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Avaya: Positioning its Portfolio for the Future
At Avaya Engage earlier this month, the Avaya team laid out the company's plans for driving the business forward once it comes out of bankruptcy, presumably with its core UC and contact center businesses intact (see my related post on potential outcomes of the bankruptcy process). I came away from the meeting with a deeper understanding of Avaya's product vision, a major point of which is the convergence of the Avaya product offerings on three new platforms for the enterprise -- Equinox, Oceana, and Zang -- and IP Office for the SMB and midmarket (up to 2,000 users).
The product strategy, as articulated during analyst and consultant briefings, seems to be coalescing and moving forward in a mostly logical way.
For enterprise UC, Avaya originally positioned Equinox as a convergence solution for bringing together its diverse set of clients into a single interface. This capability, introduced last October, is now available. It features a common user experience from softphone and mobile clients, and even on the Avaya Vantage "all glass" phone.
In addition, Avaya made it clear that it is expanding the Equinox brand beyond endpoints and into a core platform. This would appear to indicate that the legacy Aura UC platform will gradually give way to Equinox as the primary premises and large enterprise cloud UC brand.
Creating a core brand and next-generation architecture should be attractive to premises users. However, Avaya hasn't cloud-enabled Equinox and associated systems as of yet, so they're lacking features such as multitenancy and limiting cloud deployment to larger enterprises that tend to favor dedicated private cloud deployments.
In the contact center, Oceana is based on the Breeze orchestration engine. Introduced in June 2016, Oceana is coming into the market now and going forward will apparently be Avaya's future primary contact center platform. Oceana will provide multichannel enhancement to the underlying voice capabilities of the Elite platform powering many of the largest contact centers in the world today, and in the long term provide more general contact center capabilities as well as voice. Over time, the Oceana platform will become the overall enterprise contact center from Avaya, eventually replacing existing platforms based on older, less dynamic technology bases.
The key for success is to enable smooth transitions from existing products into the new Oceana age. How this is managed over the next two to three years will dramatically impact how Avaya migrates and retains its strong contact center user base.
The third major area of focus is Zang. While Zang started out as a CPaaS solution, it has rapidly evolved to be a much broader set of cloud-based capabilities. Zang Spaces is a team collaboration capability that competes with products such as Slack, Cisco Spark, and Mitel MiTeam. And Zang Office, featured at Avaya Engage, is a cloud telephony solution designed to compete with UCaaS offerings from companies like RingCentral and 8x8. I was not able to do any real testing at Avaya Engage, but the Zang Office functionality list appears to be generally comparable and the roadmap looks promising.
Of particular note is the Zang Office pricing, at least for now. Avaya has priced the standard user package at $22 per month, but offers a pre-paid year option at 50% off, or $11 per month. This aggressive pricing may reflect Avaya's strategy to do less direct marketing and let this market position grow the space.
This leaves the IP Office SMB/midmarket portfolio as the fourth part of the Avaya solution set. IP Office is primarily a premises solution, though the strategy of single instance cloud-based options is gathering traction. In fact, the first booth on entering the Avaya Engage expo floor was for a company offering a cloud hosted IP Office solution. Avaya channel partners seem to adopting hosted IP Office as a way to offer cloud solutions both to their installed bases as well as to new opportunities.
Serve the Old, Gather the New
In moving to a new set of brands and focuses, Avaya is positioning itself not only to increase the value and footprint of its solutions within its existing accounts but also to entice others to its portfolio. This direction clarifies how Avaya will compete with Cisco and Microsoft, its primary competitors. In many ways, the Avaya directions are very similar to those articulated by Cisco. While Cisco continues to provide enhancements to its Jabber UC client, the primary focus for new solutions is Spark... much as Avaya is focusing on Zang. Compared to Microsoft, Avaya and Cisco are focusing on extending the premises telephony infrastructure into the new world while offering SMB and midmarket companies cloud-based UCaaS solutions.
Assuming that Avaya emerges from the bankruptcy process with the core UC and CC businesses intact, the path for Avaya solutions appears to be set. However, two challenges remain: Consolidate the back-end systems to eliminate the 20 plus-year-old software of platforms like Aura Communication Manager, and gain new customers.
While mining the installed base is the core of the current revenue stream, for every Avaya customer that replaces its system with Cisco or decides to deploy Skype for Business, Avaya needs to acquire a similar customer from another vendor. This is going to be a challenge. Over the last 10 years, the combined Avaya/Nortel installed base in North America has shrunk by 25% to 35%. Cisco leverages its strong position in networking to help drive VoIP, and Microsoft uses its desktop productivity dominance to promote Skype for Business adoption. Avaya does not have a similar adjacency to leverage. It has strong contact center share, but the ability to translate contact center position to winning in the UC space is not proven.
While the product brands and product structure of the new Avaya are becoming clear and the results look to be compelling, long-term Avaya success will rest on winning transitions in the marketplace. We'll see if Avaya has put in place a a successful strategy for making that happen.