The Alcatel-Lucent merger: What about the labs?

Image courtesy Alcatel

Alas, so far they aren’t getting any answers from Alcatel, which, a spokesman says, is keeping mum pending regulatory clearance. But the combination would be just the latest in a series of massive changes that have swept the two companies’ storied labs.

Combined, Alcatel and Lucent’s Bell Labs would have a workforce of 25,000 research engineers, a budget of $2.9 billion and a portfolio of 41,000 patents. The companies plan job cuts – but how many will hit the labs isn’t yet disclosed.

During the telecoms-industry’s five-year-long crisis, Alcatel maintained its R&D budget at 13 per cent of revenues. But this apparent status quo hides profound changes. With no single client accounting for more than 10 per cent of its total sales, Alcatel cannot finance anymore the type of long-term research that allowed it to lead in technologies like DSL high-speed Internet access or ATM switching systems. More than Lucent, the French company has slowly reduced its fundamental research effort. According to Stephane Lapeyrade, an Alcatel spokesman, the company relies now mainly on university partnerships for its basic research.

Alcatel’s R&D is still organised around four themes: optoelectronics, radio, networks and service applications. But there is a clear shift from science-intensive research like optoelectronics toward application-oriented software developments. Marcoussis, the main laboratory of Alcatel specialised in optronics and photonics, employs 400 today instead of a thousand a few years ago.

Of course, most big players in network equipment these days have changed the way they get technology. “Today, the role model in telecom equipment R&D is not Lucent but Cisco”, explains Julien Salanave, analyst at telecoms market-research firm Idate. “After the technology bubble burst, the California company has not slowed its policy of buying tickets in start-up companies, and integrating them if their technologies prove successful enough.”

Indeed, Lucent has a Cisco-style venture capital arm – albeit less active than in the past. But Alcatel has stopped most of its corporate venture operations, except in China. It still has some investments in a small number of independent venture capital funds in the US.