And Velocix Sells Out to … Alcatel-Lucent?

July 28th, 2009 by · 2 Comments

In May, it was heavily rumored that CDN provider Velocix was for sale.  At the time, Dan Rayburn reported that a telecom equipment provider was in the hunt, and those rumors have now proven true: Alcatel-Lucent (NYSE:ALU, news, filings) today announced it will acquire the company.    I was skeptical at the time, but one never can tell in this sector who is going to jump on new technology.  Dan Rayburn has more details on the acquisition.

Alcatel-Lucent is of course after Velocix's Metro product line, which offers service providers what might be described as a managed CDN appliance.  The key here is that the product has always been targeted at Alcatel-Lucent's customers, and therefore Alcatel-Lucent sees it as a logical extension to their business and an opportunity to use their substantial market leverage to sell a whole lot more of it than Velocix ever could.

But what exactly will they be selling?  They're not giving details yet of course, so we can only speculate.  A major feature of Velocix's product was that while a service provider could use it to build and control their own CDN, that CDN would also be a part of Velocix's overall CDN.  In other words, it brings to mind a community of CDNs that can talk to each other, perhaps cooperate and become more than the sum of their parts - all held together by your friendly equipment vendor.  Maybe that day isn't here yet, but it's the sort of thing an equipment provider might dream about.

It also throws into a new light the recent discussions on this site about core competencies and outsourcing.  Another way to look at this may be that Alcatel-Lucent can run your CDN for you.  After all, it's a fairly specialized world and one whose main functions have become increasingly commoditized over the last year or two.  If Ericsson (NASDAQ:ERIC, news, filings) can run Sprint's backbone, why not a CDN for it too someday.  Given Verizon's use of Velocix gear, perhaps Alcatel-Lucent is hoping to take over theirs?  Hmmm, I'm beginning to warm to this concept, though I'm still not quite sold on it.

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Categories: Content Distribution · Mergers and Acquisitions · Telecom Equipment

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