best-of-breed switching architecture.
Then the rest is fundamentally around managed LAN services and managed Ethernet services [via service providers].
When you talk about the converged campus LAN, where does wireless LAN fit into that? You have a long-standing OEM relationship with Aruba Networks.
Emelianoff: The bulk of the wireless LAN solutions we sell [today is] as part of a bigger solution. The vast majority of the sales we do in wireless LAN are combined with wired switching. Most of the time we are selling edge and core together. A significant portion of our sales are a complete core-edge refresh, with core, edge, and sometimes aggregation, depending on the size of the campus, with wired and wireless.
How does the Alcatel-Lucent enterprise division’s converged LAN solution differentiate from what other vendors are doing?
Emelianoff: When you look at our application-fluent network approach, it's based on three pillars. One is architecture;control or intelligence [is second]; and the third one is operations. From an architecture standpoint, we are looking at simplifying architecture by reducing the number of layers, which is a common trend in the industry. But we are also integrating some of the functions that used to be delivered as an overlay on that network into the switching fabric. [An example would be] wireless LAN and security along the lines of network access control to cope with the BYOD phenomenon.
The control or intelligence [pillar] is really the capability to recognize particular applications and particular communication flows. Our focus is on real-time communications and we to try to optimize network parameters to secure the right level of SLA for these communications. We have the ability to recognize video flows. You can have video surveillance as an application, [and] you can have me doing a Skype session with my wife... [and] We have the capability to differentiate [between] video communication flows and [prioritize for QoS].
The operations piece, [provides] the right set of tools, not only to manage elements of the network, but also to monitor. It's great to have intelligence in the network to implement very detailed policies and rules, but if you can't monitor at the application level, the results that you are getting are useless. We have certain number of tools where we can effectively monitor the quality of voice but also video calls, using categories like latency and jitter. We can in essence measure the quality of a voice conversation. Say you want 98% of your calls be a MOS [mean opinion score] of four or above, we have the capability to monitor that. If you are not hitting that score, we have the capability to drill down and identify in the network which network elements are causing problem and then take action.
What's Alcatel-Lucents’s view on emerging technologies like software-defined networking, network virtualization and OpenFlow?
Emelianoff: From a roadmap standpoint, we're just releasing in our top of rack [Omnitswitch] 6900 with the 40 [Gigabit Ethernet] capabilities in a week or so, so we're delivering against the mesh blueprint. The next OmniSwitch 10000 is shipping at the end of July with the support of multiple enhancements: Shortest Path Bridging, which allows us get away of spanning tree; the support of virtual chassis, which helps with the management of the mesh architecture; and the support of lossless Ethernet, which is the foundation to start the real convergence between Fibre Channel and Ethernet.
We will continue to expand our ecosystem in the areas of virtualization, storage, servers and security. You saw announcements with Citrix and we are working with other partners to expand that ecosystem
We're looking at later this year introducing 100 [Gigabit Ethernet] for very large data center interconnects.
And what about OpenFlow?
Emelianoff: We're looking at OpenFlow. The point is what our customers will be looking at doing with OpenFlow. Right now we're at the point where we're not sure we see value for campus LAN, but potentially can see value in the data center. Where we see value is for very large data centers, like Google. We struggle to see how smaller customers with midsized data centers are going to [benefit]. It's nice to have, but are they going to invest in resources to do something with OpenFlow? Is it going to bring them anything if they don't have solutions and other protocols? I'm pretty sure that there are some areas that are worth looking at. I haven't seen something yet [with OpenFlow] that we can't do with current technologies.
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