When big goes bad

"Well, that's another set of products for them to screw up."

It's a phrase I've heard at least a half-dozen times over the past week. It typically comes from a competitor commenting off-the-record about one of two transactions: Tellabs buying AFC or Lucent acquiring Telica (see stories below). The implication being that since both acquiring companies have made numerous missteps in the past, they're bound to screw up their newest prizes.

Also implicit is the belief that when a big company buys its way into a hot new market, the creativity that got its acquired company there in the first place is drained. No executive with an ounce of creativity wants to work for a company where meetings are held for the sole purpose of planning other meetings. They take the buyout and run. And who wants to work for The Man, anyway?

History says this thinking has some validity. As the dominant provider of circuit switches, Lucent should have been a natural candidate to carry on that role in the next-generation switch market. Its acquisition of Telica is an admission of what everyone already knows -- Lucent is playing catch-up in the softswitch market. Likewise, Tellabs' purchase of AFC sends the obvious message that selling cross-connects isn't going to keep a company going forever.

But instead of seeing either transaction as a forecast that technological innovation will be wrung out of access and switching, I see a natural evolution that is healthy for both markets. Innovation isn't going away simply because two companies bought themselves some market share. The pure access play isn't dead (Calix, Zhone, Allied Telesyn and ECI immediately come to mind). And somewhere within Telica or AFC resides a group of engineers that will spawn more switching and access vendors.

Disagree? E-mail me at vvittore@primediabusiness.com