The unified communications market should undergo considerable consolidation over the next several years as product categories converge around broader, integrated platforms that blend communications and collaboration technologies. Smaller vendors left in the market will provide “feature set” add-ons that extend the core capabilities of such platforms or compete in specific functional areas where specialization enables them to have a superior solution. That would leave a credible under-market where open source, open standard and consumer-oriented vendors (e.g., Skype) could offer a compelling alternative for organizations interested in “rolling their own” framework for unified communications.
If Avaya was in play... who would come to the game?
In addition to Nortel, Cisco could be one candidate that would find Avaya attractive. Cisco is intent on consolidating its base IP communication platform and market position. Cisco is also very driven to extending its solution capabilities into the area of communication-enabled business processes, collaboration and "Web 2.0". Avaya’s efforts regarding SOA and unified communications, as well as its acquisition of Ubiquity, would benefit Cisco’s application efforts.
Oracle would be another interesting suitor for Avaya. Oracle’s competitors – Microsoft and IBM – have strong unified communications strategies. Oracle has not been very pro-active in the unified communications market. Oracle has made some moves. It acquired HotSip in 2006 and included some HotSip's IM and presence capabilities (based on SIP/SIMPLE) within its WebCenter platform. Oracle also recently acquired the assets of AppForge (mobile software) and announced a Service Delivery Platform that includes the Oracle Communication and Mobility Server (targeting carriers). But overall, it has not articulated a comprehensive enterprise strategy for unified communications.
Being late to the game could pay off for Oracle however when it comes to Avaya. Avaya clearly would make Oracle a much more credible unified communications player. Given Oracle's large portfolio of business applications, the technology associated with Avaya (namely Avaya's SOA efforts and Ubiquity technology) could quickly propel Oracle into a leadership position concerning communication-enabled business processes. Some of the partner work Avaya has announced regarding Google could also help Oracle bridge its HotSip technology with its older Oracle Collaboration Suite platform (which is based on the same technology as Google, XMPP).
What about IBM?
IBM is a long-shot but it would not be inconceivable for IBM to be interested in Avaya. IBM would likely turn around and dump the hardware-related business (as might Oracle) and focus just on the middleware software assets of Avaya. IBM's entire strategy for unified communications + collaboration (UC2), rests on the premise that it would not cross certain business model and technology lines (namely IP telephony, video and audio conferencing). Those capabilities would be delivered by IBM's communication partners. This strategy differentiates IBM from Microsoft and alleviates some of the pressure IBM would feel if it had to compete across all aspects of the UC market (given that more time is needed to modernize the Sametime platform). IBM announced a special arrangement with Cisco but Cisco turned around and acquired WebEx. Given Cisco's intent to compete at the same level as IBM and Microsoft in the unified communications market, IBM could feel that it has no alternative but to make a more dramatic move and obtain more direct control over certain communication technologies (making Avaya attractive). IBM would also not want Microsoft to have any part in an Avaya acquisition.
What about Microsoft?
This scenario might also be a long-shot but has some credibility. Microsoft has never indicated that it wants to get into the hardware business extensively. It could however turn around and find someone else to take on those aspects of Avaya's business and retain specific software assets (similar to what IBM would likely do). If that was the case, then Microsoft would pick up some interested technology (again, related to Avaya's SOA efforts and Ubiquity acquisition). I could see a coordinated Microsoft/Nortel combination that could acquire Avaya with each party taking away the assets relevant to its own business efforts (Nortel for instance picking up the hardware aspects and certain application categories dealing with the high end of the unified communications market).
Well, this could all be idle rumor and Avaya could continue as an independent entity, perhaps backed by a stronger partner that wanted the organization to remain intact. Or perhaps Avaya merely divests itself of some business units. Right now, we're all merely speculating on different scenarios given recent news accounts.
Avaya May Be Next Telecom Takeover Call
By LI YUAN, DANA CIMILLUCA and DENNIS K. BERMAN
READY FOR A DEAL?
• In Play: Avaya is in talks with private-equity and strategic bidders about selling part or all of the company, according to people familiar with the matter.
• Switching Gear: The telecom-equipment maker is hoping to take advantage of a fertile period for high-tech deal making.
• Needed Consolidation: Analysts said mergers among telecom carriers have left the equipment segment crowded, with too many vendors chasing too few deals.
Avaya is in talks with private-equity firm Silver Lake Partners about a leveraged-buyout plan, said people familiar with the matter.
Avaya postponed its analyst-day meeting scheduled for May 31 and has yet to reschedule it, a sign being read by some analysts that the company may be in buyout talks.
Earlier this month, Avaya also talked to Nortel about a deal, according to people familiar with the matter. But the momentum cooled off after the two sides couldn't agree on price and whether Nortel should pay cash or stock, according to people familiar with the situation. The sides are still talking and a deal could still materialize, these people said.
An Avaya executive said in February that Microsoft had also tried to court the company. Karyn Mashima, senior vice president of strategy and technology, was quoted by an online trade publication that Microsoft offered Avaya a partnership before it formed one with Nortel. But Avaya turned it down because the deal would have required licensing what constituted Avaya's "crown jewels" to Microsoft. Microsoft isn't involved in talks with Avaya, but that could change, according to a person familiar with the matter.
--Bobby White contributed to this article.
Source: Free Article - WSJ.com
Avaya Is Said to Be Exploring a Sale of All or Some of Itself
By ANDREW ROSS SORKIN and MICHAEL J. de la MERCED
Published: May 29, 2007
The telecommunications company Avaya is in negotiations to sell a part or all of itself, in what may be the latest round of deal making in its industry, executives briefed on the negotiations said last night.
The company, based in Basking Ridge, N.J. and valued at $6.1 billion, has retained the investment bank Credit Suisse as an adviser, the executives said. Among those interested are two rivals — Cisco Systems and Nortel Networks — and the equity buyout firm Silver Lake Partners.
The executives cautioned last night that negotiations were in the early stage and that the company could still remain independent.
A spokeswoman for Avaya did not return a telephone call or an e-mail message seeking a comment.