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Avaya's Nortel bid: Which products will survive merger?

With its $475 million stalking-horse bid for Nortel's enterprise business, Avaya could decide the fates of product lines ranging from desk phones to the BCM suite. It's up to Nortel customers to figure out which ones will survive the merger.

Although it's far too early to know what will happen, Nortel customers should start thinking about which product lines Avaya will shut down if it successfully acquires the enterprise assets after the Nortel bankruptcy.

Avaya's $475 million stalking-horse bid for Nortel's enterprise business isn't a done deal. Bankruptcy laws require a 60-day period where other bidders can try to better Avaya's offer. Competitors like Siemens could raise the bidding, if only to force Avaya to pay full price for Nortel's large unified communications customer base.

Irrespective of the outcome, Nortel customers are left wondering about what product lines Avaya will keep. Is Nortel's Symposium Call Center Server (SCCS) safe? And how will Nortel's technology integrate with the new owner?

Avaya will have to start streamlining product portfolios almost immediately, according Ronald Gruia, principal analyst with Frost & Sullivan. For instance, the combined company will have 25 desktop phones in its catalog, he said.

The consolidation of products could take years, Gruia said, because Avaya stands to inherit from bankrupt Nortel long-term contracts and customers with rollout roadmaps that extend four or five years ahead.

The first product lines likely to be eliminated or merged will be pure software plays like Nortel's CallPilot unified messaging system, which merges voicemail, fax and email functionality onto the desktop and duplicates functionality found in Avaya products like Integrated Messaging Pro.

"Software's easier to knock off," Gruia said. "You keep maintaining them for a little bit but start offering incentives to migrate out of it, and if you make it compelling enough, people will do it."

Victor Bohnert, executive director of the International Nortel Networks Users Association (INNUA), said the group has high hopes of getting a seat at the table to determine just what is kept around for the long term and how long various product lines destined for the dustbin will be given for end-of-life after the Nortel bankruptcy is put behind them.

"The Nortel technology will be moving forward. There's still a lot to work out over the next 60 days, and after that bid closes in 60 days, that's when we'll know where we're going forward," Bohnert said. "It wouldn't surprise me if they came up with a roadmap that took the best solutions from each of their technologies."

Todd Abbott, Avaya's senior vice president of global field operations, said the company could not discuss future product roadmaps pending regulatory review, but he advised Nortel customers to make purchasing decisions based on the technology, not concerns about whether Avaya would discontinue the line.

"Avaya's goal is to consolidate the assets of a company that's got very good technology and a great partner base – to integrate it into a single entity with Avaya," Abbott said.

But he said that Avaya's focus on Session Initiation Protocol (SIP) should make that consolidation easy for former Nortel customers if they do decide to switch over after a successful Avaya Nortel bid. He said the company's new Aura architecture is designed to interoperate with other vendors' products, so any Nortel investments made today should work with future Avaya investments.

"Because of the announcement of our new Aura architecture – a SIP-based architecture -- the beauty of that architecture is if you're a Nortel customer today ... [that] isn't interested in a rip-and-replace strategy, Aura will enable [you] to continue to deploy and integrate any Nortel investment that you make today or tomorrow," Abbott said.

Even with Aura's SIP integration, though, Avaya will find it hard to move Nortel customers onto their own platforms. Some Nortel product lines will be hard to kill.

Nortel's Symposium Call Center Server (SCCS), for example, powers numerous call centers at enterprises that would be wary of deploying a new technology when their SCCS investments are meant to last years.

"Even if you want them to eventually move over to Avaya's [products], you have to be careful not to kill that off too soon," Gruia said.

He added that Nortel has negotiated some sweet tax incentives with certain governments that would be hard for Avaya to walk away from. For instance, Nortel receives a large tax break from the Irish government for developing the SCCS in that country.

"It makes sense to keep selling that for that incentive," he said.

Note: This article was corrected to reference Nortel Symposium Call Center Server (SCCS) being developed in Ireland.

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