Nortel customers: Don’t panic yet

Users of Nortel Networks Corp.’s products shouldn’t panic, but they should put off any long-term decisions about their communications infrastructure until after Avaya Inc. buys the enterprise voice and data assets of Nortel and reveals its product road map for the combined companies, VoiceCon attendees were told.

Avaya Inc. is likely to consolidate product lines, eliminating some gear, but promises to continue support for several years and to devise a migration path for customers who own equipment that is phased out, said Stephen Leaden, president of Leaden Associates, who sat on a panel discussing what Nortel customers should do now.

Nortel has been operating under court protection from creditors since January and has agreed to sell its enterprise unit – whose products include switches, routers, private branch exchanges, phones, firewalls and unified communications – to Avaya for US$915 million.

“Avaya promises a clear statement of direction within 30 days of [the deal closing],” said Zeus Kerravala, an analyst with the Yankee Group, another member of the panel. “That’s probably the most important thing they must do.”

That could mean changes that have an impact on individual customers depending on what gear they own, said David Stein, principal with PlanNet Consulting, another panel member. “I would be really nervous to consider either an Avaya or a Nortel product until after the road map is revealed,” he said.

Meanwhile, Nortel customers with currently supported products should upgrade to the most recent version of software they can to ensure that the gear will be supported after Nortel is bought, said Brad Tompkins, head of the North American Nortel users’ group. “Just because a product is discontinued doesn’t mean it stops working,” Tompkins said. “If you have an old PBX and all you need is dialtone, great. Keep it working.”

Stein said third-party vendors sell maintenance contracts for discontinued gear, and that may be the most cost effective route for some users.

Leaden said the upgrade route extends the life of the gear and gives corporate telecom decision makers more time to research and acquire the capital needed for network upgrades that might be needed to fulfill strategic communications plans.

Customers with multiple voice vendors in their networks should migrate to other vendors if the have to make a decision soon, Kerravala said. If they have more time, just wait until Avaya’s plans become clearer, he said.

Details from the road map will enable users to make better decisions. Avaya says it expects the deal to close by the end of the year, but industry observers are skeptical, guessing that January or February is more likely. While Tompkins is patient, he said the sooner the road map is revealed the better. “If it moves into February or March, OK, we’re going to have a problem,” he said.

Once the deal is done, there could be another shoe to drop soon after, Leaden said. Avaya is privately held by Silver Lake and TPG Capital, who say they plan to take the company public at some point. That could mean more changes about how the company is run and that could affect customers, he said.

Leaden said he expects no new products from Nortel and that its product lines will be phased out in favor of overlapping Avaya gear.

Stein said customers should be prepared to lose trusted channel partners they have come to rely on if they use Avaya or Nortel gear. While not all will be affected, after the companies become one, some of the partners who supported one or the other vendor will be phased out if they cover the same territory, he said.

The upside, he said, is that these vendors may be offering deals on licensing as a way to lock in customers over the long term, and that could mean big savings. “You have the ultimate leverage during this uncertain time,” he said.

Customers with products that do wind up discontinued should calculate how long they have before they must replace it, weigh the transition plan Avaya puts forward, then draw up a list of other vendors to consider, Stein said.

Looking around for another vendor may be something Nortel customers haven’t done in awhile, because Nortel corporate customers tend to be large and loyal, he said. As a result they may not have an alternative strategic plan in place for acquiring communications gear.


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