What Nortel Acquisition Means for Avaya

by Sonal Desai    Jul 22, 2009

Yesterday, Nortel publicly admitted that it received a $475 million bid from Avaya for its enterprise solutions business. If the bid goes through, for Avaya the acquisition helps them to offer not just enterprise telephony solutions, but also telephony network solutions.



Till recently, switches and network elements were third-party offerings and in large orders Avaya could not have offered better price points. With its acquisition of Nortel enterprise group and government group, Avaya could compete more aggressively in the European and NA market.



However, as anticipated, its position in the unified communication (UC) market does not change much as Nortel, embroiled in its financial hurdles, had not been addressing the opportunity. But by acquiring Nortel, it can surely add more teeth in offering enterprise telephony solutions, said T.R. Madan Mohan, managing partner at Browne and Mohan.



But Cisco would find itself bracing two strong brands (one from hardware and other from the software front). Customers would be happy to the challenge in sectors like BPO, BFSI, telecom and government. Avaya would surely gain market share from sectors like IT, BFSI (darlings of Nortel switches), telecom and would grow revenues from enterprise solutions in government.



The two companies will have to check for product overlaps, specially in areas of the TDM, contact centre and IP-sec. It will be interesting to see how Avaya would relay its IP-line of communication equipment and UC offerings to integrate hardware/software better.



Plus Avaya will also need to stall the advances of Juniper, Cisco and others who have been trying to cash on the likely exit of Nortel, and ensure that the deal is quickly concluded. It will next have to check on how quickly it can convert conventional and hybrid customers to IP network.



Comparing Nortel with prior acquisitions of Avaya, those have been in contact centre (Agile), peer-to-peer IP (Nimcat) or Networking (Router-science). They were all strings complementing its IP or contact centre capabilities. What makes Nortel acquisition significant is Avaya gains considerable market share and loyal customer base in high-spending sectors like telecom and BFSI.