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Sun teams with Lucent
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December 1, 1999: 3:37 p.m. ET
Technology pact aimed at building next-generation network infrastructure
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NEW YORK (CNNfn) - Lucent Technologies and Sun Microsystems on Wednesday inked a technology sharing agreement aimed at developing a network infrastructure to support the changing needs of companies that provide electronic business services over the Internet.
By combining Sun (SUNW) network-server hardware with Lucent (LU) network switching software and technology, the two companies said they will be able to provide faster, more flexible Internet-based products.
Under the terms of the agreement, Lucent agreed to use up to $500 million of Sun’s "Netra” brand servers over the next seven years as the platform for its new wireless network architecture, called "Flexent.”
Those servers will be the basis for shifting the design of Lucent’s wireless network equipment from the traditional "circuit-switched” architecture - designed for traditional voice communications - to "packet-switched,” which is based on the Internet Protocol (IP). Lucent also said it plans to use Sun’s Solaris operating system in its wireless network equipment.
The companies also are collaborating to develop the next stage of Sun’s Netra server platform, which they say will enable network operators to use standard IP applications for rapid and cost-effective introduction of new services such as broadband IP, multimedia, and mobile IP.
Meanwhile, new versions of Lucent’s programmable "softswitch” technology - which allows various software and hardware to work together - will be incorporated into a range of Sun servers.
"This collaboration is a direct response to our service-provider and enterprise customers who want access to Internet-based services that will work across all wireless, wireline and optical infrastructures,” Scott McNealy, Sun’s chief executive, said in a statement.
In a related announcement, the companies said they will work together to market new communications networking systems, Internet servers and turnkey solutions for enterprises and network service providers, including Applications Service Providers (ASPs), which provide network-based computer applications services.
As a relative newcomer to the network services business, teaming with a company like Lucent gives it an advantage as it goes head-to-head with industry stalwarts such as IBM, noted Jonathan Ross, an analyst at ABN Amro Securities in San Francisco.
"As they go into the ASP space, Sun is up against companies like IBM that have big services arms,” Ross said. "Sun is growing fast, but its coming off of a small base and needs to partner up with players that have stronger service capabilities. Lucent brings that to the table, and their telecommunications expertise also comes in very handy.”
On the hardware side, the partnership bodes well for Sun as it competes in the server market against companies such as Hewlett-Packard and Compaq, Ross said.
"It definitely puts them at the forefront of that race,” he said. "There probably won’t be one single player that dominates. But they’re second to none and this should be a very strong partnership.”
Shares of Lucent added to nearly 3 percent on the news, trading 2-1/8 higher at 76-1/8 on the New York Stock Exchange Wednesday afternoon. Meanwhile, Sun was up just slightly, trading 5-16 higher at 132-9/6 after dipping as low as 130-3/4 earlier in the afternoon. 
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