The long-running Nortel soap opera took another twist last week, as the auction of the bankrupt network supplier's wireless business neared. Presumptive buyer Nokia Siemens was challenged by venture capitalist firm Matlin Patterson, while Research in Motion declared it had been locked out by Nortel and its creditors.
At the same time, Nortel's long-lost cousin Avaya made a dramatic return, putting in a $475m (£288m) offer for Nortel's enterprise business.
If the enterprise acquisition goes through, Avaya will climb to the top of the voice market with around 23% share worldwide, and will find its voice-centric solutions supported by Nortel's data portfolio, creating a Cisco-style end-to-end proposition. It will also gain a much larger channel.
Neither Avaya nor Nortel have commented on the acquisition, which takes the form of an asset sale in EMEA and a stalking horse deal everywhere else. But that has not stopped others.
Little to fear
If the reaction of the Nortel Networks Users Association (INNUA) is anything to go by, the channel has little to fear. INNUA represents over 4,000 Nortel buyers worldwide, and claims its members spend five times more on Nortel kit than non-members.
An INNUA poll conducted after Nortel's bankruptcy showed that 80% of members intended to move forward with Nortel purchases or deployments.
"INNUA leadership will continue a deep strategic relationship with Nortel leadership and develop a relationship with Avaya throughout this transition to ensure the customer community's voice is heard," the group said in a statement.
Writing on his blog, The Yankee Group's Zeus Kerravala said the acquisition was good for the comms industry, which he sees as having too many vendors to support. He predicted further consolidation in the space, and went so far as to name firms including ShoreTel and Aastra as possible targets.
In a research note, Gartner analysts Bob Hafner, Akshay Sharma and Jay Lassman said Avaya would be a cautious, sensible owner and in no hurry to merge the two product sets, so the Nortel channel might be preserved.
They point out that in spite of its rush to the channel, Avaya has traditionally allowed its end-users to evolve their networks at their own pace; many of its clients remain on Tenovis platforms five years on from that acquisition.
However, Kerravala at the Yankee Group suggests that if Avaya keeps Nortel's portfolio intact it will have to manage an end-to-end-style solution similar to that proposed by Cisco, potentially leading to a bust-up with its technology partners.
Datamonitor's Daniel Hong argues that the acquisition would leave Avaya with a confused product portfolio and dispirited channel that would be tough to whip back into shape."The long downward spiral Nortel has suffered has left the channel dispirited and depleted in number.
Many competitors have spent the past six months wooing channel partners. Avaya was one of those vendors attempting to poach the Nortel channel as a means to both hurt a flailing competitor and bolster its own indirect sales efforts," he says.
Hong adds, "Clearly those efforts were not enough to obviate the need for a full buyout."
Hong and colleague Ian Jacobs say Avaya will have to win over Nortel resellers one partner at a time. This will take a while, as inventory levels in the Nortel channel are still high.
They add, "If the acquisition goes through, Avaya will have bought its way into being a channel-friendly company and that will likely be worth the purchase price."
This was first published in July 2009