Nortel purchase to test Avaya big time

Nortel purchase to test Avaya big time

We look at Avaya's year ahead

Another executive, Mohammed Ali, senior vice president of corporate development, worked at IBM where he integrated the company with three other vendors that it acquired: Cognos, FileNet and Ascential.

Beyond being a source of Avaya executives, Cisco is also Avaya's chief rival in unified communications, Weckel says. Cisco came in No. 1 for sale of phone-line equivalents in the third quarter of both 2008 and 2009, according to a recent Dell'Oro study. Avaya came in second and Nortel placed third. Combined, Avaya and Nortel would have buried Cisco by 11.7 million to 6.7 million in the third quarter of 2008, and by 2.4 million to 1.4 million in the third quarter of 2009, Weckel says.

If gauged by revenue, Avaya ranked No. 1 for the third quarter in both 2008 and 2009, he says. Combined with Nortel, Avaya would have extended its lead over Cisco in the third quarter of 2008 to a total of $2.11 billion vs. $0.95 billion for Cisco. The results for the third quarter of 2009 would have been $400 million for Avaya/Nortel to $205 million for Cisco.

No vendor has had more than 15% of line shipments, Weckel says, but in the third quarter of 2009, Avaya/Nortel would have cornered 21.3% of the total to Cisco's 13.2%. "That's uncharted territory," he says. "The merger will set the bar higher for Cisco."

Considering that Cisco wheeled out its first VoIP call server in 1998, it has made remarkable progress, he notes. In 2007, it was No. 3 in line shipments and is No. 1 today. "Is that lead defendable or could Cisco reach it?" Weckel asks.

One possible advantage for Avaya is that it is privately owned so it doesn't have to respond to the expectations of Wall Street, which gives the company some breathing room and the chance to implement strategic moves without showing immediate bottom line results. But with Cisco breathing down its neck, it can't afford to waste time.

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More about AvayaBrocade CommunicationsCiscoCognosCognosCommunications SolutionsDellDell'OroFileNetIBM AustraliaIBM AustraliaNortelWall StreetYankee Group

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