What's Next for Avaya?
I agree with Eric Krapf’s earlier post and with the Avaya press release, that in roughly two years as CEO, Lou D’Ambrosio has, “shaped a compelling strategy, built a strong team, and led the company through important technology transitions…”
My first thought is to pause for a moment and support Lou in a rapid return of his health.
Then, what about Avaya?
With Charlie Giancarlo as the interim CEO, any residual lack of reality or false optimism will be immediately eliminated at Avaya. Charlie certainly knows, from both sides of the story, how difficult it has been for Avaya to hold off the increasing momentum of Cisco Systems. Billions of dollars of IP Telephony revenue that were Avaya’s expectation when the company went public in 2001 (at $27 per share) are largely flowing to Cisco.
However, the job of Don Peterson, the first Avaya CEO, was to get Avaya financially stable, which he did with great competence. Lou D’Ambrosio stood on that foundation to bring a new excitement and energy to the Avaya message. Together with Michael Thurk, Lou led a shift of the product lines toward Unified Communications; refocused Avaya on alliances with Microsoft and IBM; and launched a thrust into communications as software with Avaya’s Communications Enabled Business Processes initiative.
Each of these new initiatives is adding value to the Avaya brand, but apparently without enough positive impact on the financials, as Avaya continues to shed talent and to feel financial pressure from Silver Lake, as indicated in Eric’s post.
So, what’s next? As mentioned on NoJitter last December, it does not appear that Charlie Giancarlo joined Silver Lake to be CEO of Avaya. And, if he did want that job, he would not be the interim CEO now. Also as mentioned in December, Charlie has great skill in technology-driven growth-through-acquisition. It’s a pretty sure bet that he will not just “hold the course” while Avaya and Silver Lake recruit a new CEO. Maybe a mega-merger makes sense (certainly Charlie Giancarlo knows Thomas Zimmermann of Siemens Enterprise Communications, for example) to accelerate industry consolidation while there is still time to thwart IP Telephony market dominance by Cisco? Or, maybe a more aggressive shift to new technologies and possibly new revenue sources, such as by emphasizing the IP Multimedia Subsystem investment that Avaya made in Ubiquity a few years back, but which has yet to transform the product line?
In any case, my bet is on even more rapid and dramatic change at Avaya. The current management team led Avaya from public to private status, but still seems to embrace the traditional Avaya business models. Neither Charlie Giancarlo nor a successor picked by Silver Lake seems likely to continue that direction. Stay tuned.
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