I got to spend an hour in Orlando talking with two of the executives who led the Avaya-Nortel integration effort: Mohamad Ali, who handles corporate strategy and business development for Avaya; and Phil Edholm, who was in the CTO organization at Nortel and helped craft the product strategy for the integration; Phil's now VP, innovation and technology strategy for Avaya. Ali made a telling comment, in describing the importance of Avaya Aura, the session-management layering technology that facilitates multivendor IP telephony/Unified Communication integration within the enterprise:"Aura is what enabled us to acquire Nortel," Ali told me.
What he meant was that, absent a technology like Aura, Avaya would have been, essentially, buying Nortel's customer base, but not necessarily gaining as much advantage in keeping that customer base through the transition. Without a technology like Aura, all the other competitors could come into Nortel accounts (as they've been doing, aggressively, since Nortel's bankruptcy filing), and position Avaya as just another vendor you'll have to migrate your Nortel infrastructure to--more of a brute-force, end-of-life swap-out story.
With Aura, Mohamad noted, Avaya has an investment-protection story to tell, so they can leverage the existing customer/channel relationships and offer the customer a plausible case that sticking with Avaya is the least-disruptive way to move forward.
Considering how much Avaya wound up paying for Nortel--close to $1 billion--I don't think Ali's statement about Aura is much of an exaggeration. Paying that much just for a perceived advantage in customer access--plus the downside risk of the corporate integration challenge--would have been a major leap of faith.
Phil Edholm echoed this idea when I spoke with him: "There's value in coming to the customers to tell them there's no variability," Phil said. "Uncertainty is what kills you."
The big question, Phil said is, can you give the customer a value proposition and a path to the future with you?
Also in my conversation with Mohamad Ali, we discussed Avaya's plans for the Nortel data portfolio. Many people speculated the former Bay Networks line would be sold off, but on the contrary, Mohamad Ali said Avaya's next big wave of product announcements, set for this summer, will feature the data portfolio prominently.
I asked Ali if keeping the data products was more about having an end to end product portfolio, almost as a check-off, or whether really sees the data products as a big revenue contributor. He insisted, "We think this is a big revenue opportunity," adding that the data business is seeing 8% growth on its own.
That also led to the inevitable question about Avaya's partnership with HP; now since HP bought 3Com and Avaya bought Nortel, each of the partners has added a new product portfolio that directly competes with the other, for the first time (HP adding voice, Avaya adding video). Not surprisingly, Ali downplayed the potential for conflict, saying, "We have a very good relationship with HP, and we will continue to have a very good relationship with HP."
So what to expect from the next iteration of the data product line from Avaya? Ali couldn't get too specific, but he emphasized the idea that Avaya data products--switches, routers and the like--will be smarter than competitors' when it comes to handling real-time traffic on the network.
"If you ignore the real-time communications element of the traffic, you will have to buy a lot more Cisco boxes," he said. "Which is basically the Cisco strategy."
I'm sure Cisco would disagree about the idea that they ignore or even downplay real-time traffic handling, but Ali has certainly gotten to the jist of the matter: Everything Cisco does must--whatever else it does--drive more bits through ever-bigger and more expensive Cisco switches and routers. If Avaya is able to pre-empt this dynamic with a fundamentally new and better way of handling traffic through switches and routers--well, they'd be the first.
