Avaya bought for $8.2 billion! A sign of the times

The longstanding stalwart PBX giant Avaya was recently bought by Silver Lake Partners and the Texas Pacific Group for $8.2 Billion. Aside from it being a lot of dough, this illustrates the turmoil happening in the competitive corporate phone system business. From my perspective, I think they paid too much. Avaya has good brand recognition and has a large foothold in the Fortune 500 companies, but they don’t scale down well and they are expensive! With the growth in the VOIP market and smaller and cheaper competitors entering the market, I don’t see how Avaya can maintain their pricing for very much longer. The challenge then becomes, how do they make money selling for less?

For companies with less than 10,000 employees, their are viable (functionally better) and cheaper options available. While CIO at Peer 1 Network, we opted to put in a system from ShoreTel, after getting sticker shock from a quote for an Avaya system. In the end, Peer 1 will have 12 sites and at least 2 call centers (one large, one small) up and running on ShorTel for roughly the same cost as an Avaya system for 3 sites and one (large) call centre. And… the functionality and flexibilty of the ShoreTel VOIP system is arguably better than what you get with Avaya.

Given the alternatives out there for small and medium sized businesses, I don’t see how Avaya can compete long term.

Now having said that, there is no question that Avaya has good products. If the new owners are to get some return on their investment, they’ll have to change the direction of Avaya and focus on the SMB market as well as beefing up it’s VOIP offerings. Even then, they will be the ones chasing the ShoreTel’s of the world! Good luck to them.