Bell Labs going to France ?

by John Quiggin on March 24, 2006

This NYT story reports that Alcatel is negotiating to buy Lucent, the communications equipment maker spun off by AT&T a few years back. It’s not mentioned until the end of the article, and then only in passing, that the deal includes “the research and development unit Bell Laboratories, an intellectual powerhouse”.

That’s putting it mildly, at least in historical terms. Eleven researchers have shared six Nobel Prizes for work done while they were at Bell Labs, among many other awards. As well as the transistor, the photovoltaic cell , the LED, CCD and much more, Bell Labs created both Unix and C. It even had its own economics journal (the Bell Journal, which later became the Rand Journal). It was truly a unique institution.

Of course, all this was cut back drastically with deregulation and the breakup of the old AT&T monopoly, and even more so after the Lucent spinoff. Still, the passing of Bell Labs out of US ownership is worth recording. It remains to be seen whether Alcatel will follow the logic of the market and kill Bell Labs altogether, or make a quixotic attempt at reviving some of the glories of the past.

{ 19 comments }

1

Daniel 03.24.06 at 3:47 am

I suppose that the transfer of a company doing vital American defence research work into French ownership will let us sort out once and for all the relative unacceptability in American public opinion of France and the Arab countries. Perhaps Alcatel could take over those ports companies as well.

2

Ray 03.24.06 at 3:49 am

My impression was that the budget cuts Bell Labs endured under Lucent has already done tremendous damage to the research organization. I don’t know if there’s that much for Alcatel to do, if they feel like downsizing …

3

abb1 03.24.06 at 5:03 am

Les Belle Labs

4

Cian 03.24.06 at 7:09 am

Xerox labs and IBM labs are two other powerhouses of research, that have been similarly downsized.

5

a 03.24.06 at 7:22 am

When this deal came up the last time, a few years back, it was killed because of American government opposition. A merger isn’t done until the fat lady sings – certainly an article in the NYT and merger talks are not enough to begin “recording” the passing of Bell Labs out of American control.

6

The New York City Math Teacher 03.24.06 at 8:32 am

Lucent’s lamentable practice of mark-to-marketing multiyear equipment sales contracts to the cash-flow negative telecoms (as did Nortel, et cetera) burned up a lot of goodwill toward their presumed management of old Bellcore. And now they are limping along, serving wire-line products to a section of the industry grayingly obsolescent.

Another classic example of modern financial management theory cannibalizing functioning intellectual-capital institutions. Comes from training up a class of professional parasites in the techniques of hierarchical rentier bureaucracy, I guess.

7

saurabh 03.24.06 at 8:59 am

Bell Labs died a long time ago; it became impossible when the AT&T monopoly was broken up and the money dried up. Once it split off into Lucent, it cut its work force massively. Their flagship compound in Murray Hill, NJ, where the transistor was invented, used to have something like 15,000+ people working there. Now it’s down to 1,500, and the enormous grounds (which are like a university campus in size) are like a ghost town. Lucent itself has narrowed its scope down to a few key networking-related products. Sad, really. It was the closest thing to an academic research environment the private sector had, and it obviously yielded enormous results.

8

Bob B 03.24.06 at 9:00 am

Btw about Alcatel, for recent news about its corporate performance:

“The French telecommunications (company) posted a Q4 net loss of euro 1,498 million compared with a net income of euro 426 million in the same quarter a year earlier. Group sales for Q4 were euro 6,766 million, down 20 percent over pro-forma sales of euro 8,505 million from Q4 2000. . . ”
http://www.theregister.co.uk/2002/01/31/alcatel_posts_record_loss/

It all rather reminds me of the hilarious unfolding saga of Debit Lyonnais in the mid 1990s:

“Founded in 1863 in Lyon by Henri Germain, Crédit Lyonnais was nationalised in 1945.

“During the 1990s, the bank was the subject of numerous financial scandals, contributing to a huge debt of around 150 billion French francs (nearly 23 billion Euros). This was caused by directors exaggerating investments and by problems with the bank’s subsidiary companies. The bank’s motto of the time was ‘Le pouvoir de dire oui’, or ‘the ability to say yes’, and saying ‘yes’ was indeed something which the bank did rather too often.

“Crédit Lyonnais notably owned the MGM movie studio for a few years, during which time Giancarlo Parretti was the chief of the studio.

“Much of Crédit Lyonnais’ Paris headquarters was destroyed in a major fire on May 5, 1996. The fire began in the main trading room of the bank and was one of the worst fires to damage a Paris building in 25 years. The fire burned for over 12 hours and two-thirds of the building was destroyed, along with crucial bank archives and computer data. . . ”
http://en.wikipedia.org/wiki/Cr%C3%A9dit_Lyonnais

As Edouard Balladur (France’s PM 1993-5) used to say: “What is the market? – It is the law of the jungle. And what is civilisation? It is the struggle against nature.”
http://yoz.com/wired/1.01/features/culture_war.html

9

eudoxis 03.24.06 at 9:00 am

Bell Labs is not only still in the forefront of technology research (listening devises for the NSA!), it is also forms the backbone of critical technology infrastructure in the US. The merger failed 5 years ago because of security issues. Since that time Bell Labs has earned a number of patents in firewall technology, presumably, some of the Bell Labs repository of sensitive industrial information will be behind a firewall.

10

Michael 03.24.06 at 9:16 am

This isn’t very different from what happened to my employer some years before I was hired on.

When GE bought RCA, Jack Welch decided (probably correctly) that he didn’t need two research labs. RCA labs was spun off and given to Stanford University. Sarnoff Corp is a for-profit subsidiary of Stanford’s not-for-profit research group, SRE.

It’s now a for-hire research lab, about 30 miles down the highway from Bell Labs. If Alcatel asks any of us what to do with Bell Labs, maybe they can give it to Stanford…

11

Alex 03.24.06 at 9:38 am

Btw about Alcatel, for recent news about its corporate performance:

For values of “recent” that include 2002.. The infantile frogbashing snarkiness is cranking up faster than I thought possible..

12

Seth Gordon 03.24.06 at 9:56 am

Speaking as a former employee of a company that was bought (and later sold off again) by Lucent, the best days of Bell Labs are far, far behind it.

A co-worker of mine diagnosed the problem as follows: The scientists at Lucent were under pressure to justify their salaries by producing commercially viable work instead of pure research. So each research group would knock together prototypes of one half-assed idea after another, and rely on outside contractors to implement the details. The result was a string of not-very-commercial products (since the researchers didn’t really know how to judge what was commercial and what wasn’t) that weren’t implemented very well (since the people with the real brains weren’t carrying the project through to completion).

13

Matt Austern 03.24.06 at 11:18 am

It’s a little misleading to say that Bell Labs is part of Lucent. It is true that there is an organization called “Bell Labs” inside of Lucent, but names of organizations aren’t the whole story.

The one-line description of what really happened is that the old Bell Labs split into various fragments over the last 25 years, and all of those pieces are now either gone or diminished. The fact that one of the remaining small pieces is called “Bell Labs” doesn’t make it any more special than the others.

The two other fairly large pieces that I can name, FWIW, are Bellcore and AT&T Labs – Research. There were famous people and groups at all three of those organizations.

14

Urinated State of America 03.24.06 at 11:37 am

“It was the closest thing to an academic research environment the private sector had, and it obviously yielded enormous results.”

Not really true – you have RAND, SRI (the old Stanford Research Institute), Batelle, which includes RCA’s former research labs), South-West Research Institute, etc. Admittedly, these are mostly reliant on Federal Gubmit money, but they’re still private-sector pseudo-academic shops.

15

Mo MacArbie 03.24.06 at 11:40 am

My oh my, I had no idea that my old neighborhood liquor store at the corner of Alcatraz and Telegraph had grown so big…

16

cm 03.24.06 at 11:47 am

“to justify their salaries by producing commercially viable work instead of pure research”

AKA by its euphemism “applied research”, but I imagine it was more of the sort “do product R&D or else”.

It’s not exclusively a Bell Labs story. Many corporate research labs or divisions have gone the same way. I know one company where a kind-of research division appears to be “loaning out” its “non-core research” people to product groups.

In related news, over the past decade I believe to have seen an increased trend to outsource R&D closer to product development than basic research to academic institutions. Why hire PhDs and engineers if you can contract students and doctorates, and perhaps even poach the ones that worked on successful projects afterwards?

It may be an issue of diminishing returns on leading-edge R&D. Many of the great inventions probably end up in products of increasing marginality, if at all. (Not because they are fundamentally worthless, but because that’s all the (worldwide) economy can do with them.)

17

Thor Likes Pizza 03.24.06 at 1:53 pm

Corporate America knows that the new version of wealth does not come from creating new and useful things – things you would need research to dream up and make a reality.

Corporate America knows that wealth comes from manipulating public opinion, greasing the skids of government officials and building for the war machine.

While Bell Lab inventions made their way into the military, the war machine does not need that much NEW technology. After all, nuclear weapons are already plentiful and we have effective delivery systems.

So why waste time and $$$ on paying overpriced scientists and their support staff when we don’t have to invent anything to create wealth anyway?

Let’s save our research $$$ for MARKET research and LOBBYSTS.

18

jet 03.24.06 at 5:16 pm

Good riddance to Lucent. Maybe now they’ll stop buying innovative start-ups and running them into the ground. SuX04z

19

jimbo 03.26.06 at 2:16 pm

“t was the closest thing to an academic research environment the private sector had, and it obviously yielded enormous results.”

Enormous results, maybe, but not necessarily for AT&T. Kind of like Xerox Parc – they basically created from scratch entire industries, but the corporation that sponsored them were not equipped to commercialize them. Pure research sucks as a business proposition.

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