Alcatel-Lucent Buys ProgrammableWeb for a Mobile-Apps Boost

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When it comes to acquisitions, Alcatel-Lucent (ALU) has a terrible track record. The upshot has been a grueling plunge in shareholder value -- the stock price has gone from $14 to $2.60 over the past three years.

Despite all this, it looks like Alcatel-Lucent's latest acquisition may actually be promising (the price tag was not disclosed). This week the company agreed to purchase ProgrammableWeb, a leading provider of web APIs (application programming interfaces). Essentially, these are software kits that make it possible for programmers to develop apps on platforms like Google (GOOG), Twitter and Foursquare.

ProgrammableWeb's Thriving Developer Community

Founded in 2005, ProgrammableWeb has built a directory of over 2,000 APIs, from 100. But the site is more than just a repository -- it has over 5,000 mash-ups. These are combinations of APIs that result in interesting applications (an example is Wii Seeker, which uses APIs from eBay (EBAY), Amazon (AMZN) and Google that allow users to locate nearby stores that have Wiis for sale).

What's more, ProgrammableWeb has turned into a thriving community of over 20,000 developers. They freely ask questions and share best practices.

No doubt, this is something that's tough to replicate. So, for a company like Alcatel-Lucent, an acquisition is a cost-effective way to get into the space.

Pushing APIs in Telecom


Alcatel-Lucent certainly has the resources to scale the ProgrammableWeb system as well as add new capabilities and even some marketing. One idea is to create a dashboard that makes it easier to manage the myriad APIs (which involve different access keys and updates). This could perhaps even be a premium offering.

Alcatel-Lucent already has its own Open API Service, which is focused on telecom networks. Some of the functions include location-based services and advertising. However, API adoption has been lackluster in the telecom world. But this may be starting to change -- Apple's (AAPL) stunning success with its App Store is a wake-up call.

So it looks like Alcatel-Lucent is on the right track. Its challenges, though, will be the need to keep ProgrammableWeb neutral to preserve the credibility of the community. Also, it may be difficult to get rivals such as Amazon.com and Microsoft (MSFT), who provide many APIs, interested in the site.

But if Alcatel-Lucent can continue to evolve the community -- and not burden it with intrusive cross-selling -- the company may get value out of this deal.
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