Like most telecoms technology vendors, Alcatel-Lucent has been suffering from a stagnant market and intense competition from emerging players such as Huawei. In fact ALU’s 2008 revenues are expected to decline “in the low to mid single-digit range”, according to the company’s Q3 financial report. Alcatel-Lucent was formed in 2006 from the merger of two of the industry’s historic giants, each with a pedigree going back to the dawn of electronic communications in the late 19th century. Those roots are evident in the Bell Labs operation, still based in Murray Hill, New Jersey. Bell Labs was for most of its life part of the AT&T organisation, and has been known as Lucent Technologies over the past decade or so. Over the years Bell Labs has been involved in developing many new technologies, not just in voice communications but in media and entertainment. Somewhat off track, a particular story caught my eye. Back in the early 1930s, when the world’s economy really was in meltdown, Bell Labs was involved in various sound recording developments and worked with the famous conductor, Leopold Stokowski, to improve the recordings of his Philadelphia Orchestra. This led to the use of gold film to improve recording masters, as well as the development of stereo recordings. In 1933 a concert in Philadelphia was transmitted in stereo over telephone lines to Washington, D. C. As I’m often reminding clients, the concept of using our phone lines to “stream” content is really nothing new… While major firms around the world rightly review their finances in the light of the current global economic crisis, they also need to avoid the temptation to take their eyes off the innovation ball, because when markets and economies do begin to recover, companies with strong positions in the next wave of technology industries will prosper, as the story above illustrates. Against this background, ALU last week presented its Bell Labs Innovations day, which, in recognition of the Franco-American business alliance, took place not in Bell Labs’ NJ base but at Alcatel’s historic headquarters in rue de la Boétie, Paris. We saw a series of demos under the theme of “Transformation”, as well as specific projects focusing on improving existing applications like home management and IPTV. Within the Home demo, we saw online gaming (Mario Kart as it happens) on Nintendo’s Wii console using a wireless LTE connection, alongside a console using a regular fixed broadband line, demonstrating that 4G at least in theory can meet this particular home application. Next to this was a demonstration of 3DTV, without which no discussion of emerging consumer technologies is now complete. Like most other demos I’ve seen, this used the Philips 3D display. ALU is not about to get into the consumer electronics business, but it is exploring the potential impact of 3D on its IPTV business line, and in particular showed a couple of interesting examples of how 3D EPGs and user interfaces might be presented. Video conferencing is another application with potential relevance to 3D. There was also a display of a femtocell solution, in which various CE devices were sharing the femtocell wireless connection built into the home gateway. Telecoms vendors have been pushing femtocells, which are basically a very low power cellular transmitter, as one of the next innovation waves. The initial motivation of femtocells was to improve in-building cellular coverage. This demo suggested that they also provide an alternative home networking solution. My question was why this offered any improvement over existing, widely deployed WiFi technologies, and the answer offered was that femtocells will be easier to use, since devices will be easier to connect and will have better power management. We will have to wait for actual deployments to see how true that is. WiFi is certainly not perfect, and connecting a new device to a home network can still be a challenge, but once it is installed I have few problems, and it’s not clear to me exactly why femtocells would be an improvement. We also saw a prototype of a video microprojector, which beamed a video from a mobile phone onto the wall. It offers VGA resolution today. We are told that true HD is on the roadmap, although this will demand a larger footprint. As optical modules such projectors will be integrated into handsets, something which we can expect from around 2010 onwards. The quality is likely to be adequate for laptop-equivalent displays (~20” diagonal). Battery life will clearly be an issue – constant projector use would give a phone about 2 hours’ usage. A number of other demonstrations focused on media and content applications such as photo file management and intelligent video stores. The latter is a profiling technology that suggests video titles based on a user’s search activity. ALU was keen to point out that this would be entirely an opt-in process. Putting all of the significant near-term business challenges aside, ALU would appear to be well positioned to take advantage of new revenue streams, if and when they emerge. The challenge as always will be to predict the winners. It’s a reasonable bet that at least one of the innovations on show will make it onto the long list of past success stories, but it may be a few years before we discover its identity. (Footnote: I just arrived in San Jose for Cisco's C-Scape event, which will make an interesting contrast with the Bell Labs show - updates to follow.) Client Reading: CES 2008 and Beyond: Can the Wow Factor Make a Comeback?