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Alcatel to outline its new Net plans

Following a series of acquisitions, the French telecom equipment maker plans to unveil its Internet strategy to attendees at the Networld+Interop conference next month.

French telecom equipment player Alcatel has spent more than $2.5 billion acquiring data networking technologies in a move to play a greater role on the Internet. Next month, the company will disclose just how its strategy will work.

Alcatel is but one of several international voice-focused equipment firms looking to take advantage of the growth in Internet-related networking technologies and services. Along with German behemoth Siemens and Swedish entrant Ericsson, the French giant has been most vocal concerning its intent to crack the North American market and add high-end Internet-based routing and switching technology to its portfolio.

Since last fall, Alcatel has purchased three data-oriented equipment companies--Packet Engines, Xylan, and Assured Access--as a means to gain access to new data technology.

Next month, at the Networld+Interop industry trade show--the largest gathering of the networking industry in the United States--subsidiary Alcatel USA plans to articulate a vision for its acquired technology, according to company executives.

The move will follow a key technology introduction by Xylan. This week, the company rolled out a set of hardware and software called NetPac that may allow the campus-oriented switching specialist to gain a greater foothold with lucrative service provider customers.

Add to that high-speed tools from Packet Engines and dial-access hardware from Assured Access, and Alcatel owns a combination of networking elements that could make it more palatable to data-focused carriers, according to analysts.

"They have the pieces to present a compelling story," said Ron Westfall, an analyst with market watcher Current Analysis. "The next step is: Can they execute this?"

Alcatel is looking to capture a chunk of the network upgrades and expansions that are expected to drive significant sales of Internet-based networking equipment over the next few years, as older phone service providers and new-age carriers build and expand all-in-one data, voice, and video layouts. "The question for Alcatel is how much of that pie can they grab?" said Westfall.

Alcatel has chosen this tact on concern over the health of the company's traditional businesses.

And Alcatel is not alone. Recognizing the profits to be made, various international phone equipment companies, as well as North American firms such as Nortel Networks, Cisco Systems, and Lucent Technologies, are gunning for the same niche.

"They're all positioning themselves to do the same thing," said Deb Mielke, principal at industry consultant Treillage Network Strategies, a McKinney, Texas-based firm.

Analysts say Alcatel will need to link their recent purchases into a cohesive package that they can then sell to service providers.

But there is also some question as to what shape the so-called convergence market will take, since it will take a combination of voice and data expertise, plus hardware and software to create the layouts that service providers and traditional telecommunications firms are demanding.

"While many think the Europeans are behind the U.S. competition, in reality the competition is just starting and the opportunities on a worldwide basis are just starting," added Craig Johnson, principal analyst with market watcher Pita Group, a Portland, Oregon-based firm.

"Companies that can offer 'old world' solutions and 'new world' solutions and can market them are the ones that will win in the longer term," he said.

It is in this environment that Alcatel--a company that has had minimal success in North America--now finds itself. But executives at the firm remain optimistic that the evolving nature of the networking industry will allow them to take a chunk of the expected multibillion-dollar market for voice and data equipment.

"Our strategy has been to plug our gaps," said Krish Prabhu, chief executive for Alcatel USA, in a recent interview. "I think this is a wide open game."

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