NES to Avaya, Tandberg (Soon) to Cisco as Industry Consolidation Accelerates

Two deals are important in their own right and as part of the accelerating evolution of the telecom and IT industries. At the end of the day, two things are certain: Avaya is gaining valuable access by its auction win of Nortel Enterprise Solutions' assets, and Cisco will be the big cheese in video conferencing with its acquisition of Tandberg.

By Carl Weinschenk | Posted Jan 5, 2010
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Two 2009 deals will change things in the unified communications sector. In the bigger picture, they also are steps in a well-established process of industry maturation.

Early in December, Avaya won an auction to buy the assets of Nortel Enterprise Solutions. That deal closed on Dec. 18. On Oct. 1, Cisco announced an agreement to acquire Norwegian telepresence and video conferencing company Tandberg. That deal was well on its way to completion – though not in fact a done deal – as of the last week of December. Cisco's public relations firm said that the deal is expected to close during the first half of 2010.

The deals differ in their specifics and what each brings to the surviving firm and their customers. What is certain is that they are big moves that will speed the evolution of the UC category.

Avaya Says Yes to NES

Nortel Enterprise Solutions' (NES) move may be particularly prudent as services move to the cloud and organizations become more comfortable with the concept. Howard Lichtman, the president and founder of telepresence consulting firm Human Productivity Lab, said that NES' strong suit – offering UC as a managed service – can be a boon to Avaya. “Avaya has an important decision to make,” he said. “Are they going to continue that as a line of business? If they do, they have a strong foundation from which to build.”

An important evolutionary step for the UC category is building interoperability between platforms belonging to different vendors. This can be done in several ways. For instance, it can be accomplished from within the platforms through creation of standards and interoperability certification. It also can be done externally to the equipment itself through gateways and other elements that form, in essence, a middleware layer.

Lichtman said that NES provides this federating function for different platforms – including Polycom and Tandberg – and offers other services, such as help desk, concierge, reservation, network management, network infrastructure and video services. It was reported last week that 25 NES executives are expected to make the jump, and that Avaya will retain about 500 more NES employees than initially thought.

NES is bringing Avaya a stable and reliable source of revenue, Lichtman said. Avaya can put that to good advantage, he said. “It's a recurring revenue stream, the kind of money that Wall Street likes. They are hard to dislodge. Fortune 5000-type companies spend typically thousands per month to manage these things. It's a very, very attractive type of business.”

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