July 25, 2006
Avaya announced a profit decrease and replaced
Don Peterson as CEO on the same day. Louis D’Ambrosio is the new CEO. I liked Don – he was a great guy. Unfortunately on Wall Street how nice you are rarely matters – it is all about the bottom line. Avaya’s biggest competition comes from Cisco and then possibly open source communications such as Asterisk. Admittedly the Asterisk threat is a way off but it should be on the radar.
If I were Avaya I would focus immediately on getting the peer to peer technology acquired by Nimcat Networks into the hands of small resellers around the world. One of the fastest growing areas of business will be the SMB market and Avaya really doesn’t play there. This is the golden opportunity for D’Ambrosio.
Other areas I would think about would be a focus on the service provider market. Yes I know the point of spinning off Avaya was to have it focus on the enterprise but in the history of telecom when enterprise spending softened, service provider spending usually did the opposite. So to diversify it makes sense to target service providers. They should likely make an acquisition or two to make this happen. Perhaps a session border controller company and possibly Sonus.
Finally the company should focus more on consulting and integrating. These are still high-margin businesses and can yield plenty of hidden profit. I would also get more involved in CRM integration.
Finally, the company should focus more on what it can do for customers – case studies, examples of how it has helped companies become more profitable and provide better service. Their marketing campaign should focus on how they can make you more money. Decreased time to decision, increased productivity from the warehouse to the boardroom. 100% of the focus needs to be on the customer.
Then they should tie this in with a campaign on helping customers from the smallest to the largest. They should be size agnostic.
If they implement these ideas they will do very well. Cisco’s massive mindshare in the IT department still makes the San Jose-based company a serious threat but Avaya has a sterling reputation and brand and I believe solid execution will turn their fortunes around immediately.