Avaya was borne out of AT&T/Lucent's legacy. But since its 2000 launch, the enterprise telephony vendor has tried to recast itself as an enterprise applications company, with a focus on voice. Recent moves include the migration of Avaya's legacy PBX to a Linux-based server application, and the introduction of an application server for partners and users to develop VoIP-integrated software such as applications that integrate VoIP and messaging with ERP software, Web sites or portals. Avaya CEO Donald Peterson recently discussed the company's evolution, as well as current trends in the enterprise VoIP market, with Network World Senior Editor Phil Hochmuth.

How does Avaya's IT- and applications-approach to telephony affect Avaya's partners, customers and its own product development?

They're either going to change their businesses or struggle with the evolution. That's not a new story. There is still a TDM installed base that needs to be serviced, and there will be a significant revenue opportunity for folks. But the longer-term value opportunity will be in this new world. By creating our own application server, in some ways we're trying to give an advantage to people who have written code for Avaya telephony products in the past. In the future, we will put the call manager and communications manager into an [IBM] WebSphere-like platform, where people would write their applications. That will most certainly happen over time.

As Avaya has moved deeper into software and applications, Microsoft has become more interested in voice technology. Does this worry you?

That's absolutely on our radar screen. Microsoft's Live Communication Server does call control, so in that sense it's a direct competitor. But call control long ceased to be the only offer in a PBX. There are 800 features that were created at different times for different customers that we support. Microsoft will be awhile catching up with that. Having said that, there are a number of users, particularly at the small end, where the LCS [Live Communication Server] could catch on. Certainly in the beginning, it's cheap dial tone. Microsoft has a huge network of developers that you would expect to be writing against that. It's going to be a rapidly developing area. But telephony is a non-trivial exercise. So I don't think I'm worried about large companies turning to LCS in a wholesale way in the near term.