It’s a classic three-course meal. First, Avaya recruited partners away from Nortel Networks’ enterprise unit. Now, Avaya is bidding on the Nortel enterprise unit for about $475 million. If the deal goes through, The VAR Guy suspects Avaya will gain an improved seat at Microsoft’s unified communications table.
Sure, Avaya works with Microsoft. But remember: Nortel had a big unified communications relationship with Microsoft. Will that deal move forward — or disappear — with Avaya’s potential buyout of Nortel’s enterprise business? The VAR Guy is looking for answers.
Nortel’s enterprise business unit certainly fell on hard times. Rewind to 1998, and Nortel acquired Bay Networks for more than $9 billion. The Bay Networks business largely became Nortel’s enterprise business unit, now valued at a scant $475 million. The VAR Guy and top bloggers like Mark Evans have already told you why the Nortel-Bay Networks deal bombed.
Still, The VAR Guy likes Avaya’s decision to potentially gobble up Nortel’s enterprise business unit. An email from Nortel’s CEO to employees, as published by Evans’ All About Nortel blog, describes the nature of the potential deal. (Other bidders may still emerge…)
Remember: This is a potential acquisition. Not a merger. This is all about acquiring business accounts and maintaining them. It’s about buying some market share before somebody else does. Oh, and the deal includes Nortel Government Solutions — a key vertical market amid the US stimulus package… …
Plus, the potential deal may trigger more phone calls between Avaya and Microsoft, as both companies seek to compete against Cisco Systems.
The VAR Guy isn’t suggesting that a potential Avaya-Nortel Enterprise combo will somehow topple Cisco Systems in core markets. But The Avaya-Nortel combo, if it occurs, makes far more sense than Lucent-Alcatel and other recent “mergers of equals.”
Remember something: Mergers of equals never work out in the IT market. One culture always needs to lead. One executive team always needs to set the agenda. Hopefully, Avaya sets the agenda if it acquires Nortel’s enterprise assets.
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Microsoft and Cisco a locked in a battle for Office documents. Cisco’s WebX runs Googles office docs, Microsoft has the Office suite as its cash cow. Email is currently the way we share docs and MS absolutely domimates in this. However Facebook, sharepoint etc all indicate that a major shift is afoot..email is old and outdated.. there is a shift real-time document collaboration that provides Cisco with opportunity to enter the market. However, Microsoft are not asleep at the wheel, and rarely lose when confronted with such competition. Also looming now are the Silverlake purchases of Avaya-Skype with Nortel planned soon. That is 75% of the NA enterprise voice market. While not directly aimed at office documents, Silverlake has aquired considerable strength in the next generation of enterprise mobile, software that decouples the wireless providers from voice, presence, email, IM, location services etc all used in collaboration. It’s difficult to so how Microsoft would not want to join Silverlake with OCS and its mobile CE operating system creating formidible competition for Cisco and possibly challenging Apple who frankly have out imagined all the laggards.