Avaya’s Bankruptcy is Structural and Akin to Nortel’s Death Spiral

Is it a stretch to say that Avaya may be heading down the same spiral of death as Nortel? Maybe so. However, there are similarities between these two vendors that are alarming and should serve as a precaution to clients.

Let’s go back in time to 1999, when Bay Networks and Nortel led the way. I worked exclusively on those technologies and got myself advanced support and design certifications, believing that these technologies would capture a large market share, which I wanted to be part of. The technology was solid and the pricing was either about the same or cheaper than other players such as Cisco and Extreme Networks. In spite of that, Nortel failed and couldn’t manage to exit bankruptcy. So, what happened and how does it relate to Avaya’s recent bankruptcy announcement?

Nortel failed in two ways:

  • First, they failed in executing their sales strategy and become a major player outside of their niche installation base.
  • Second, they failed to focus their product development on new and disruptive technologies. Instead, they played it safe and maintained focus on older technologies; which made them money but left them to face demand destruction.

Now how does Nortel’s failure equate to Avaya’s current situation? I believe that Avaya never really changed direction post-acquiring Nortel and continued the ill-fated strategy in hopes they could execute it better. I recently worked with a large Nortel/Avaya customer where we wanted to figure out the costs involved in a forklift upgrade to a unified platform with the latest offerings. We faced continuous problems obtaining a quote, whether it was hardware or service based. At the end of the day, the price was much higher than the competition although license upgrades were offered for free. Of course, this is only one example, but I have seen this happen repeatedly over the past few years. My opinion is that Avaya has become lethargic, not only in its sales organization, but also on the development side, which continues to use and reuse old technologies such as the Nortel Passports from 2002.

If you’re an Avaya customer and this blog has you thinking, “What can I do?” the best answer I can give you is to look into your options. From Avaya to Shoretel to Mitel, all of these businesses provide customers with technologies and handsets that are proprietary and require a complete forklift for any major changes that are made. This can become extremely expensive from both a hardware and training perspective. If you have an installed base of Nortel and Avaya equipment, I would suggest that you consider non-proprietary providers that offer solutions based on the latest SIP standards with standard based handsets. This will ultimately allow both you and I to simply change software and firmware in the event that we run into an issue with a vendor in the future.