Avaya was one of the biggest winners in the 2009 fire sale that was Nortel Networks.
The communications technology vendor bought Nortel’s enterprise business, which includes Nortel’s UC (unified communications) products. Avaya on Dec. 18 completed the acquisition, which analysts at the time of the deal’s announcement in September said put Avaya up at the top of the enterprise telephony field with rival Cisco Systems.
Since announcing the $915 million deal, Avaya officials have been relatively quiet about what they will do with the Nortel products they bought. The company has brought on about 6,000 Nortel employees, with Avaya CEO Kevin Kennedy telling Bloomberg in December that the Nortel business had “held up better than we comprehended” after Avaya announced the deal. The ex-Nortel salespeople will help Avaya gain business in sectors such as government, and also in emerging markets such as Asia, Kennedy told the news organization.
Avaya officials are now ready to take the wraps off their integrated road map. The company is scheduled to unveil its plans Jan. 19.
This will be an important day for Nortel’s former customers, according to David Passmore, an analyst with Gartner’s Burton Group.
“What Avaya does will tell customers a lot about the future of their Nortel equipment,” Passmore said. “It’s not entirely clear just yet.”
Avaya officials have indicated the company will support the Nortel products for 12 to 18 months, but haven’t said much beyond that. The company’s road map will answer a key question about Avaya’s strategic intent for the acquisition, Passmore said.
The deal obviously strengthens Avaya’s UC and VOIP (voice over IP) offerings, he said, but by buying Nortel’s Enterprise Solutions business, Avaya also got Nortel’s enterprise switches and routers.
What will be interesting to see is whether Avaya wants to keep its focus on its strong UC and VOIP businesses, or expand its reach in switches and routers, Passmore said. Switches and routers is a strong market, but it’s highly commoditized with low margins, and it’s one that Avaya has been in before. It’s unclear whether Avaya officials will want to get back into it.
“Except for Cisco, which is the 800-pound gorilla in the room, there’s not much to distinguish one [switch and router] vendor from another,” Passmore said.
Avaya’s purchase of Nortel’s enterprise business may come down to Avaya’s desire to expand its customer base, rather than grow into other markets.
Avaya officials also will talk about the integrated Avaya-Nortel road map at the Internet Telephony Conference & Expo East show held Jan. 20 to 22 at the Miami Beach Convention Center in Florida. The road map will be part of a panel discussion at the show, according to Avaya.
Nortel officials announced in January 2009 that the company was filing for bankruptcy protection, saying the global recession had derailed plans to make the company healthy again. Initially the plan was to use the bankruptcy protection to restructure, although the tack quickly changed to selling off the company piecemeal. Officials said it was the best way to protect the company’s technologies and employees.
“Maximizing the value of our businesses in the face of a consolidating global market has been our most critical priority,” then-Nortel President and CEO Mike Zafirovski said in 2009. “We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible.”
Nortel over 2009 also sold off a number of other businesses, including its CDMA (Code Division Multiple Access) wireless group, LTE (Long Term Evolution) technology and wireless technology business.
