The Europeans are coming! The Europeans are coming!
Within a week of each other, telecom vendors Alcatel SA of France and Siemens AG of Germany announced separately their plans to acquire U.S.-based data networking companies to help them establish a presence in the enterprise networking market on this side of the big pond.
Alcatel is buying Xylan Corp. in a $2 billion deal, while Siemens picked up Castle Networks Inc. and Argon Networks Inc. for US$300 million and US$240 million, respectively. And a March 4 article in the New York Times suggested Siemens is in preliminary discussions with 3Com Corp. to acquire the latter’s telco-focused business unit, although this report was unsubstantiated at press time.
What’s happening here is, as North American-based telecom equipment providers such as Cisco, Nortel and Lucent have already realized, bigger is better when it comes to engaging in the global battle for converged voice/data networking sales.
But what Alcatel, Siemens and other expansion-minded European telecom vendors, such as Finland’s Nokia and Sweden’s Ericsson, will soon come to realize is their drive into the North American networking market will be an uphill struggle.
These vendors have had only marginal success in this continent’s carrier market and have even less mindshare among data networking managers here. The acquired companies, Xylan, Castle and Argon, are not much better known, especially in Canada.
Alcatel et al are essentially asking North American customers to gamble their mission-critical data networks on vendors they have had little, if any, dealings with in the past.
The current consolidation in the networking market place means customers have less choice in terms of suppliers but they get a broader range of equipment from a single source. It only stands to reason that the vendors with the most mindshare, regardless of technical expertise, will have the easiest time convincing customers to do their one-stop shopping with them.
An interesting footnote to all of this is that Cabletron, the last bastion of not-invented-here paranoia, still insists on trying to go it alone. Not interested in becoming simply the enterprise networking division of a larger telecom equipment provider, Cabletron is planning to unveil at NetWorld+Interop in May a new data network product line for service providers looking to offer users integrated voice, data and video over the Internet and private IP networks.
The new product line is a completely internal development effort, although it is based partially on technology obtained from companies acquired by Cabletron during the past few years.
While Cabletron’s independent outlook would once have been applauded, its isolationist position may not serve it well in today’s integrated voice/data networking market. Similar to the challenge facing European telecom providers wanting to gain mindshare within the enterprise, Cabletron will find it difficult to market itself as a viable choice in the service provider market.
What do you think about the current voice/data consolidation trend? Are you prepared to go to one vendor for all your communications and networking needs? Please e-mail your comments to editor Linda Stuart at linda_stuart@lti.on.ca.