Alcatel-Lucent Sells Enterprise Networking Business for $268 Million

Analysis: Alcatel-Lucent exits enterprise business after failing to get the traction or growth it deserved.

By Sean Michael Kerner | Posted Oct 2, 2014
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Alcatel-Lucent is doubling down on its carrier efforts by divesting its enterprise networking business. Alcatel-Lucent Enterprise is being sold to China Huaxin Post and Telecommunciations Economy Development Center for cash proceeds of approximately $268 million.

Alcatel-Lucent isn't entirely abandoning its enterprise business, however, instead retaining a 15 percent ownership stake.

Officially speaking, the sale is part of Alcatel-Lucent's overall effort to re-emphasize its carrier service provider business.

The truth is also that Alcatel-Lucent has been struggling ever since the company was created back in 2006 and continues to try and find a profitable way forward. It actually wasn't until 2012 that Alcatel-Lucent actually generated a profit. That's six years the company bled cash, and it's a legacy the company continues to deal with.

In 2012, Alcatel-Lucent really did make a solid effort to bolster its Enterprise unit, adding new leadership with President Michel Emelianoff. Alcatel-Lucent sold off its Genesys call center unit in January of 2012, and Emelianoff was tasked with building out a strong enterprise business focused on unified communications and switching.

Alcatel-Lucent Enterprise was at one point ahead of the curve, emphasizing Application Fluency since 2010. That's the idea that applications drive networking and not the other way around. It's an idea that is now commonplace as part of the Software Defined Networking (SDN) revolution and is the cornerstone of Cisco's Application Centric Infrastructure (ACI) as well.

At many points, Alcatel-Lucent has been able to leverage its service provider heritage to bring carrier-class networking ideas down to the enterprise. The idea of having both service provider and enterprise assets under the same company banner is one that has served other vendors well, including Cisco and Juniper.

To further confuse the issue, in 2013, Alcatel-Lucent spun out its Nuage Networks division to focus on SDN software that is separate and not necessarily tied to Alcatel-Lucent Enterprise gear. Unlike Cisco's Insieme, which was merged back into Cisco, Nuage has remained separate.

Selling enterprise networking gear is a tough business, with many exceptional vendors all competing for a share of the market. The idea behind the sale is that China Huaxin will provide new energy and resources to push the business forward. Time will tell if it's a strategy that will succeed.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and Follow him on Twitter @TechJournalist.

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