Ground floor

When people talk about “getting in on the ground floor” of something, they’re usually talking about a rare and rewarding opportunity, as if the ground floor wasn’t the same one used by everybody else forever afterward to enter the same place.

But getting in on the ground floor is so important to telecom equipment vendors that they’re willing to put up with a lot of pain to get there. They slashed their prices to get a piece of the government’s GIG-BE project. They “forward-priced” their wares to get a piece of Verizon’s fiber-to-the-premises business (and did it again when Verizon moved to gigabit speeds). They do it whenever major carriers or those in emerging markets are ready to build next-generation networks.

Alcatel-Lucent is doing it today to keep its customers from being lured away by competitors while it focuses on getting its own house in order. Consolidation across the industry, along with a migration to packet-based technologies, gives carriers ample reasons to consider changing equipment suppliers, said Jean-Pascal Beaufret, the company’s chief financial officer. “We cannot miss any major market share.”

The economics of razor and blade sales are at work, but also much more. The pressure intensifies as equipment vendors, themselves in a consolidating space, struggle to establish their new brands as authorities in new technology arenas. If you believe that being known as a leader in [fill in the blank: IPTV, next-gen wireless, etc.] is key to your corporate strategy over the next decade or two, you can’t afford to miss out on early deployments by major carriers today.

The tougher question for vendors to answer is: How far are you willing to go to win these deals? And will it be worth it later on?

E-mail me at ed.gubbins@penton.com.