Avaya IP Office Moves a Step Closer to Replacing Nortel BCM

Competitive Positives

• Linux option less expensive, more reliable, easier to install
• Beginning of Norstar- and BCM-to-IP Office migration path 
• New video conferencing options 
• IP Office positioned as key system alternative 
• SCS positioned to help Avaya win business in select markets

Competitive Concerns

• Unclear if BCM to be developed further
• Multi-site management software doesn’t support BCM
• New installation DVD specific to Linux 
• IP Office Essential Edition Partner Version not a global product 
• SCS limited both in market and in Avaya portfolio

Analytical Summary

Perspective

• Positive on Avaya’s enhancements to SMB communications portfolio, because they evidence positive momentum in the company’s efforts to combine the Avaya and Nortel portfolios. Transitioning Nortel clients to Avaya has been and remains a top priority and this latest round of product updates paves the road for bringing Business Communication Manager (BCM) customers into the IP Office fold.

Vendor Importance

• Moderate to Avaya, because the company is gradually consolidating its communications initiatives in the SMB market around IP Office. This will help Avaya focus development, marketing, sales and support resources more tightly than has previously been possible.

Market Impact

• Moderate on the market for SMB PBX systems, because the product enhancements touch on IP Office, BCM, Partner, Norstar and Software Communication System (SCS) – nearly the entire base of Avaya and Nortel communications products for the SMB space. There are few Avaya SMB customers that will not benefit from the product upgrade in some way, shape or form.

Competitive StrengthsCompetitive Positives

• IP Office 6.1 introduces a Linux option that is less expensive, more secure, more reliable and, thanks to administration software enhancements specific to 6.1, easier to install than IP Office’s current Windows operating system. This gives Avaya customers a choice in underlying operating system, which is not always the case with IP PBX systems sold into the SMB space. 

• With IP Office 6.1 Avaya introduces some of the first features that will allow Nortel customers to migrate away from BCM and to IP Office while retaining the value of investments in Nortel technology. Specifically, BCM IP phones (the 1100 and 1200 Series) can register to a IP Office 6.1 system, and IP Office 6.1 auto-discovers and auto-provisions the BCM devices. With handsets often constituting 50% of the price of a PBX system sale, BCM customers’ ability to retain existing end stations while migrating to IP Office will be a very attractive option. Furthermore, future versions of IP Office are expected to further extend investments in BCM technology, which should further contribute to Avaya retaining BCM customers and resellers. 

• With version 6.1 Avaya has brought its new video conferencing products to bear on IP Office. Previously the Avaya Video Conferencing Solutions supported only its enterprise communications systems, and previously IP Office only supported point-to-point video conferences driven by its soft-phone interface. When integrated with the Avaya Video Conferencing 1040 system, IP Office can support four-way video conferences, and support for video-capable IP phones from Polycom and Grandstream opens up new end point options not previously available to IP Office customers. 

• Nortel’s Norstar key system reached its end of sale in October 2010, while Avaya’s Parnter key system was discontinued this month. Both moves were expected as part of ongoing product rationalization in Avaya’s SMB portfolio and the company’s drive to penetrate the small business market where traditional key systems have been popular Avaya previously announced a version of IP Office specific to the small business market (IP Office 500v2) as a migration alternative for Partner customers. And version 6.1 introduces IP Office Essential Edition, which replicates certain Norstar features, giving it a look and feel familiar to Norstar users.

• Avaya has repositioned Software Communication System (SCS) to help it penetrate specific regions where IP Office sales have been weak or non-existent. Going forward the company will target sales of the product to Brazil, where tariffs on hardware have priced IP Office out of the market; Malaysia, where software-centric communications solutions sell well; and Japan, where Avaya has never marketed an SMB offering. Such a strategy should help the company create a presence in countries where sales have not historically been strong. Also, focusing SCS on only these markets helps Avaya to reduce the number of communications systems it sells in other key markets, and so to avoid cannibalizing IP Office sales.

Competitive WeaknessesCompetitive Concerns

• Though Avaya released version 6.0 of the BCM software in September, it is not clear at this time if the product will be developed further. With the end-of-life date for BCM systems not yet announced, it is not known how long new investments in the product will retain their value to customers and resellers, regardless of the announced BCM-to-IP Office migration plan. It has long been known that IP Office will eventually be Avaya’s main PBX platform for the SMB market, but how much longer BCM will remain a viable alternative is much less certain.

• IP Office’s multi-site management software, which was enhanced with version 6.1, does not support BCM. This could prove problematic for resellers and businesses with multiple BCMs installed who are planning to phase in IP Office gradually. 

• The streamlined provisioning software that allows resellers to set up an IP Office system in 30 minutes works only with the new Linux option. 

• The IP Office Essential Edition Norstar Version is available in Middle East and Africa only, where there is a large and vibrant community of Norstar resellers, and replicates key system features. There is also a large base of Norstar customers in North America, but they will be encouraged to migrate to IP Office Essential Edition Partner Version. While there is nothing inherently wrong with Avaya meeting the needs of specific customers and resellers, developing a region-specific version of its SMB PBX runs counter to the product rationalization and simplification efforts Avaya has under way. However, this is understood to be an interim step until the BCM/Norstar migration is complete early next year.

• Avaya is not just repositioning SCS as a communications platform for regions in which it has little to no market presence, namely Brazil, Malaysia and Japan. Avaya is restricting new sales of the product to these countries for the time being. A communications system for businesses of all sizes when it was originally a Pingtel and then a Nortel product, SCS’s target market was restricted to SMBs when Avaya took over the product. 

• Under Nortel SCS was sold worldwide, whereas Avaya is now shutting down SCS sales activities in Europe, North America, Latin America and elsewhere. (Existing SCS customers in these regions, however, will continue to be supported.) With these moves and until marketed more broadly, SCS has effectively been removed as a competitive UC offering in most markets and regions, and is no longer a competitive differentiator for Avaya in the markets most relevant to its business.

Response & Recommendations

• Avaya competitors need to continue aggressively targeting the Nortel channel. Avaya remains in the midst of a long-term product consolidation process. The decisions the company is making clearly appeal to many Nortel resellers, who have been actively training on and selling Avaya products. But other resellers are likely feeling disenfranchised and are ready to count their options. 

• Avaya needs to reconcile corporate messaging that it is transitioning away from hardware- and toward software-based products with its decisions to restrict the regions and markets in which the one software-only PBX in its portfolio is sold. Rather than embrace SCS’s software-centric product design, Avaya seems to be placing considerably more R&D effort behind its system-based communications products.

Avaya’s VENA Makes a Mark in the Data Center Fray

November 10, 2010 – Avaya debuted its vision of how to build next generation networks that better accommodate virtualized resources and real-time applications with its Virtual Enterprise Network Architecture. VENA is intended to reduce costs and simplify network design and operation across data center and campus networks by streamlining provisioning and reducing the need to redesign networks to support new application traffic.

Analytical SummaryPerspective

• Positive on Avaya’s Virtual Enterprise Network Architecture (VENA) launch, because it demonstrates—first and foremost—the strength of Avaya’s commitment to its data networking business, and also establishes a credible approach to enabling customers to build next-generation networks. VENA draws on former Nortel network engineering talent to solve issues of scale and efficiency in virtualized environments. And it draws on its strong network management tools to provision new network services to accommodate new virtualized applications rapidly and accurately.

Vendor Importance

• High to Avaya, because it intends to grow the data networking business it acquired with Nortel as a business in its own right, rather than just play a supporting role to its UC, contact center and business collaboration business. The VENA architecture is a central element to help it revive its former competitive position in data networking, starting with the data center and moving out into the campus. The architecture also can be positioned in enterprise networks fueled by other suppliers’ equipment, offering Avaya the opportunity to grow market share.

Market Impact

• Moderate on the enterprise networking market, because while it may give the former Nortel installed base a good reason to stick with Avaya and base their next generation network designs on Avaya’s vision, it’s not clear that VENA will help to steer Avaya’s existing UC, contact center or business collaboration customers towards Avaya’s data networking, or help Avaya displace established rivals.

Competitive StrengthsCompetitive Positives

• Avaya delivered the VSP 9000 next generation 10 GbE switch in a controlled release ahead of the architecture launch, which allowed the company to develop strong customer references who can speak to the benefits of Avaya’s approach in real world terms (see Nortel Keeps Innovating with VSP 9000 Core Switch, May 20, 2009). Unlike rivals such as Juniper, who described their strategies/visions without having the key supporting technologies in place, Avaya with its VENA launch can bolster its message with endorsements from customers that already have switches in production. That sets Avaya apart from the pack.

• Avaya is addressing a significant pain point in its efforts to speed the delivery of network services in support of new applications. That has been a big point of contention between network operations and application owners. By simplifying the provisioning of new network services and increasing the level of automation to both speed delivery and reduce human error in the process, it is creating a good differentiator.

• Avaya in its January roadmap announcement said that it has added an overlay dedicated networking sales force incented to sell data networking products, and it has obviously been producing results for Avaya. Avaya in August claimed that its data networking unit has produced four consecutive quarters of quarter over quarter growth, and its data networking business increased 30% in its second quarter. Now that sales force has greater ammunition for data center sales with the VENA vision and software upgrades for the Ethernet Routing Switch 8600, 8800 and VSP 9000. 

• Key to the success of Avaya’s VENA strategy is its management tools, such as the Configuration and Orchestration Manager, which Avaya enhanced with a new Virtual Services Manager. The tools provide centralized provisioning of VENA’s Virtual Services Fabric and Virtual Service Networks, and they simplify Shortest Path Bridging configuration. The inclusion of wizards that lead network operators step by step through the provisioning process should help to reduce human error, which is the single biggest factor in network outages.

• Avaya’s use of fully programmable network processors in its switches such as the ERS 8600 and new ERS 8800 allows customers to adopt these next generation capabilities through a software upgrade, rather than a rip and replace hardware upgrade. (see Spring Interop 2010: Avaya Demonstrates Commitment to Former Nortel Data Networking, April 28, 2010). That type of investment protection is unique to Avaya and should appeal to prospects outside Avaya’s existing installed base of data networking customers.

• Avaya is unique in promoting the network-wide visibility it can provide through its network monitoring tools, along with simplified end to end provisioning. This is a refreshing change from the lip service most other networking vendors give to network monitoring and management of next-generation data center networks.

Competitive WeaknessesCompetitive Concerns

• We said it before and we’ll say it again: Avaya’s high level message about being unique in delivering “always on” (reliable), efficient and scalable networking technology is the same tune being sung by every other enterprise networking vendor. That marketing message won’t be an attention grabber for any prospect that’s examined the next-generation network architectures of other rival vendors.

• Rivals will undoubtedly describe Avaya’s vision as a sincere form of flattery, given that it’s messaging seems to mimic their themes. In fact nearly every enterprise networking vendor describes their technology as scalable, reliable (always on) and efficient. And like all other vendors, Avaya is promoting flat networks (eliminating the aggregation layer in a three-tier network design) as the best way to simplify data center networks. Being just about the last one to describe your vision for next generation networks gives rivals the opportunity to say, “been there, done that.”

• Avaya’s reliance on its management tools to help deliver its VENA vision is a mixed blessing. While such tools are necessary for successful deployment of virtual networking, but management is almost always an afterthought in any major networking upgrade or project. Getting new customers to pony up for these tools up front before deployment will be a tough job to accomplish, as will getting sales people to push them as an essential element of the switching sale.

• Avaya is basing the core of its virtual switching fabric on the emerging IEEE 802.1AQ (Shortest Path Bridging) standard to eliminate the spanning tree hurdles. Standards are great, but their purpose is to insure interoperability and none of the other vendors that have outlined their architectures have pledged support for that emerging standard. The competing IETF emerging standard, TRILL, has generated greater support. Although Avaya is confident that SPB is a superior approach to TRILL, superior technology does not always win out.

• The VENA launch was thin on partnerships, with only four partners supporting its vision: VMware (which partners with everybody), QLogic for converged networking processors, Coraid for converged storage, and SilverPeak for data center WAN optimization. It will be important for Avaya to fill that out with more partners who can help fulfill a vision of seamless, interoperable and simplified virtualization in the data center.

• Security, which has been a huge stumbling block for cloud computing, plays a very minor role in the VENA architecture. Avaya describes its virtualization as being inherently secure by virtue of the separation of application traffic into separate virtual networks. That sounds like the same lip service server virtualization vendors such as VMware gave five years ago before they got security religion.

Buyer Actions

• Avaya customers who have, as Avaya officials described it, “hit the pause button” on their Avaya network infrastructure, can now safely hit the play button. Any needed upgrades that were put on hold can be moved forward with assurance that Avaya is strongly committed to its portfolio. And with the VENA launch, Avaya has continued the former Nortel heritage of networking innovations with its software upgrades for the ERS 8600, 8800 and now generally available VSP 9000. Avaya customers looking to upgrade their data center networks to meet the challenges of virtualization and real time applications should evaluate Avaya’s approach.

• Enterprise network and IT managers should investigate Avaya’s claims of simplified virtualization as they examine their next move in the data center. Those with Cisco, HP, Extreme, Enterasys or other investments should not discount Avaya – if only to keep the others honest about their own capabilities and commitments.