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Alcatel-Lucent signs deal with Chipzilla

by on25 February 2014

Staying out of price wars

Alcatel-Lucent has signed a deal with Intel to share the costs of research and development on cloud computing and security. Known as network function virtualization, the tech means telecom operators can rely more on software to run their networks and less on hardware. Other telecom gear makers are also pitching such products so it is not new, but the fact that Intel is working with an name like Alcatel-Lucent is important.

NSN said it had carried out over 50 commercial trials with carriers to explore such cloud technology. It is the second R&D partnership announced since Michel Combe took over as CEO in April 2012, and he pledged more to come. Meanwhile Combes said that Alcatel-Lucent will be staying out of a price war in the telecom equipment market and set itself apart with better service and new products. He said that he wanted to gain market share but not at any cost, as it entered the second year of a three-year turnaround aimed at restoring regular profits and cutting 1 billion euros of costs.

Fortune tellers and soothsayers have predicted that competition could intensify this year among telecom equipment vendors after Nokia's unit forecast lower operating margins as it tries to rebuild revenues lost after a bout of restructuring. This could spark price cuts from Sweden's Ericsson and China's Huawei.

However Combes said that all the players in the sector have understood that competition based on price was not the right answer. It is better to come up with different products. Each company must find its areas of excellence and deliver on the services promised to customers, he said.

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