Business as usual for Avaya SA

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 20 Jun 2007

This month's takeover of the US telephony hardware manufacturer by two private equity firms will have no impact on the company's local operations, strategy or plans, says Avaya SA country manager Bridget Kelly.

"The market has been really good to us and we're excited about the prospects going forward," Kelly says.

Meanwhile, research firm Gartner says the $8.2 billion takeover by investment firms Silver Lake and Texas Pacific Group Capital should pave the way for its transition to a software communications company.

In an advisory note, the firm says the deal will allow Avaya to restructure its business behind the scenes and away from public scrutiny.

"The investors paid a healthy premium for Avaya ($17.50 per share - 33% more than before rumours began) and will expect to make money on this transaction. It is unlikely this can be achieved without changes to Avaya's previous plans," it adds.

Changes likely to be introduced, Gartner predicts, include streamlining of product offerings, adding middle management with proven track records in the software industry, and increasing the profitability of services.

Changing position

Gartner says Avaya needs to change to better position itself in a market that is evolving away from hardware-based standalone systems and towards software-based applications embedded in other enterprise systems.

The firm has already taken steps in this direction through the purchase of software companies like Ubiquity Software, which it bought for $144 million in January.

That was also the message conveyed to the South African market in March by Avaya VP for the EMEA channel Patricia Hume. She was in the country to develop the company's small and medium business channel strategy for Africa in general and SA in particular.

"The market opportunity here is tremendous," said Hume. She added that the company's product range was migrating from hardware to software with an emphasis on IP telephony.

Avaya's local business development manager Leslie Forsman said the company had provided the digital backbone for last year's Soccer World Cup in Germany and was keen to do the same in 2010.