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Avaya CEO talks competition, debt, innovation

Kevin Kennedy says managed unified communications services are more attractive

By , Network World
March 28, 2013 11:58 AM ET

Page 4 of 7

It was always the anticipation that 2013 would be the year that we would try to go out [and file an IPO]. We filed earlier in an effort to - the market had gotten frothy and the owners had asked for us to file so we did. By the time that had happened the markets began to close on us.

Is IPO in the future?

It was always the anticipation that 2013 would be the year that we would try to go out. We filed earlier in an effort to - the market had gotten frothy and the owners had asked for us to file so we did. By the time that had happened the markets began to close on us. At the end of the day that's the call of the owners. My job is to make sure that we're continuing to improve the company so that [IPO] becomes a possibility, and I'm here every day to try to make that a possibility. To be successful your numbers have to work and the market has to be receptive to an IPO. In that particular period we filed in June and by August it had become a very dubious market and it was not optimum for us to go out. Again, owners will make those decisions. They're very clear for me to stay focused on improving the products, and that's what I do.

In 2012 Avaya lost some market share in terms of endpoint support to Cisco. What's going on there?

This year we have recently reengaged the mid-market. After we did the Nortel acquisition on both the contact center and the unified communications side our low-end and mid-market offerings became stale, and we were more focused on the high end. It is true that we have lost share in the mid-market. On the other hand the good news is we're on a new product cycle and the product you just asked me about that is so competitive is one of the reasons that we're winning again. You'll continue through 2013 to see us focused on both the contact center side as well as the unified communications side in the mid-market.

The analysis was that what Avaya had lost had gone pretty much directly to Cisco.

There were multiple beneficiaries of it. I don't think they were alone.

Microsoft's Lync is coming up as a less expensive way to get into unified communications. What do you say to customers who are considering it?

We've made it very clear - in effect many of our customers have made it very clear that there are certain things that Lync is ready for and certain things that they are not. Are they a full replacement for a phone system as you think about a phone system in the past? The answer is no.

What are the shortcomings?

There are feature deficits. Are they a full replacement of room-based videoconferencing system today? The answer would be no. Are there many things that you would have to add to integrate with it to make it a full system? The answer is yes. Perhaps one of the most important points is it's highly bandwidth consumptive. Our focus on low-bandwidth, high-def is a focus that irrespective of the top two competitors you may choose you'll find us to be 50% less consumptive of bandwidth and 50% less expensive. Part of that is an architectural issue - one being more a peering architecture vs. a cascading architecture. It's not something you can simply throw a new codex at and change. The real reality is customers and employees will decide what tools they want to use, and it won't be just one tool. IT organizations will decide where they will want Lync to be, and they'll decide where they want bandwidth efficiency in their communications network. I personally believe you will see the coexistence of multiple technologies, not a single technology that is the only answer. That's actually one of the reasons we were very clear today on this notion of an open collaboration platform, a sort of collaboration environment because we believe all of the answers are unlikely to come from any one company. If you want an application that can distribute an SMS to every device that you own vs. just one, well a company may want that and a company may get that from someone else other than Avaya - Microsoft, Cisco - and may want to implement it. That notion of openness is something that we're going to continue to foster. We think the computer industry evolved in that way. That's why WebSphere and WebLogic became what they became in that industry and it's a very different philosophy than you'll see from others.

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