Via Ronald Gruia of Frost & Sullivan, here's a really interesting blog post looking at the potential upside for Avaya from the Nortel buy. The blogger, Roger Toennis, makes a case that the next year or so represent a critical time for enterprise communications, because of the potential economy recovery and the effect it would have.Certainly there's pent-up demand--the enterprise market cratered in 1Q09, and even though it rebounded Q/Q last quarter, we're still looking at a down year. The time to lock in Nortel's installed base and its channel is just before the economy starts to grow again, Toennis argues.
In his post, Mr. Toennis also discusses the impending effect of the Cloud on the enterprise communications business,which is a subject that hasn't been discussed much in the context of the whole Nortel auction. But there is a story there, as blogger Larry Lisser also mentions here here.
The thing to watch in this regard was brought out during this morning's Nortel press conference by our own Sheila McGee-Smith, who asked Joel Hackney of Nortel about the future of Nortel's CS2100. The CS2100 is Nortel's carrier-grade platform for running enterprise communications--in other words, an ideal platform for running Cloud-based services. Hackney confirmed that the merged company will have the ability to carry the CS2100 forward.
To wrap up this post on the upside, both Toennis and Lisser are bullish on the deal and on the $900 million price tag, from an Avaya perspective. I should point out that, on No Jitter, Allan Sulkin has blogged about the financial incentives driving the deal. Allan argued essentially that Avaya has to get big if Silver Lake and TPG are to successfully take it public or sell it and recoup their $8 billion initial investment.
