Avaya

Nortel Auction: Siemens was edged out by a $15 million nose

Toronto’s The Globe and Mail newspaper reported today that Siemens Enterprise Communications fell just $15 million short of beating out Avaya for Nortel’s enteprise division.

What the paper calls Siemens is probably more accurately described as a joint venture between private equity firm Gores Group and Siemens AG, who together own Siemens Enterprise Communications. Gores Group owns the controlling interest. Those two firms were reportedly working together to bid on the Nortel enterprise division.

If Gores and Siemens won,  the plan was to create a new company that combined Siemens’ market presence in Europe with Nortel’s presence in North America into a company that remained headquartered in Canada and offered a strong alternative to Avaya and Cisco, so says The Globe and Mail. In backroom negotiations with Nortel and the Canadian government that kicked off a year ago, before Nortel’s bankruptcy, Siemens had said that it would relocate its own headquarters from Munich to Toronto as part of the merger. Once the bankruptcy auction got underway, Siemens remained at the table.

But ultimately Siemens fell $15 million short of Avaya’s $900 million bid this week. Also, while Avaya’s offer was all cash, Siemens’ offer included $700 million in cash cash with an IOU for the rest. Apparently Siemens was trying to work out a loan from the Canadian government to help pay for the Nortel merger. The government backed away from those loan talks when Canada’s other major tech firm, Blackberry-maker Research In Motion, started grumbling about the prospect of Nortel selling off all of its various divisions to foreign companies, The Globe and Mail reported.

This has to be disappointing news to Canadian technophiles who have always had justifiable pride in Nortel’s status as the nation’s top tech firm. Now, the Globe and Mail reports, Avaya will ship all top executive jobs of Nortel’s enterprise division south of the border, probably to… gasp… New Jersey. And the paper says Avaya will probably cut 25% of Nortel’s workforce, including layoffs of 400 of 1,000 employees at plants in Ontario.

All the right moves with unified communications

What is unified communications? Never mind, don’t answer that.

Sometimes when I”m talking to vendors, I sense that unified communications is whatever they can convince you to buy. “Here, install our IP PBX and you’ll be on the cutting edge of unified communications?”

Oh really? How about a presence engine? How about a desktop client that combines voice, video, messaging and everything else that I need to stay in touch with the members of my team who are scattered all over the country?”

Yesterday I was talking to Shane Yu, the head of Avaya’s unified communications consulting practice and one thing he said really stuck with me. A lot of IT organizations treat a UC initiative as a science project. They just buy a piece of it and put some users on it and see what happens. If that’s your approach, how do you measure success? Gee, people like it. It works. That will make you popular among the cubicles, but executives won’t be impressed when you bring that message into their offices. They want to know why the company needs to change the way it communicates.

This conversation dovetailed nicely with my plans for a new series that I’m writing for SearchUnifiedCommunications.com.  I’m calling the it simply “Success with Unified Communications.” Not particularly catchy, but it’s to the point. Each story in this series will look at a key step in a unified communications deployment and explore how to execute it. I’m going to look at everything, from vendor selection to design & build. I’ll explore how to assemble the right team to run your UC project and what management software you should have in place to deliver good quality of service and experience. I’ll also explore what you need to do in order to stay ahead of the curve and to make sure your UC deployment ages gracefully.

Part One of this series hit the wire today: The Technology Needs Assessment. I hope you find it helpful.

Avaya buys Nortel’s enterprise assets, bringing UC leader into network world

Avaya’s acquisition of Nortel’s enterprise assets doesn’t come as a huge surprise, as Shamus McGillicuddy noted weeks ago when acquisition rumors swirled. Even the price was pretty spot on: Rumored $500 million, actual sale price $475 million. But now that the sale is official, Avaya’s the proud owner of a huge enterprise unified communications customer base that will be looking for answers on if and when a migration strategy will appear.

They also inherited a large networking business outside of Avaya’s core focus, as Shamus notes on the Network Hub blog, but I’m sure they’ll find something to do with that.

The full text of Avaya’s press release after the jump.

Further Reading:

• Nortel auction: Avaya or Siemens-Enterasys will bid for UC business
• Nortel enterprise business set to go to Avaya for $500 million?
• Nortel voice customers are the vendor’s only enterprise asset

Continued »

Nortel enterprise business set to go to Avaya for $500 million?

According to the Canadian newspaper The Globe and Mail, Nortel is close to selling its enterprise unit for $500 million. The paper says Avaya is the leading bidder, but Siemens-Enterasys could emerge as the buyer if Avaya backs out. Both bidders are interested in Nortel’s enterprise customers more than its technology.

If Avaya seals the deal, it will suddenly find itself in the data networking market with Nortel’s line of enterprise routers and switches. It’s unclear whether it would hold onto those assets or try to spin them off to a third party. Depending on who you talk to, Nortel owns about 3% to 4% of the network switching market. If Siemens-Enterasys emerges as the winner, it will have find itself with some redundant product lines which will require some rationalization.

It looks like Nortel will purge some of its lower level executives before handing over the division to a buyer. www.ITbusiness.ca is reporting that Nortel laid off the senior UK staff who were leading Nortel’s unified communications partnership with Microsoft, known as the Innovative Communications Alliance. The partnership was formed in 2006 and expires next year. It’s been on shaky ground since Nortel entered bankruptcy.

Nortel auction: Avaya or Siemens-Enterasys will bid for UC business

Nortel is breaking apart.

The former crown jewel of Canada’s high-tech industry revealed today that it will sell off its CDMA and LTE wireless telecom infrastructure division to Nokia Siemens Networks (NSN) for $650 million. Nortel also revealed that it will sell of the rest of its assets. According to reports, the CDMA division generates $700 million in annual revenue, which means means that NSN will make back its money inside of a year. NSN has also established a low bar for the sale of all of Nortel’s other business units.

A sale of Nortel’s enterprise telephony and unified communications businesses is will probably follow soon. A couple months ago at VoiceCon Orlando, there was plenty of buzz circulating that Avaya and Siemens-Enterasys were both looking to acquire Nortel’s UC business. Neither of them, according to rumors, are interested in technology. Instead, they want the customer base.

A company that’s only looking for access to installed customers might not be willing to pay much for Nortel’s UC division. However, NSN’s $650 million deal with Nortel is so shockingly low that it has certainly driven down Nortel’s asking price for its UC business. The only question now is whether the price has been pushed low enough for Avaya or Siemens to pull the trigger. If that happens, Nortel customers will find themselves with two choices: They can accept whatever incentives the winning bidder offers Nortel customers to buy into their own products, or they can start looking elsewhere.

Retired Nortel executives look to buy company out of bankruptcy

Reports out of Canada say that a team of former Nortel executives hope to raise money in order to buy the company out of bankruptcy and keep it more or less intact and under Canadian ownership.  Former Nortel president Robert Ferchat, 74, leads a group that also includes former chief marketing officer Ian Craig and retired Nortel vice-president David Mann. It might be more accurate to call Ferchat the former president of Northern Telephone, since that was what Nortel was called back in 1991 when Ferchat last worked there.

Ferchat told the Ottawa Citizen that his group hopes to raise at least $1 billion US from investment banks in order to buy Nortel through the bankruptcy courts.

Meanwhile, Nortel’s current executives are still trying to sell off the company’s top business units. But Nortel CEO Mike Zafirovski’s efforts have been undermined because no one is willing to pay very much for them.  For instance, Nortel sold its application delivery buisness to Radware in February for just pennies on the dollar. Nortel originally acquired that business when it bought Alteon for about $6 billion in 2000. Radware paid just $17.5 million to take the Alteon business off Nortel’s hands.

I’ve heard rumors that Avaya and especially Enterasys-Siemens  are interested in buying Nortel’s enterprise communications business, but they are more interested in gaining access to Nortel’s customers than actually owning Nortel’s technology. How much are they willing to pay when they can simply try poaching nervous customers (and partners)?

VoiceCon 2009: Building success through innovation

The impact of today’s global economic crisis has wrenched companies into shaping new business models merely to survive, much less thrive. But top-tier UC vendors at the recent spring VoiceCon 2009 show in Orlando are interpreting the recession (or depression) as a unique opportunity to change the old ways of doing things. The dawn of a new day. A time to rely on and trust in innovation to carry us through these dark days.

Tough times coupled with perpetual, driving need is the catalyst that has historically sparked prodigious ideas. And, as in the past, the tumultuous times we’re now experiencing paired with our insatiable thirst for new technology will be the impetus to finding more efficient ways to do what, in otherwise good times, would keep us trekking down the same path, doing things the same way. The way to survive, more over, come out ahead of the competition, is to innovate now.

In every VoiceCon keynote presentation, a single theme threaded its way through — innovation. Kevin Kennedy, president and CEO of Avaya, kicked off the keynote sessions stressing the critical importance of innovation. According to Kennedy, innovation will help us navigate these uncertain times and emerge from these times of turmoil.

Gurdeep Singh Pall, corporate VP of unified communications with Microsoft, said in his keynote address that it’s the choices companies make now that will determine their viability when we’ve moved beyond the current recession.

General manager of IBM, Bob Picciano, stated simply, “We can’t afford to do things the way we did before.”

Cisco’s CTO, Padmasree Warrior, went further to say that ideas get stronger when we share them with others and social networks and collaboration are powerful in making connections stronger.

All of the keynote speakers offered sensible, reasonable reasons why companies should invest now in collaborative innovation in some capacity (irrespective of their financial status). Each presented their thoughts on the best ways in which to do so – respective to their agendas, of course.

Whether you innovate through social networking software, collaboration tools, UC technologies, CEBP, otherwise, or all of the above and more, a thoughtful strategy is imperative. Gurdeep Singh Pall rightly said that hope is not a strategy. If you want to keep your company afloat now and gain a healthy degree of competitive dominance in the future, in a sunnier financial climate, heed Pall’s simple, but wise, advice:

• Focus on innovation
• Shift away from old models
• Lay down the foundation for the future

VoiceCon keynote: Kraft Foods UC vision includes Avaya and the iPhone

Kraft Foods sounds like a fun place to work. During his keynote, Tom Behnke, manager of network services, global architecture and strategy for Kraft, gave VoiceCon attendees a glimpse of the future for information workers at his company. He offered details of a unified communications pilot program at Kraft’s Chicago facility.

Behnke’s pilot involves a rethinking of not only communications and collaboration technologies, but also the workspace. Kraft wants to change the collaboration culture among its employees. To do that, it did away with traditional cubicles and office, putting information workers at large work table, where they can sit side by side and face each other.

As far as technology, Behnke brought in Avaya to deliver its voice infrastructure. He also decided to go with a wireless office, so employees could move freely throughout their workspace, building a Cisco wireless LAN infrastructure that was designed by HP/EDS. And he engaged AT&T to come in and build an in-building cellular system so that he could deploy iPhones to every employee.

Behke said his goal was to change the user perception that he was providing them with technology widgets that they had to use. He was trying to create something that would focus on the individual user experience, that would help them the way they do there jobs.

One thing that really jumped out at me. He designed this new environment to be free of MAC addresses. If a user needs to move his work station, he can just get up and walk somewhere else. IT doesn’t need to reassign the employee’s phone and network profile to a new set of ports.

I’ve asked Avaya to give me a one-on-one conversation with Behnke is doing at Kraft. If they come through, I’ll write more extensively about this project for www.SearchUnifiedCommunications.com.

VoiceCon Avaya keynote: SIP has come of age

Avaya’s CEO Kevin Kennedy delivered the first keynote at this year’s VoiceCon Orlando, and he took the opportunity to introduce Avaya Aura, a new SIP-based session manager that ties together all of the company’s other technologies, including its IP PBX, its presence server, its messaging server, etc. Avaya also claims it will tie other vendor’s technology into a single system.

Kennedy says SIP has come of age. Clearly Avaya is placing its faith in SIP’s ability to take unified communications to the next level by allowing enterprise networks to focus on sessions rather than packets and giving users access to applications regardless of what network their on.

Kennedy and fellow Avaya executive Brett Shockley demonstrated a lab Facebook application, built on Aura, that would allow enterprise contact center to have video conferencing sessions directly with customers through Facebook. The customer service rep could see the customer’s Facebook page, have context for what the customer is interested in, and conduct a transaction through Facebook. This was pretty cool. I saw a lot of positive buzz on Twitter during the keynote. I’ll write more in depth on Aura later in the show on SearchUnifiedCommunications.com.

Avaya starts layoffs

This week I’ve been hearing rumors that Avaya has laid off a bunch of employees this month. Avaya went private back in 2007, so I doubt they’ll release any specific information on the extent of the layoffs and where they are occurring. But I did reach out to their PR folks to ask them what was going on.

Lynn Newman, Avaya’s director of corporate communications sent me this statement.

In December, we told our employees we’d be reducing the size of our workforce in response to the global economic slowdown.  The notifications about reductions are happening in different regions at different times.

Avaya’s situation isn’t unique. Plenty of companies that play in the UC market are having layoffs, just like any other industry. Microsoft and Cisco both laid people off a few months ago. No one is immune, sadly.