The merger of Alcatel and Lucent Technologies, creating the world’s largest telecom equipment maker, will dwarf competing vendors, likely pressuring them to form their own corporate combinations soon. But it may also create some opportunities for rival equipment vendors that play their cards right, analysts say.

Equipment vendors will be working hard to gain market share in the coming months, hoping that the distractions inherent in a massive corporate merger will cause slowdowns in Lucent’s and Alcatel’s operations.

The wealth of overlap in the product portfolios of the two vendors--including switching, access, optical and voice-over-IP gear--could make integration difficult, Merrill Lynch analyst Tai Liani wrote in a research note this morning. “[The merged entity] would not be able to go cold on existing customers. [It] would have to first grow the [research and development] and develop a hybrid solution and management software that will be interoperable with both systems. Only then redundancies could be eliminated.”

The elimination of those redundancies might create opportunities for some competing vendors, according to Susquehanna Financial Group analyst Joe Chiasson. For example, considering Alcatel’s success in the DSL equipment market, the merged company may opt to shelf Lucent’s line of Stinger DSLAMs. If that happened, it might allow other access vendors such as Adtran a better shot at Sprint and other second-tier carriers in North America that have deployed Stingers.

In addition, as Lucent has not had much success with its LambdaXtreme optical platform outside Verizon Communications, the merged entity might discontinue the product, leaving room for rival optical vendors such as Ciena to get a foot in the door there. Still, Lucent’s well established relationship with Verizon, one of the vendor’s most coveted assets, won’t make it easy for competitors to move in.

Until they consolidate, competing vendors will have to be more innovative and nimble than ever to outmaneuver the new 800-pound gorilla in the space.

“Increased pressure should emerge on [equipment vendors] to out-hustle and better engineer product to differentiate themselves from bigger vendors,” Lehman Brothers analyst Marcus Kupferschmidt wrote in a research note this morning.

The merger no doubt creates new challenges for nearly every vendor in the industry. But the wave of vendor consolidation catalyzed in large part by the Alcatel/Lucent merger will aid the sector as well. “Consolidation is inevitable and is a blessed trend of the wireline industry segment, which has been structurally challenged since the boom/bust cycle of 1998-2003,” Liani wrote.