Avaya and Nortel: What happens to the Nortel End Users?
There has been a huge volume of correspondence about the potential acquisition of Nortel’s enterprise business by Avaya for $475M, and much speculation around why the deal is priced so low, how easily can the two distinct cultures be assimilated and if this isn’t just a case of two sinking ships lashing themselves together to stay afloat as they both lose market share. Below is an excerpt from a financial analyst.
Barclays Capital Comm Equipment Research
“Valuation Appears Modest
A $475M price represents around 0.2x-0.3x calendar 2010 sales assuming roughly 20%+ sales decline in 2009.”
- Jeff Kvaal
However intriguing these questions may be to the industry in general, the key questions that everyone seems to be overlooking are: What happens to existing Nortel customers? Will they be upgraded to new UC offerings over time? Will the product roadmap be maintained?
Customers buy a communications system with the expectation that it will last more than 10 years. During this period they expect the supplier to continue to offer new enhancements and upgrades as they become available. For Nortel customers who have just made a significant investment in a new system, the outlook seems to be troublingly uncertain. The following is from the Avaya Q & A document released as part of the acquisition announcement:
Q8. What will the product roadmap be? What is Avaya keeping? How will the Nortel services business be integrated with Avaya’s?
A8: We cannot answer questions about the product or services portfolios or other integration issues at this early stage. Both companies are committed to open standards, rather than proprietary architectures. Avaya is committed to the Avaya Aura architecture which allows customers to protect their technology investments using a “wrap and extend” migration strategy. This allows for graceful product migration at the customer’s desired pace.
Translated into simple English for current Nortel customers, this means that they will not enhance your system, but work to sell you to a new Avaya platform. This is not surprising. As CEO of a very successful IP telephony/unified communications company, I understand that it is difficult to impossible to invest in the engineering resources required to maintain two separate products.
Based on my experience, here is a synopsis of what I believe current Nortel customers should expect to experience:
1. Firstly, you will receive a communication of support that omits any true commitments.
2. If you press to understand their roadmap commitments, you will find there are none. You should expect that the majority of the Nortel engineers will be let go – keeping a skeleton crew to provide ‘break fix’ support.
3. After the dust settles, you will be notified of plans to discontinue the Nortel line. Smallest customers first – larger customers as a follow on. This notification will be accompanied with a proposal to replace your current Nortel with a Avaya product.
I can’t tell you exactly when, but you can be sure of the order of events, and so I encourage all Nortel customers to investigate your options early. Many Nortel customers already have converted to ShoreTel, and are experiencing the benefits of lowering their total cost of ownership and boosting productivity on a reliable platform designed for the long haul.
ShoreTel’s brilliantly simple system was built smart – on an IP platform – without a monolithic TDM legacy to inhibit its design. That provides a huge competitive advantage both to us and our customers.