VoiceCon 2009: Measuring Avaya Nortel Deal's Impact

Avaya's planned acquisition of Nortel raises many questions for businesses with existing Nortel equipment.

Marin Perez

November 3, 2009

3 Min Read
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During a panel discussion Tuesday at VoiceCon San Francisco 2009, industry experts said Nortel Networks' collapse and potential acquisition by Avaya definitely raises many questions for enterprises, but businesses can maneuver through the ripple effects by not panicking and doing their due diligence.

Avaya said it expects the $900 million acquisition bid to close by the end of the year, although some experts said that timeline may be optimistic due to regulatory hurdles. The deal will definitely have impacts throughout the industry, as it would make Avaya the largest enterprise communications equipment vendor in the world, and it would have an especially large market share in North America.

Zeus Kerravala, senior VP at the Yankee Group, said he expects the deal to close by the second quarter of 2010, and the move could be good for the industry as a whole.

"Too many suppliers and not enough buyers leads to unhealthy suppliers that can't compete on a global basis," said Kerravala.

Kerravala said the deal has the potential to create a large company that merges the engineering expertise and channel-friendly nature of Nortel with Avaya's size and distribution channels. Avaya-Nortel would create a formidable foe for Cisco, which could lead to competitive pricing and services for businesses.

David Stein, principal director of operation with PlanNet Consulting, said the Nortel deal should not greatly impact businesses handling day-to-day issues like wiring up a new office, but those companies looking to make major strategic network shifts may be better off waiting until the deal closes and there's a thorough product roadmap. Avaya has already said it will sell certain Nortel product lines for the next 12 to 18 months, and the panelists agreed that it will have to offer some sort of evolutionary path to its voice and unified communications products.

All of the panelists agreed that this is the time to be carefully assessing what's out there, taking a strong look at layering technology, and pushing their Avaya representatives for as much information as possible post-merger. Companies should also examine their comfort level with third-party solutions to network management.

Of course, these types of large mergers often hit bumps in the road, and many acquisitions do not achieve the stated business goals. Even though Avaya and Nortel are both based in North America, there may be some company culture issues, and some Nortel product lines will definitely go away, the panelists said. Kerravala said Nortel data portfolio customers should start looking for alternative vendors because Avaya likely doesn't have strong interest in this market.

Enterprises are looking at an inflection point that is fundamentally changing what communications means to businesses, said Phil Edholm, chief strategy office at Nortel. Because the deal has not closed, Edholm could not elaborate on the specific strategy of the upcoming Avaya-Nortel, but he said both companies are moving toward a path that goes beyond just putting a phone on every desk, or adding new features to a PBX. The companies are looking to integrate applications, utilize a wide variety of devices, and centralize resource management in order to enhance the functionality of a company's communication network in and outside of the business facility.

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