Avaya Wraps Up Nortel Enterprise for the Holidays

| Dec 22, 2009 | Enterprise Communications | Competitive Update

| Analyst: Rob Arnold

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Positive

Event Summary

December 18, 2009 - Avaya announced the successful completion of its acquisition of Nortel Enterprise Solutions (NES), further enhancing Avaya’s strategic position in providing business communications solutions and services for enterprise customers around the globe. Approximately 6,000 NES employees have joined Avaya, including 25 top managers. Joel Hackney, previously president, Nortel Enterprise Solutions, joins the Avaya Executive Committee as senior vice president and president, Avaya Government Solutions and Data. The company expects to provide information about the new combined product portfolio and roadmap within the next 30 days.

Analytical Summary

• Current Perspective: Positive on Avaya’s announcement that it has completed its acquisition of Nortel Enterprise Solutions, because while there are still many details to be hashed out with respect to future product development and support, it will bring some resolution to the many Nortel partners and customers that had been in limbo since Nortel announced plans to sell off its enterprise business nearly a year ago.

• Vendor Importance: Very high to Avaya, because now that its acquisition of Nortel Enterprise Solutions has closed the company is freed of regulatory restrictions that prohibited Avaya from publicly detailing its strategic plans for the acquired technology, personnel, customers and channel assets. Avaya can now move forward with the process of integrating these assets with its own, and to leverage these greater resources to accelerate its previously established channel transformation, R&D innovations and growth initiatives. Similarly, any risks associated with these endeavors—whether in terms of product development focus or in terms of customer confidence—will now begin to take shape.

• Market Impact: High on the business technology and software landscape, because with its acquisition of Nortel Enterprise Solutions, Avaya has inarguably solidified its place as a top-two competitor in the enterprise telephony, contact center and voice messaging markets. This reinforces the company’s resources to become a more formidable foe and sought after partner in not only these sectors, but also in adjacent business segments for competitors to contend against.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Competitors should continue to instill fear, uncertainty and doubt about the viability of Nortel product lines. Even after Avaya announces its product roadmap, competitors should continue to employ aggressive customer and partner recruitment strategies because it is likely to be the better part of a year before Avaya is able to truly unify and move its portfolio forward.

• Alcatel-Lucent and Cisco can contend that Avaya’s combined portfolio will lack the tight integration of voice and data components that solutions developed side-by-side from a single vendor can provide.

• Avaya rivals should be aware that Avaya is planning to leverage existing relationships that Nortel Enterprise Solutions had with telcos and systems integrators as a means to accelerate its transition to more of a channel-centric go-to-market strategy. Competing vendors are advised to tighten bonds with their service provider and SI partners, in effort to maintain their current standing within these channels as well as to provide these partners with alternatives to Avaya.

• Competitors will need to recognize that while the combined Avaya-Nortel Enterprise entity will still have its greatest strength in the U.S., it also fortifies Avaya’s resources in other regions where it already had a presence, such as CALA where both companies are well established and in Canada, the Middle East and Asia Pacific where Nortel maintained a foothold.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Enterprise Communications

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