Can Cisco benefit from Avaya/Nortel deal?

Product overlap and rationalization may drive customers to other suppliers

So Avaya did the expected and made an offer for Nortel's enterprise business. But the "stalking horse" arrangement really initiates an auction for the Nortel asset, with a starting bid of $475 million.

Should Cisco offer a bid? Or should it wait and welcome refugee customers with open arms?

Avaya gaining Nortel would give the company a double digit market share lead over Cisco in enterprise telephony. Currently, Avaya is No. 1 in the market with a share of 16% to Cisco's No. 2 position of 14%. Nortel would add its 10% share to Avaya, or anyone willing to outbid Avaya for the business.

But there will be significant product overlap and rationalization issues to contend with, for Avaya or anyone else in IP telephony willing to play a hand in the Nortel enterprise stakes. And those 4,000-plus Nortel customers may get antsy waiting for word on the future viability of their installations -- or the ultimate acquirer of their incumbent vendor.

This could open up an opportunity for Cisco and other vendors as customers assess their options. But should Cisco wait for the defectors? Or should it outbid Avaya for Nortel Enterprise Solutions and gain leadership in enterprise telephony?

What do you think?

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