Avaya's Nortel acquisition moves it to number one in N. America

Updated: January 07, 2011

Avaya won the auction for Nortel's ES division on Friday with a bid of $915 million - $900 million of it in cash. There was only one other bidder - which was widely rumored to be Siemens. The acquisition is not expected to face much delay despite a mandatory review and despite a Verizon filing that alleges the acquisition will harm its business and particularly strategic and military contracts it has with the federal government.

The result of the acquisition is that the combined group will now take the lead in enterprise VoIP market share from Cisco - but not by a wide margin.

There are lots of questions floating around the industry, many inspired by the Verizon motion. The biggest area of concern is support for Nortel's customer base and whether Avaya has the resources to manage this. Other questions include how dealer and distribution agreements will be handled and how existing contracts will be affected.

Nortel was a much larger company than Avaya before its bankruptcy. And many of its assets and divisions are being sold seperately. Ericsson purchased the wireless group recently and voice technology and government solutions groups are to be auctioned in the future. But despite that, there are many product areas in the division that Avaya purchased that are new to Avaya - specifically to do with data networking. What is Avaya going to do with these? Is it going to sell them, drop them or try to compete in an area where Cisco is already very dominant?

There is a great discussion of the channel ramifications at the Unified Communications Strategies site.