Avaya Bids $475 Million for Nortel Enterprise Business - Page 2

Avaya officials said the deal needs to go through a competitive bidding process and needs approval from the U.S. Bankruptcy Court in Delaware and the Ontario Superior Court of Justice. They expect the process to take several weeks.

The Bankruptcy Court approved Nortel's deal with Nokia Siemens in early July.

However, challenges to Nortel's plans to sell off its businesses are appearing. MatlinPatterson Global Advisors, a Nortel creditor, reportedly has talked with Nortel officials about buying the entire company, or at least developing a plan to restructure the company rather than selling off its assets. MatlinPatterson reportedly has until July 21 to submit a plan with the Bankruptcy Court.

Either way, though, Yankee Group's Kerravala said there needs to be consolidation in the business communications space. Over the past 20 years, the voice industry has grown from a handful of companies, such as Lucent, Nortel and Siemens, to including Cisco, 3Com, ShoreTel and now-with the advent of voice software-Microsoft, IBM, Citrix and possibly Google, Kerravala said in a July 20 blog post.

"Through these past few transitions we've doubled the number of suppliers of voice services but there isn't double the number of business end users," he wrote. "Couple this with wider adoption of mobile phones and its clear the market needs to rationalize down."

Kerravala also noted that Avaya would have to play the part of diplomat should it acquire Nortel's enterprise business.

"From a product perspective, the combined organization is going to have to go through some consolidation of products on the voice side and decide what to do with data portfolio," he wrote in the blog. "Should it choose to keep the data portfolio, Avaya would now have an end-to-end voice and data solution-a systems approach, similar to what the Avaya leadership had when they worked at Cisco. This will cause some tension between Avaya and some of its alliance partners, such as Brocade, Extreme and [Hewlett-Packard], so the company will need to navigate that carefully."