{stuart corner}In a wide ranging Q&A session in front of financial and telco analysts and journalists at the company's technology symposium in Silicon Valley last week, Verwaayen admitted that the company had much work to do to repair its relationship with financial markets (its market cap today is only about a tenth that of Alcatel & Lucent prior to the merger), but added: "Our relationship with our customer base is, I would say, stronger than it has ever been before."
While companies like Alcatel-Lucent might be on the nose with the markets, 'device' companies like Apple and 'cloud' companies like Google are market darlings. That, says Verwaayen, defies logic and must ultimately create opportunities for telcos and their suppliers.
"It is interesting that the financial world thinks the value in the hand is enormous and the value in the cloud is also enormous, but the value in the middle is being squeezed. Whether you are a service provider or a humble supplier like us you are being squeezed. butut how long can you keep squeezing?
"If you continue to attribute so much value to the cloud and the device something has to give. The network has to become a proper part of the value chain."
That is what Alcatel-Lucent is banking on. At the event it made its debut into the core router market, with an offering that seems, for the moment to have the edge on the competition. Core routers of ever increasing capability are essential to meet the ever increasing demands placed on networks by the Googles and Apples of this world and the market is shared by just two players, Cisco and Juniper, with Cisco having the largest share. More competition can only be a good thing. Verwaayen is very bullish. "I think we have an opportunity to dominate," he said.
Verwaayen said the company's focus was now firmly on the service provider market, "We have significantly reduced the complexity of our service and product portfolio, Today we focus on only three areas: access and core network and [creating] the service and monetising capability for our [service provider] customers."
Moreover he sees wireless access as very much the end game. "There is no wireless and wireline reality: it does not exist. The only way people communicate in the widest sense is wireless broadband. Sometimes it is fixed but that is a technical aspect of a movement that is clearly going to mobile broadband everywhere."
However he conceded that the company was still in the throes of a long and difficult transition. "We have made significant choices, and I think that we have made more than any of our competitors. But you are never free of your past. So you have to be smart in how you reduce the shadow of the past and be very selective of the product and the teams that you that are capable of delivering.
"That is the journey we are on, but we cannot do it overnight or we will break the company. And sometimes you have a better year than others. And certainly we should have done better on costs in 2011. We did better in 2012...
"What we are balancing is to make sure we have enough movement in the right direction, in the bottom line, cash burn etc. But what we do not have yet to the satisfaction of the market is the ability to do that in a less volatile way. That is criticism I fully take on board."
At the end of they day Verwaayen believes that the company's survival will rest on its ability to be an innovation leader.
"For the last few years the market has been dominated by price, unless you were first out of the box. It is not in our DNA to be in a market where the technology is not differentiated except on price... We needed to change direction and to be truly an innovation company; that is all that sets us apart...With Bell Labs at our heart and with the choices we have now made I think we have the ability to become a very differentiate company but it takes time."
iTWire's telecommunications editor Stuart Corner attended the Alcatel-Lucent technology symposium as a guest of the company
