Open letter to Avaya management: Don’t sell the networking business

The fate of Avaya has finally been determined. It’s not being broken up, shut down or having parts stripped off it in a fire sale. Instead, Avaya filed for Chapter 11 bankruptcy to help shed the $6 billion debt load that is weighing the company down.

The question for the company now is what happens next? Obviously the business will be restructured. I believe the management team will keep the call center and UC businesses intact, as they go together like “rama lama lama ka dinga da dinga dong.” But what happens to the networking business? Post restructuring the networking division might be a more attractive asset to buy because many of the things weighing it down, such as pensions and debt, won’t be an issue. Avaya could sell it, then use the money to make an acquisition that could bolster its UC and CC business.

Right now, I believe the odds are 75/25 that it sells the networking division, but I urge Avaya management to look at networking as its best catalyst for growth. Avaya plays in three major categories: contact center, unified communications and networking. A quick look at numbers from Synergy Research shows Avaya as the current market leader with about 20 percent share. Gaining share in contact center will be a challenge, so it’s likely to grow at market rate.

 Enterprise voice, one of the largest segments of UC and Avaya’s entry point, shows Cisco as the dominant share leader with Avaya as a strong number 2. Cisco is unlikely to cede share, and Microsoft is coming on strong, so again in this market, Avaya’s share is likely to remain flat or possibly decline as Microsoft ramps up its voice business.

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