As a long-time follower of Genesys Labs, I regard it as good news both for employees of Genesys and their enterprise customers as a period of uncertainty approaches its end. Alcatel bought Genesys back in 1999, for the same $1.5 billion (not adjusted for inflation). Permira is a private equity firm, founded in London in 1985. It has built a portfolio of companies in a diverse set of businesses, including in chemicals, consumers, industrial products and services, technology, media, and telecommunications. It has a decidedly European focus and its average deal size is in the $650 million range, making the acquisition of Genesys (if it is at the $1.5 billion price) more than twice the size of its average purchase.

Based on reports, it looks like Permira succeeded in convincing ALU to keep the enterprise networking and equipment part of its Enterprise Division, meaning that the object of its purchase purely Genesys Labs. This makes sense because Genesys’ strength in the marketplace has been based on its software’s ability to support customer care operations in through its core contact center and customer interaction software and its interactive voice response systems (Genesys Voice Platform or GVP). Its innovative work in this area was never bolstered by the inclusion of enterprise wide area networks or wireless LAN technologies. Ironically, it would have benefitted more from tighter links with “core” ALU technology in public network infrastructure as key components of customer interaction moved into “The Cloud.”

The transaction, when completed, marks the end of uncertainty for Genesys and its customers. It brings much needed cash into ALU’s coffers so it can pursue its “high leverage network” approach to inspiring network operators to get more innovative. More importantly, we got the sense that enterprise customers were hesitating to commit to some of Genesys’ most forward-looking solutions to support, multi-channel, social and mobile engagements.

Genesys should be one of the top contenders for enterprise software and infrastructure to support conversational commerce and, for 9 of the 11+ years under Alcatel (then Alcatel-Lucent) it was able to stay at arm’s length from the parent company. Then, about two years ago, it was ceremoniously glommed into the Enterprise Software Division and its crown jewels were inlaid into a substratum of enterprise telecom gear. It wasn’t pretty (any longer).

Permira has successfully separated the wheat from the chaff here and has the grist that can be the basis for a tasty brew for social, mobile customer care. The question now is whether it is too late.

Now the time to speculate has begun, with unnamed analysts placing a value of “greater than $1 billion but less than $2 billion” on the operations and assets for sale. Named candidates (once again, all speculation) include (with my rating on the likelihood) Microsoft (highly unlikely that it will add another line of hardware, especially phones), HP (unlikely, but could be a maneuver to tweak Cisco) and L.M. Ericsson (uncertain, I can’t really see the point except to grab market share).

In separate conversations (and on the Twitter stream) IBM’s name has been invoked. Like most major system integrators, Big Blue has generated significant revenues in recent years using its middleware (WebSphere) to meld its own software, hardware and systems with existing infrastructure and multi-vendor resources that make up today’s “unified communications” solutions. But IBM has “been-there-done-that” with PBXs and phones. It bought and then spun off Rolm (which is now Siemens Enterprise) back in the 1980s and 1990s when the functions and standards around CTI (Computer Telephone Integration) was being defined chiefly as IBM Callpath, Geotel (now part of Cisco’s Collaborative Contact Center Business Unit) and Genesys (now considered the gem of ALU Enterprise Division). IBM is highly unlikely to plunk down $1+ billion to get back in the game.

So let’s step back and think about what the impending sale might signal. From my perspective, it is the latest evidence that ALU has been unable to assimilate the porous nature of enterprise computing and communications. It’s a shame because it has some of the best marketing and positioning statements in the industry. The HLN (High Leverage Network) which I discussed last September is a powerful platform for innovation and application development and has the potential to destroy the “firewall” between enterprise and carrier networks.

In recent analysts’ meetings, the Enterprise Group was indicating that there were some real opportunities to get Genesys application software up and running over top of the HLN, especially noting that many of the sales of the core Customer Interaction Platform were being made to traditional carriers and being instantiated in their “Clouds.” The rebranding fo the entire Enterprise line as OpenTouch laid the foundation for more links over carrier networks.

The criticism logged in the WSJ article is that Enterprise accounted for “only 10%” of total revenue for ALU and that the $1 billion asking price would take a meaningful dent out of the company’s debt. But no holistic approach to selling gear and software to carriers can be independent of enterprise infrastructure. That is a meaningful 10% that has been a door opener and a key component for some major, profitable “wins” with modern service providers.

That said, you can’t forget that the Lucent side of ALU has been down this path before when it was forced to spin-off its Business Communications division in 2000. That entity, now known as Avaya, has been owned by private equity funds Silver Lake and TPG since 2007. In that time, rather than divesting assets, it has acquired the enterprise division of Nortel, expanded into Europe with the acquisition of Tenovis and paired up with Tata Telecom (now called Avaya Global Connect). By the way, Wikipedia lists several other acquisitions, including Vista, VPNet. Quintus, Routescience, Nimcat Networks, Spectel, Ubiquity Software and Traverse Network. And lest we forget Silver Lake is also a major investor in Skype, which is the prototype for the Next Generation Service Provider.

Observing the success of the Avaya roll-up, makes me think that this might be a good time for the Gores Group (half owner of Siemens Enterprise Communications) to look into melding ALU’s Enterprise Communications line-up with its own. The OpenTouch brand for Alcatel-Lucent Enterprise products (announced in January of this year) seemed like an homage to Siemens’ OpenScape line of Unified Communications software. Maybe there is a stronger connection than the mere naming convention indicates.

These technologies are assembled into an architecture (and vision) designed to foster more conversational commerce. Core to the approach is the Conversation Manager, designed to bring more context (such as customer influence, device being used, location, history, etc) to bear while determining how to treat a call or other input. The key take-away was that Genesys has felt real “pull” from customers (both existing and new) for its “listening and analytics” resources, WFO (workforce optimization) and reporting and iWD (intelligent Workload Distribution).

While many of the resources are the product of Alcatel-Lucent, Genesys and Bell Labs, the OpenTouch brand and adherence to standards means that many solutions can augment the home-grown capabilities with products from third parties like Lithium (a relationship announced at G-Force in May 2010), Radian6 or others that social media-oriented customers might prescribe.

The heightened interest in WFO, analytics and social “engagement” was made tangible by customer presentations from Ticketmaster, Groupama (an insurance carrier in Lyon, France, that built a quite impressive iPhone app that exemplifies the “open” approach by integrating Asterisk with Genesys SIP server, reporting and WFO) and Kansas City-based real estate brokerage Reece & Nichols. The Reece & Nichols use case showed such dramatic cost savings from moving its traffic to SIP trunks from the telco-provided switched voice and data services to SIP that we can only expect the migration to accelerate.

That portends an uptick in sales for the #ALUenterprise’s SIP-based, socially engaged solutions.

“HLN” is a great job of packaging and marketing by ALU. At one and the same time, it recognizes that the demand for capacity on public networks – which is being driven by the proliferation of multiple, connected devices – is growing at rates that appear to create scarcity on carrier networks. At the same time, although end-users and their devices are (forgive the term) consuming more bandwidth, they have established a hard ceiling on what they are willing to pay to connect to the resources that provide them with content and conversations. HLN solves the scarcity problem by using IP-communications as a great equalizer that would carry conversations, downloads, “backhaul” in ways that are indifferent to whether it traverses copper, fiber, 2G, 3G, 4G, LTE or femtocell networks.

In a more radical, yet true, vision of the communications landscape, ALU execs observed, “Connectivity is not exclusive to communications or even telecommunications verticals.” In the context of the event, it was ALU’s way of saying that, on a global basis, it will be marketing its infrastructure and the HLN concept to energy companies, transportation providers and government agencies, all of which have their own communications networks to leverage.

Moving up the stack, CEO Verwaayen waxed eloquently about the role of end-users and developers both in driving demand for increased capacity over an HLN and in defining new applications that extend greater power and control to the edge of the network. He said that North America is now leading the way in terms of adoption of new technologies, but that emerging markets in Asia, Latin America and “rural” regions around the world, will be sites for both innovation and growth in demand.

Verwaayen sees the market at a “change point” where smaller firms, new entrants and individuals have larger role to play in defining the future of communications. He made this observation even though Marcus Weldon and his cohort from Bell Labs were allotted about a half hour to describe their vision of “immersive communications”, a concept that melds end-to-end support of augmented reality, behavior analysis, gesture control and a number of other mixed reality technologies to (in their view at least) “bring people closer together” without growing their carbon footprint.

Thus ALU creates a dynamic tension between its locked down font of “innovation” (Bell Labs) and its support of application development by a broad spectrum of small developers and end-users. Verwaayen went so far as to observe that the U.S., and specifically California, is expected to be the hot spot for fostering this change. We certainly hope he’s right. It will make California the epicenter for Recombinant Communications.

Until now, as DuVander explains, application developers could bring Twitter-based content into their user interface through search or by pasting in the stream itself. Think of the new service as a way to include Twitter-based content that can be tailored by a viewer’s interests and keys off the activities of a selected individual or group. Twitter provides some insights and guidelines (including use cases) for the API in this post. It is telling (in a good way) that the first guideline is to declare all information in a “protected” account as “non-public” and therefore out-of-bounds for services that refer to the output of the streamed API.

Of special interest to customer care, social CRM and VRM professionals should be the additional metadata that is included in the API or “feed”. It has the potential to let users know when a Twitterer favorites a site, retweets a message, follows a new twitter or makes changes to a list. As I recently wrote, Programmable Web was purchased by Alcatel-Lucent, which is aggressively working to to integrate (mashup?) the customer interaction management resources of Genesys Labs with the rest of its Enterprise Software Group. With so much attention focused on bringing social media content into the customer care contact center workflow, an easy way to incorporate real-time streams should be much appreciated.

The ProgrammableWeb Website is literally littered with links to application development tools, community resources and (especially) a repository of more than 5,000 mashups which take advantage of more than 2,000 “open APIs” (application programming interfaces) to help glue together content or resources from the likes of IfbyPhone, Twilio, Amazon.com, Google, MapQuest, Constant Contact and WhitePages.com.

ALU provided no figure for the cost of the acquisition. Its management assured the developer community and ProgrammableWeb’s employees that the company would continue to operate as an independent entity for the foreseeable future as its continues to grow its code base and community of developers. This arm’s length strategy served ALU well in the contact center and CTI market where Genesys operated independently for roughly ten years.

This is a timely competitive move for ALU, whose management recognizes the geometric growth in demand for reliable communications infrastructure that “enterprise mashups” is fostering. It represents a quantum leap in the growth of developer resources, as well as the community of developers that use them. It is a force multiplier where community members foster the sort of geometric growth that occurs when the most popular content and services are ingrained into new portals, channels, widgets, gadgets or Web sites. In posts like this, the company’s blog chronicles how community members build services that include Facebook, YouTube, Twitter, Google Maps or Last.FM. At some point this creativity had become contagious.

When the phone ships later this year, its users will be able to shop from an AppStore-like inventory of apps. In the pre-briefing, we were shown a roster of apps that included stock quotes, sports scores, weather and even a Skype client to initiate chat or voice calls from a user’s Skype Contact list. However, the large touch-sensitive screen provides creates a place for multiple vertical applications to be mounted “on the glass.” One of the featured verticals on display (so to speak) addressed the needs of the hospitality industry, where an in-room phone could also serve as the thermostat and control the room temperature, etc.; or as the remote control for the entertainment system (allowing selection of channels, ordering pay-per-view or even electronic checkout services).

A lot of thought had clearly gone into the industrial design. The device had a very slick look about it. The metal base even had extra microphones that could be used to detect and filter out background noise in an office environment.

In advance of the roll-out of the phone, Alcatel-Lucent is making the SDK (software development kit) that the folks in its labs have been using to build the widgets available to members of the Alcatel-Lucent Applications Partner Program (AAPP). The can register here to gain access through the developer portal. The application environment is considered “open” in that it supports Javascript, HTML5 and Ajax, as well as an “open API” published by Alcatel-Lucent for both the phone and other conformant devices. It is a process that is managed by Alcatel-Lucent to assure quality and security and to make sure it runs in conjunction with the new phones and the OmniPCX Enterprise Communications Servers.

The core of the platform is ALU’s “Application Exposure Suite”, which gives developers access to API’s that suppot such things as location services, along with fundamental capabilities such as provisioning, billing, system management and reporting. Newly announced at MWC is a Virtual Sandbox, which has a “try-before-you-buy” feel to it and enables developers to build applications, test them and simulate traffic across a wide range of devices and environments.

In this press release, ALU asserts that it is the first into the market with such a comprehensive approach. It sees it as an important mechanism to support a global community of 14+ million mobile and telecom application developers. There are also hooks into resources that support distribution and billing for a range of new applications. The ability to developer, test and implement new applications quickly is a pre-requisite to the age of Recombinant Communications. Access to well-defined API’s is crucial to the introduction of new communications-enabled business processes (CEBPs) that extend enterprise resources to mobile devices, improve a caller’s experience, or make the lives of road warriors (both sales people and service techs) more efficient. More importantly, it better fits the “smart pipe” strategies that carriers are adopting to stave off the slow decline into pure commoditization.

One customer like Kaplan is all it takes to showcase Genesys’ broad line of software. Deployments span the “core” call routing resource, SIP server, voice processing (Genesys Voice Platform), task distribution (called intelligent Work Distribution, based on the Conseros acquisition) and multiple flavors of knowledge management and analytics. The entire fabric of software “resides behind”, “augments” or simply “extends the life of an installed base of Avaya or Nortel ACDs or PBXs.

That said, from my point of view, the main issue that both Genesys and Alcatel-Lucent addressed at the Analyst Relations meeting (which had the Twitter hashtag #genesysAR) was how the combined company plans to support efforts by third-parties that expect to benefit from development, marketing, sales and channel development by both Genesys and Alcatel-Lucent’s Enterprise Software Group (ESG). Merging the two organizations has been a complex process, under the auspices of ALU Executive VP of Enterprise Products Tom Burns in conjunction en Paul Segre (serving simultaneously as CEO of Genesys and president of Alcatel-Lucent’s Applications Software Group (ASG).

But the other B-I-G deal for ALU revolves around efforts to build a community of partners and application developers to leverage its considerable repertoire of platforms, tools and other resources that promote enhanced network services. As this link demonstrates ALU has invested a considerable amount of money and energy into promoting the emerging architectural and business models that leverage ALU’s intellectual property into “open” environments and APIs. And it tried to drive its point home with this video, which describes how Alcatel intends to support service providers’ (that means telco’s) efforts to support open business models and multivendor environments. The effort has already enlisted participation by tens of thousands of developers and integration partners.

Meanwhile, on the enterprise side, the combined Genesys/Alcatel-Lucent entity need a name for its enterprise-oriented developer network. In the coming months, we expect Alcatel-Lucent, and Genesys, to extend their efforts to support third-party developers and integrators. At the highest levels, it involves HP, Accenture, IBM and the like, but Genesys (with ALU) has an opportunity to expand into the middle markets in order to grow.

Genesys and ALU execs noted that their near term rivals are Avaya and Cisco, with Oracle looming in the future along with global rivals like Huawei. If they are going to compete, they must highlight their efforts to support Recombinant Communications and an active and involved developer community.

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