Smart Move: Why Avaya-Nortel Enterprise Deal May Work
It’s a classic three-course meal. First, Avaya recruited partners away from Nortel Networks’ enterprise unit. Now, Avaya is bidding on the Nortel enterprise unit for about $475 million. If the deal goes through, The VAR Guy suspects Avaya will gain an improved seat at Microsoft’s unified communications table.
Sure, Avaya works with Microsoft. But remember: Nortel had a big unified communications relationship with Microsoft. Will that deal move forward — or disappear — with Avaya’s potential buyout of Nortel’s enterprise business? The VAR Guy is looking for answers.
Nortel’s enterprise business unit certainly fell on hard times. Rewind to 1998, and Nortel acquired Bay Networks for more than $9 billion. The Bay Networks business largely became Nortel’s enterprise business unit, now valued at a scant $475 million. The VAR Guy and top bloggers like Mark Evans have already told you why the Nortel-Bay Networks deal bombed.
Still, The VAR Guy likes Avaya’s decision to potentially gobble up Nortel’s enterprise business unit. An email from Nortel’s CEO to employees, as published by Evans’ All About Nortel blog, describes the nature of the potential deal. (Other bidders may still emerge…)
Remember: This is a potential acquisition. Not a merger. This is all about acquiring business accounts and maintaining them. It’s about buying some market share before somebody else does. Oh, and the deal includes Nortel Government Solutions — a key vertical market amid the US stimulus package… …
Plus, the potential deal may trigger more phone calls between Avaya and Microsoft, as both companies seek to compete against Cisco Systems.
The VAR Guy isn’t suggesting that a potential Avaya-Nortel Enterprise combo will somehow topple Cisco Systems in core markets. But The Avaya-Nortel combo, if it occurs, makes far more sense than Lucent-Alcatel and other recent “mergers of equals.”
Remember something: Mergers of equals never work out in the IT market. One culture always needs to lead. One executive team always needs to set the agenda. Hopefully, Avaya sets the agenda if it acquires Nortel’s enterprise assets.