In the short term, no one expects Microsoft Office Communications Server to displace enterprise PBXs, but that's certainly Microsoft's long-term goal, and so the traditional players have to find a way to play alongside OCS while also providing value that Microsoft can't match.
One area where Avaya has been placing a lot of emphasis recently is the contact center, where they have a strong product and market leadership position. They've also been positioning themselves as a middleware provider, offering software products that enable communications-enabled business processes (CEBP), which is the technology that integrates communications capabilities with business process applications. Avaya also recently announced its Intelligent Presence Server, which attempts to link or federate disparate presence engines. It's widely believed in the industry that the presence capability will supplant the PBX as the core of the next-generation communications system driving Unified Communications.
D'Ambrosio's departure will be keenly felt, as he was widely respected in the industry and had a lively, upbeat style that was a breath of fresh air for a company whose roots were as part of the Bell System. However, in Giancarlo, Avaya has probably the best available replacement for D'Ambrosio, even if it indeed turns out to be only an interim assignment. Giancarlo was widely understood to be the presumptive successor to John Chambers as Cisco's CEO, until it became clear that Chambers wasn't leaving any time soon.