TMCnet - World's Largest Communications and Technology Community



Competitors: We're Not Worried about Avaya Winning Nortel

TMCnews Featured Article

September 14, 2009

Competitors: We're Not Worried about Avaya Winning Nortel

By Brendan B. Read, Senior Contributing Editor

Call it bravado. But also call it a hard-nosed assessment of the enterprise communications space and what is happening with Nortel’s (News - Alert) presence.

At least two competitors, who have long been on the leading edge in telephony and contact center solutions, Interactive Intelligence and ShoreTel, don’t appear to be worried about an Avaya (News - Alert)-Nortel combination in the enterprise space.
Quite the opposite. They appear to see that the sale as creating opportunities for them to gain new business from Nortel customers whose installations are nearing end of life or need upgrading or from prospects who would have bought Nortel. They also see less threat from Siemens (News - Alert) Enterprise Communications, which had reported lost out to Avaya; if it had won Nortel it would greatly strengthened its position in the North American market.
And while Avaya is engaged in sorting out the acquisition they can focus on developing, enhancing, and marketing products and reaching out to serving customers directly and indirectly. That includes luring Nortel clientele and channel partners.
“The Nortel base isn’t going to buy from Avaya just because Avaya holds the maintenance agreement,” said Joe Staples, Senior Vice President, Worldwide Marketing, Interactive Intelligence (News - Alert). “The market opportunity is there for the best product and company to win a significant share as that Nortel installed base continues to turn over in the next 36 months.”
Bernard Gutnick, ShoreTel’s (News - Alert) senior director, product marketing, told TMCnet that the sale of the Nortel unit to Avaya is the best thing that could ever happen to his company.
“We’ve had huge numbers of Nortel resellers and customers switch over to us ever since Nortel announced that they were in financial trouble a year ago and we think will continue,” Gutnick said. “It also means that Siemens will deteriorate, causing it to lose customers to us as well.”
ShoreTel’s Gutnick, a former Nortel engineer, doesn’t think Avaya can continue to support let alone develop Nortel’s product lines for long, especially given the $915 million purchase price: nearly double the $475 million stalking horse bid. Avaya, he has heard, is heavy in debt. He also says there is no synergy between Avaya’s and Nortel’s platforms.

While no one is going to immediately unplug Nortel because the enterprise unit has been bought by Avaya they will have to plan their migration from Nortel, he points out. And if customers, and resellers, had chosen Nortel over Avaya they’re not about to go Avaya now that it has acquired the Nortel division.

He gives Avaya six to nine months before it starts to consolidate product lines, dumb down Nortel endpoints, offer financial incentives to encourage switchover to Avaya solutions, and close offices and lay off staff.

“Avaya is promising that it will continue to support Nortel’s products but it just can’t do it in the long-haul,” Gutnick said. “Nortel has had hundreds of patches to CS 1000s for various reasons, which means the products will need more support, not less. Yet Nortel has already let go thousands of employees, resulting in domain knowledge disappeared from company. How on earth are you going to sustain same level of product integrity? Especially when there is no commonality between Avaya’s and Nortel’s solutions?”
There could be less than meets the eye with the sale, which can only help the competition. While Nortel’s enterprise division recorded $2.4 billion in revenues in 2008, the Ottawa (Ontario, Canada) Citizen reported Sept.13 that it generated only $860 million in business in the first six months of 2009, down 34 per cent from a year earlier. It lost $209 million compared to an operating profit of $168 million a year earlier.
Interactive Intelligence’s Staples reports that Nortel’s product line was aging. There is not a lot of new functionality in their contact center products during the last few years, he says. Avaya didn’t get a ‘leading edge’ product line as part of this purchase.
“This is a business losing money,” Staples said. “Avaya will have to go into cost cutting mode immediately. That isn’t a formula that bodes well for the Nortel customer base looking for new functionality.”
Down the road ShoreTel’s Gutnick expects to see other TDM fade away, replaced by IP-from-the-ground up companies like ShoreTel that lack the old technology and the need to support and integrate it into the new generation solutions.

“The Nortel bankruptcy is just the first of the legacy players to disappear, just like Tandem, and DEC and Silicon Graphics in computing,” says Gutnick. “Nortel died in the enterprise space because it didn’t move quickly enough to new technologies like IP.”

The fate of the Avaya acquisition will ultimately rests in Nortel’s customers. If they can be convinced to migrate to Avaya the deal succeeds; it they can’t it flops.
“If you are an existing Nortel customer: at least you now know your fate, or part of it; you still have to wait until December to hear the Avaya integration story,” Staples said. “The thing most people underestimate about you is that you, as an account, are not ‘owned’ by Avaya. Nobody ‘owns’ you. You’ll make your future planning and buying decisions based on what technology and relationships will be best for your business, not because of who-bought-who.”

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Michael Dinan

Technology Marketing Corporation

35 Nutmeg Drive Suite 340, Trumbull, Connecticut 06611 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments:
Comments about this site:


© 2018 Technology Marketing Corporation. All rights reserved | Privacy Policy