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Gartner UC Magic Quadrant ranking belies Avaya's challenges

Avaya was once again named a leader in the Gartner UC Magic Quadrant. But analysts say the vendor could struggle to add customers given the growing dominance of Microsoft and Cisco.

Avaya has regained its position as a market leader in Gartner's annual rankings of unified communications vendors, after being dropped from the list amid bankruptcy last year. But the vendor will likely struggle to keep pace with Microsoft and Cisco in the years ahead, analysts said.

Avaya's return to the leadership quadrant in the 2018 Gartner UC Magic Quadrant report is a positive development for the company as it tries to reassure customers that new leadership and a cloud-first strategy will lead to long-term financial stability.

But IT buyers should be careful not to read too much into Avaya's latest Gartner ranking. The vendor lost its leadership spot because it filed for Chapter 11 bankruptcy in January 2017 -- and it regained the honor this year mostly because those proceedings are now finished, according to a co-author of the Gartner UC Magic Quadrant. 

"Overall, they are looking in better shape financially," said Steve Blood, analyst at Gartner. "What they can't shake off yet, though, is that they did have years of underinvestment in product."

Avaya has gotten more aggressive in building out its cloud portfolio and investing in AI technologies over the past year, acquiring the cloud contact center vendor Spoken Communications and launching a partner program for AI developers. The vendor is "moving in the right direction," Blood said.

But Avaya still has work to do to convince businesses of the value of its relatively new cloud products, such as Avaya Equinox and Avaya Oceana, Blood said. Meanwhile, Microsoft and Cisco have continued to expand upon a "huge" product and execution advantage over Avaya and Mitel, the other top-ranked vendor in the Gartner UC Magic Quadrant.

Avaya looks to move past bankruptcy, achieve growth

Some channel partners that had previously sold only Avaya products decided to pursue partnerships with competing vendors amid the financial uncertainty in 2017 -- a weakness highlighted in the Gartner UC Magic Quadrant.

For the most part, however, Avaya's sizable customer base seems comfortable with the company's position right now, a testament in part to how transparent Avaya was with them during the bankruptcy proceedings, said Zeus Kerravala, principal analyst at ZK Research in Westminster, Mass.

"Now they are in a position where they are OK financially at this current revenue level and this current debt load," Kerravala said. "From a customer perspective, these next two, three, four quarters are very important to see if the company is actually growing."

Avaya does have a strong portfolio of public and private cloud products, Kerravala said. The company's challenge now will be changing its public perception as a legacy on-premises vendor.

Avaya likely has more opportunity for growth in the contact center market -- where its products stack up well against main rivals Genesys and Cisco -- than in the UC market, which is becoming dominated increasingly by Microsoft and Cisco, said Irwin Lazar, analyst at Nemertes Research, based in Mokena, Ill.

"I think they have got a challenge in terms of where they have opportunities to grow at this point," Lazar said. "I don't see them taking market share from Microsoft and Cisco."

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What does Avaya need to do to retain its leadership position in the UC market?
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