The consolidation dance party is on again. Lucent and Alcatel are in talks again, according to AP. Partly driven by the consolidation among customers, the AP story says that the combination would benefit from Lucent’s strength in the wireless business and Alcatel’s strength in DSL. Lucent isn’t too bad in that area itself!
I think consolidation talks are also a statement about the rise of new suppliers from Asia. Reports out of the CeBit show in Hanover are talking about the presence of equipment suppliers from China and Korea and software houses in India. This is a global business and companies may feel a need to combine in order to gain appropriate global perspectives and efficiencies derived from even greater scale.
What does consolidation mean for Canadian R&D;? Alcatel’s acquisition of Newbridge kept high quality research jobs in Ottawa. Ericsson continues to operate a major R&D; presence in Montreal. Both of these companies would seem to demonstrate that Canada provides a favourable environment for such positions to remain. Lucent has a variety of R&D; functions in Canada as does Siemens.
Canada’s concern, from an industrial policy perspective, should be to ensure that any of these combinations see opportunities for R&D; growth in Canada. That means looking beyond the companies heaquartered here, like Nortel or RIM and continuing to foster conditions to encourage high quality employment, entrepreneurship and competitiveness.
Lucent and Alcatel have dated before but never made it to exchange vows – so don’t start figuring out whether the new name is Alcacent or Lucatel. In what talks are Mike Z. involved to ensure Nortel isn’t left alone plopping Alka Seltzer?