Summary
There were many impediments to a successful merger, these included: 1. Diverse cultures 2. Diverse geographies limit economy of scale 3. Diversion of the merger caused both companies to take their eye off the ball in terms of their real problems 4. Large size slowed down ability to respond to changing market conditions 5. Merger caused US customer nervousness in terms of buying gear from a foreign controlled entity
Analysis
Having worked with both entities over the years it was clear to me that the cultural issues alone would cause problems for years to come. Product development groups in large corporations can quickly become demoralized when culture wars begin such as which groups get downsized and which groups get funded to complete their products. While all this happens schedules are missed and key product improvements are overlooked. In the meantime your competition is under no such burden and they race further ahead.
Part of the rational for the merger was to counter the threat from Cisco and other IP switch providers. And since the merger Cisco's telco business has expanded world wide at the expense of AL. In retrospect Lucent would have done better on its own if they had battled Cisco directly but instead time and energy was lost in the turf wars. Some of Lucent's US customers became nervous when the merger was completed and took second looks at equipment from Cisco and SONUS Networks who were free to innovate and improve their products.
Looking at marketshare errosion since the merger was fianlized it has been a continuous slope downward.
In the end of the day you cannot merge your way out of the product issues that both entities had individually. Both Alcatel and Lucent grew up in an era when product change within the telcos was relatively slow. The Internet and IP telephoney changed all of that and it isn't a surprise that the younger and more innovative companies born of the IP age were able to race ahead and garner marketshare. Like the Chrysler Daimler merger before it, this union must be dissolved before the entities can move forward again. And to do that the architects of its combination must exit.
