Cisco’s improving product offerings, the product sector’s strongest marketing prowess and its dominant position in the network equipment market space make Cisco the one to beat. This holds true even when Cisco is not a customer’s incumbent voice system supplier, because it is more than likely they are the customer’s primary network equipment supplier.
Since it entered the voice communications system market, Cisco has smartly executed marketing campaigns at both the macro- and micro-levels. They established a strong presence at industry trade shows attracting voice system customers, particularly VoiceCon; designed an excellent website with detailed product information and an effective search engine (something many of its competitors sorely lack); developed an effective and highly rated consultant relations program; and continues to operate a strong and influential grassroots voice communications education program (although some would say it is closer to brainwashing than education) for data communications managers. This has facilitated selling into the installed base of its competitors, despite product offerings frequently not yet equal in overall performance to several of its strategic competitors.
In a few short years, Cisco has convinced many in the industry that it is the one setting the agenda for the market’s migration from voice-only digital PBXs to IP-based unified communications systems.
It’s important to point out that they were abetted by the ineptness of the incumbent competitors to counter-market against them. For several years Cisco’s CallManager offering had more than a few major competitive weaknesses such as: significant software feature gaps; telephone instruments with no fixed feature keys and limited programmable line/feature keys; and several less than stellar networking capabilities. Competitors like Avaya and Nortel each had superior product offerings, but failed to conduct effective competitive marketing campaigns highlighting their strengths versus Cisco weaknesses. For several years, Cisco’s stronger marketing efforts gave it the time necessary to address enough product issues to significantly narrow product performance gaps against competing offerings.
Avaya is still a strong market competitor for core IP telephony systems and the leader in advanced contact centers, a market segment in which Cisco is relatively weak by comparison, and Avaya’s enterprise communications revenues exceed that of any competitor (partly owing to its decision to maintain its strong direct sales/service operations). But major corporate changes occurred last year that will have a significant impact on Avaya’s future success and survival.
The New Jersey-based system supplier with the strongest product portfolio and the largest, if slowly shrinking, installed customer base, is now a privately held company jointly owned by Silver Lake Partners and Texas Pacific Group (TPG). There are many advantages to being a private company, such as the luxury of sacrificing short term for long term profits, but none of these factors is likely to help Avaya reclaim its lost market leader position. Avaya still outships Cisco on global basis, but for how long? One more year, maybe two?
Why did Silver Lake and TPG think Avaya was worth $8.2 billion when it was losing market share to Cisco and the dynamics of the evolving unified communications market were changing to favor a new competitor such as Microsoft? Apparently, Avaya’s best marketing effort during the past few years did not involve selling IP telephone systems, but itself.
From small to very large system customers with either basic or advanced performance requirements, Avaya has highly competitive product offerings. Its product portfolio easily received the highest overall grades across the board in the most recent TEQConsult Group survey of consultant members from the Society of Telecommunications Consultants (STC) and Canadian Telecommunications Communications Association (CTCA) organizations (see “Consultants Grade the Vendors,” BCR December 2007).
The same survey also revealed why Avaya has been an underachiever despite its inherent competitive advantages. The consultants ranked Avaya’s consultant relations program sixth among the leading system suppliers, and overall consultant support services efforts ranked fifth. The two mediocre rankings are representative of two ongoing Avaya problems: marketing communications and people interaction.
