Ask Steve: Is Avaya-Nortel a Good Match?

Is merger-and-acquisition mania beginning to grip our country again? Or maybe we’re just seeing some fire sales as the still-standing grab the fallen at reasonable prices. You be the judge. And I’ll address a great $900 million question I recently received.

Q: Nortel and Avaya — a match made in heaven or the other place?

— Shirley, Ottawa, Canada

A: Shirley, I’d put the match closer to heaven than the pit of a bitumen-laden inferno. Nortel Networks Inc. has selected Avaya Inc. as the purchaser of Nortel’s Enterprise Solutions Business. This includes Nortel’s product and services, channel partners and other ancillary solutions. I believe the Avaya–Nortel deal works on four points.

1. The Nortel acquisition buys Avaya a place at the network infrastructure table, a critical place in the world of unified communications. According to Yankee Group small and medium business (SMB) and enterprise surveys, Nortel is almost always in the top five vendors (sometimes in the top three) to consider when businesses are purchasing network infrastructure. Without a way to battle Cisco Systems Inc., 3Com Corp., HP and Juniper Networks Inc., Avaya was handicapped as the communications-only provider. Not so going forward. The networking team at Nortel will be an important addition to the Avaya team for both SMB and large enterprise business. Nortel falls within the top five networking vendors considered by SMBs and enterprises for wireless LAN and a bevy of other IT networking gear (See chart, Primary/Secondary Wireless LAN Suppliers).

2. Avaya bought itself a robust, international channel organization. Nortel’s channel partner program has some very nice assets, particularly outside North America. Avaya relies almost exclusively on its channel to sell to SMBs and the Nortel channel asset will aid Avaya in its self-professed bid to recruit channel partners, grow the success of its partners and accelerate partners’ understanding of Avaya and now Nortel solutions.