Avaya

Avaya as a networking vendor

Avaya has tried to be a networking vendor in the past (Anyone remember Cajun switches? I think you can still buy one in Thailand). The market has not been friendly to it.

And yet, with this week’s news that Avaya won the bidding war for Nortel’s enterprise division, the company is now on its way to being the owner of a significant data networking market share.

According to Gartner’s quick-take on the Avaya-Nortel deal, Avaya has committed to continue Nortel’s data portfolio as its own. I haven’t seen that corroborated anywhere else. In July I asked Todd Abbot, Avaya’s senior vice president of global field ops, about Avaya’s plans for Nortel’s switches and routers. He said the company wasn’t ready to discuss it.

Chances are that Avaya won’t be ready to discuss the future of the data portfolio for awhile, at least until the deal is closed. Then perhaps Avaya will make a go of it as a networking vendor. It’s not out of the question, given how many former Cisco executives the company has on board. But it’s also entirely possible that Avaya will eventually flip the data business to another vendor.

As Garter’s Bob Hafner et al noted in the firm’s quick-take, Avaya has a poor history with data products and Nortel’s product line needs some updating and rationalization (Although Nortel would disagree with that assessment). Gartner worries that Avaya “may not be able to spare resources for this task while it focuses on integrating and supporting the combined [Nortel-Avaya] voice portfolios.”

So Avaya’s Nortel agenda looks like this:

• Retain an extremely rattled voice customer base.
• Make amends with a very unhappy channel community.
• Integrate two huge voice and unified communications product portfolios.
• Figure out what to do with the data networking business.

Gartner is right. The first three bullets in this list look like tall tasks. The last one might sit in the to-do file on CEO Kevin Kennedy’s desk for awhile.

IBM exec leaves to head Avaya’s Nortel integration?

IBM veteran exec Mohamad Ali will leave IBM after more than 13 years and join Avaya as a senior vice president of corporate development, focusing on M&As, he told his contacts in a personal email over the weekend.

Ali’s transition to Avaya is especially noteworthy now that Avaya intends to acquire Nortel’s enterprise business.

Ali said he will lead Avaya’s M&A activity as the company angles to gain market share on Cisco in the enterprise communications market, according to Xconomy, a Massachusetts business and technology journal that interviewed him over the weekend. Avaya, Nortel and Cisco have long battled for the top three spots in the Voice over IP market, with Nortel holding ground even amid its bankruptcy proceedings.

There appears to be a clear alignment between Ali’s new role at Avaya and Nortel’s current customer base. Ali said in his email that Avaya offers “an opportunity to participate in and shape a whole new era of intelligent communications for healthcare, financial services, government and other services.” Nortel counts numerous government and healthcare agencies among its largest customers.

Ali led IBM’s worldwide M&A activities and was behind IBM’s 2007 acquisition of Cognos. He also said in his email that he has joined the board of Ember Corp. a Boston-based ZigBee wireless technology company that enables smart meters and building systems for energy efficiency.

Ali did not respond to emails regarding his new role at Avaya.

Avaya buys Nortel’s enterprise business

After months of rumors, Avaya has finally struck a deal to buy Nortel Enterprise Solutions, the bankrupt Canadian company’s enterprise division whose assets include its voice and unified communications portfolio and its Ethernet enterprise networking business. Avaya has agreed to pay $475 million for the division. It had been rumored to be offering $500 million. Siemens/Enterasys was another rumored bidder for the business.

Nortel, despite the bad press surrounding its financial collapse, remains one of the leading global vendors of enterprise networking equipment. It has a significant install base and access to those customers is appealing to other network equipment vendors. Avaya, however, is a leading vendor of enterprise voice and unified communications with no history of being in the enterprise networking business. It remains to be seen what Avaya will do with Nortel’s networking business. I hope to get someone from the Avaya on the phone today.