Avaya to put $165 million into Ontario R and D labs

When Avaya Inc. spent just over $900 million to buy the enterprise telecommunications business of Nortel Networks almost exactly a year ago, there were concerns about what it would do with the two Canadian research and development labs it acquired.

The company answered the question Monday by announcing it will invest $165 million over three years in the facilities in Ottawa and Belleville, Ont., so 350 staffers can continue to work on new unified communications and collaboration technologies. The Ontario government will add another $5 million.

“As we acquired Nortel Enterprise Solutions last year and married it with Avaya’s development group we realized we had a real recipe for success here,” Ross Pellizzari, president and managing director of Avaya Canada, said in an interview.

“So we’re going to continue to invest in Ontario and retain and attract more skilled labour as we go forward and the business grows.”

The money, which will be used to hire staff and pay for lab facilities, helps fulfill a commitment Avaya made to Investment Canada to get approval for the acquisition of keeping at least 350 R&D positions in the province.

Avaya has about another 550 administrative, sales, marketing and support staff across the country.

Since buying Nortel, Avaya says it has increased research and development spending here by 25 per cent.

The other big buyer of Nortel assets, Ericsson Canada, has also been putting money in here. Patricia MacLean, Ericsson Canada’s director of communications, said Monday the company has hired 100 more staffers here since it paid over $1 billion for Nortel’s wireless businesses. The Ottawa lab’s expertise in the next-generation wireless technology called LTE (Long Term Evolution), particularly for helping Nortel’s CDMA-based carrier customers, was seen as a key asset.

In September, Ericsson took politicians and reporters on a tour of the former Nortel wireless lab it runs in Ottawa to emphasize how important the facilities and staff are to the company’s operations. Before the acquisition Ericsson also had a research lab in Montreal.

Avaya’s Ottawa lab works on web.alive, a virtual conferencing and collaboration environment, some application design and some work on the company’s small and medium enterprise applications. Belleville developers have done work on the interface for the upcoming Flare tablet.

But they also work on supporting legacy Nortel telecom and telephony equipment, as well as on merging certain Nortel capabilities into the Avaya Aura platforms. That includes the ability to link Aura systems to Nortel handsets through Avaya Session Manager.

For example, Pellizzari in current and upcoming releases of Avaya’s IP Office platform for SMBs has features from Nortel’s BCM (Business Communications Manager) line.

The integration, he suggested, has gone smoothly. “Everybody wants to protect the products they designed,” he said, “but when you put the two teams together they pulled the best out of both product lines.”

How many more people Avaya will add to its R&D labs depends on the company’s growth, Pellizzari said.

Given the recent uncertain economic news that’s not encouraging. But Pellizzari, who joined Avaya earlier this year, is positive. “I’ve been here six months and have been pleasantly surprised at the growth we’ve had.” He wouldn’t give specifics because Avaya doesn’t break out its Canadian sales numbers. However did add that “I’m cautiously optimistic we’ll continue to see double-digit growth.”

While looking ahead to new products, Pellizzari also stressed one of the company’s biggest initiatives is to continue supporting customers with Nortel gear.

“Ontario is home to some of the company’s most critical R&D activities, facilities and personnel,” said Avaya CEO Kevin Kennedy said in a news release accompanying the announcement. “This investment from the Government of Ontario reinforces our commitment to innovation in Canada and builds on the expertise of our Ottawa and Belleville R&D teams.”


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