Subject: [NEXTEL-1] Ocelot: A Different Breed for Lucent

From: Marcel <[email-masked]>
Date: Thu, 09 Jan 2003 02:04:01 -0500

JANUARY 6, 2003

 NEWS ANALYSIS :TECH

 Ocelot: A Different Breed for Lucent

 Its new network-optimization tool marks a shift in its approach to turning technology
into products -- and maybe even
 profits

 China Unicom's plans for a mobile-phone network presented enormous challenges. The $1.5
billion project announced in
 May, 2001, covered 70 cities in 10 provinces of China, an area comparable to the eastern
half of the continental U.S. The
 deployment's most complex aspect was tuning the 3,800 antennas attached to towers and
buildings throughout the region.
 That's usually a labor-intensive process in which field workers drive around in trucks
and adjust each antenna by hand.

 In Unicom's case, the process was made easier because of a technology from Bell Labs, the
research arm of Lucent
 Technologies (LU ). The technology, called Ocelot, allowed engineers to tune all of the
antennas remotely, using an
 automated software system. Reducing the need to send workers into the field typically
trims network deployment costs by
 10% to 20% and cuts the rollout time by months. Ocelot helped Lucent win a $400 million
contract for the China Unicom
 project.

 "RAMPING IT UP."  At a time when wireless phone companies are struggling to lower their
debt and reduce deployment costs,
 network-optimization tools such as Ocelot should find plenty of demand. The global market
is about $300 billion and is
 growing 10% a year, says Philip Marshal, an analyst with consultantcy Yankee Group. By
contrast, the overall
 telecom-equipment market is expected to be roughly flat in 2003.

 Ocelot could play a role in helping Lucent, which has reported 10 straight quarterly
losses, get back on its feet. In addition to
 gaining traction in Asia, the product has also been sold to domestic customers, such as
Verizon Wireless, the largest U.S.
 wireless carrier. "Ocelot is already available in the field, and we're ramping it up this
year," says Gee Rittenhouse, director of
 wireless research at Bell Labs. "It should provide the company with an important new
revenue stream." (For a Q&A with
 Rittenhouse, see "What Makes Lucent's Ocelot Run".)

 Lucent is finding new ways to ensure that it makes the most of its investment in Ocelot,
which took
 about four years to develop. In the past, Lucent and former corporate parent AT&T (T )
had
 trouble turning Bell Labs' innovations into products. Most famously, AT&T years ago gave
away the
 rights to the original cell-phone technology, which was developed in the labs.

 How have things changed? Lucent is making the Ocelot technology available to all
carriers, even
 those that built their networks with equipment from Lucent's rivals. That would have been
unthinkable in the past, when
 Lucent and other big equipment makers used proprietary standards to force customers to
spend all their money with one
 vendor. The new policy has yet to attract any new business, but it's an encouraging sign
that Lucent is embracing open
 standards. In time, that should help it broaden its market.

 ANALYZE THIS.  The new business model is being applied to other technologies coming out
of Bell Labs as well. Another
 example is something called NetInventory, which creates an automatic inventory of a
network's components and analyzes
 how they're linked. The technique, known as topology, has become increasingly complex as
data routers, hubs, and switches
 are added to traditional voice networks. According to Lucent, NetInventory is one of the
few software applications that can
 analyze equipment from any vendor. It also runs on a variety of open platforms, from Unix
to Windows to Linux. That means
 NetInventory can be marketed as a service to any wireless carrier in the world,
regardless of whether its network was built
 with Lucent components.

 Ocelot faces plenty of competition from rivals such as Nokia (NOK ), Ericsson (ERICY ),
Marconi, and Motorola (MOT ).
 One key rival, Schema, is located in Rochelle Park, N.J. Founded in 1995 as a wireless
network-optimization specialist,
 Schema has already done business with carriers such as Verizon Wireless, Cingular
Wireless, and Bell South (BLS ).

 Rittenhouse acknowledges these rival products, but he insists that they lack Ocelot's
features and sophistication. Schema
 spokesman Josh Klein disputes that characterization. "I have not heard from any customers
or analysts that their product is
 superior," he says.

 Still, Ocelot is a step in the right direction for Lucent. The product isn't large enough
to make a huge difference in the
 company's near-term financial performance. But it's encouraging that Lucent has continued
to develop new technology in the
 midst of the industry's unprecedented downturn. Just as important, it's developing new
business models to make the most of
 them.

http://www.businessweek.com:/print/technology/content/jan2003/tc2003016_0267.htm?tc

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