Cisco acquires Tandberg for $3 Billion

Cisco announced earlier this week that they acquired Tandberg for $3 Billion. Tandberg is a world wide leader in video conference equipment, and puts Cisco into a very dominant position in this market.

Cisco’s acquision gives them a bigger install base for their Telepresence product including a whole new line-up in the lower end of the market. This now also puts them in an excellent competitive position against Polycom, the other dominant market player in the video / voice market.

BTW – Polycom is now an excellent market play. I’m wondering who might decide to pick-up Polycom and gain a very quick foot hold in the voice / video market to better compete in the converged world. HP perhaps ? Silver Lakes, one of the private investors that owns Avaya ? Microsoft ?

On another note, I find it rather interesting that Cisco overpaid for Tandberg, although couldn’t see any value in acquiring the Enterprise division of Nortel which was acquired a few weeks ago by Avaya for $900 Million. A Cisco / Nortel marriage would have created a Telecom powerhouse. True, there’s a lot of product overlap, and as I speculated a few weeks ago, Cisco decided to let Avaya take control over Nortel and wait for Avaya to mess it up. That’s the only reason I can think of for them not being at the Nortel bargaining table.

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

TheTelecomBlog.com is looking for feedback

I started this blog about 3 months ago, initially with the intention of keeping Digitcom’s customers up to date with product notices, updates, features, and releases. I wrote a few posts on the Avaya IP Office and Cisco’s UCME (Unified Communications Manager Express) products, and quickly graduated to more Telecom related news, initially centered around Nortel, and then gradually Telecom and VoIP in general. Although I still cover, and have an active interest in the Nortel saga, my general interest in that particular subject matter has waned a bit as the company winds down operations.

I have a passion for Telecom 2.0, and have written extensively about the next generation of where the market is headed. I enjoy reading and writing about the Canadian cellular market, and generally give Bell, Telus, and Rogers a hard time. I’m a champion of the underdog, and want to see the new carriers take a bite out of the incumbents market share (I am writing this post while waiting on hold for a Rogers technical support rep – our home internet connection is down and I have been on hold for almost 20 minutes).

I have never lacked content – the Telecom market is filled with amazing news. Google Android, RIM, Apple’s iPhone, Cisco, NEC, Mitel, ShoreTel, Avaya, and yes, of course, Nortel ! Many people ask how I find the time to write Telecom blog posts on a daily basis. It’s a hobby, not a job. Jason Finnerty also writes two blog posts per week. I should add that if I were keeping this blog as a profit venture I would be out of a job, and certainly wouldn’t feed the family. The only means of profit comes from those small little Google ads that you see at the right hand corner of the screen, and the last I checked I think there’s enough in the account to purchase a birthday cake for my daughter’s upcoming birthday party (she wants a white, rectangular, with purple swirls around the side b-day cake).

I have met and had conversations with some very dynamic and interesting people as a result of them finding me through this blog. I have been apprised on numerous occasions of some very confidential non disclosure “say nothing to nobody” kind of news, and have heard from some “industry insiders” with regards to stuff I definitely shouldn’t be told. That has certainly been a positive unexpected end result. I have bumped into, and have been approached by quite a few people that have introduced themselves and expressed how much they like reading these posts. That’s certainly encouraging as I sometimes wonder whether I’m writing into a vacuum !

Why am I writing this ?

Well, I know I’m not writing into a vacuum based on the positive trajectory of the Google Analytics for this blog – the stats are growing. BUT, I’m looking for some feedback. Probably not posted as comments (although you can if you wish), but, instead feedback through a personal email (which you can send to jw@digitcom.ca). I’m now in the process of doing a minor re-design of the web site itself, and am working on the scope of content moving forward.

Am I headed in the right direction ?

What would you like to read more of ?

What would you like me to cover – more news ? more technical, cellular ?? I’m looking for some feedback people – so, please drop me a personal email with your thoughts.

More: As an aside, I am still on hold waiting for a Rogers technical support rep. Their service stinks – it’s been 40 minutes and holding.

Looking forward to your feedback.

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Avaya is giving away FREE Avaya IP Office phone systems

Well sort of ! Don’t get too excited just yet. But, read on …

This fall, Avaya will be visiting 20 small businesses—organizations with 10 to 50 employees—and giving them FREE communications makeovers. They will help design and install solutions specially tailored to each company’s specific needs. Actually, the installation, if the winner happens to be in a city serviced by Digitcom.ca, might be done by one of our own technicians.

How it works:
It’s simple: You will need to explain the “disconnects” (no pun intended of course) that are hurting your business, and if you win, Avaya will help you fix them (by donating a FREE Avaya IP Office phone system).

The disconnect could be technical—like an outdated phone system, or a patched-together “system” that’s unreliable. Or it could be a human problem—like frustrated customers or a key employee who no one can get a hold of. Or it could be a combination of both.

Whatever the problem is, you will need to explain this in a short video or written essay. You can be funny. You can be serious. You can be desperate. But however you do it, be sure to submit it by October 15, 2009.

Interested in finding out more – check this out …

Interested in speaking with Digitcom.ca about a new phone system (that’s not FREE) – then visit our web site or give us a call – 866-667-8357

P.S. I have been in the Telecom business for 20 years. I’ve seen some real horror stories out there, so if you are looking for some good ideas then give me a shout !!

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Avaya wins Nortel’s Enterprise business for $900 Million

I did this post as a guest post for AllAboutNortel.com and am cross posting this on TheTelecomBlog.com.

It’s been a long downhill battle for the last many years. Nortel has been languishing in the business sector, their prized business hampered by years of poor management and financial crisis. It’s a rather unfortunate end for Nortel, the staff, customers, dealers, and the Telecom market in general.

But, every cloud has a silver lining.

The Silver Lining: Every industry needs healthy competition, and Nortel brought that in spades for many years. Healthy competition spurs innovation, lower prices, and a spirit to win. At this point Avaya’s purchasing Nortel is a reflection of the consolidation happening in the marketplace, making way for Telecom 2.0 and the changes to come. On one side, competition is healthy, and one the other, so is consolidation; It will make way for stronger players in the CPE space. That’s the silver lining.

Nortel was a Canadian Telecom institution. Actually, Nortel was a Telecom powerhouse. And there isn’t much more Nortel left to go around, especially with today’s announcement that Nortel’s Enterprise business unit has been sold to Avaya for US$900 million in cash, with an additional pool of US$15 million reserved for an employee retention program.

The Nortel business units left are Metro Ethernet Networks (MEN), the carrier business (including VoIP), the stake in the Nortel-LG joint venture, and the LTE patents, which weren’t part of the Ericsson deal.

Some of the main highlights of this deal include:
– Nortel will sell the assets of the Enterprise Solutions Business, and shares of Nortel Government Solutions and DiamondWare to Avaya
– Avaya to Pay US$900 Million in Cash to Nortel, with an Additional Pool of US$15 Million Reserved for an Employee Retention Program
– Canadian and U.S. Court Approvals of Sale will be Sought at a Joint Hearing on September 15

It’s hard not to be somewhat nostalgic about the sale of the Enterprise division, especially given it’s business history. Nortel’s origins date back to 1882 as a manufacturing arm for the Bell Telephone Company of Canada, and they were incorporated as a separate company in 1895 known at the time as Northern Electric.

Unfortunately, both Nortel, and their technology has been lagging in the market for some time – quite a difference from only a decade ago when Nortel was the largest company by market CAP in Canada, their shares making up over 25% of the Toronto Stock Exchange’s main composite index.

The last few years Nortel began losing market share, and now Avaya needs to stem that tide, consolidate business operations, and hopefully for Avaya, remain profitable. In the best of times this is a huge task. Under these circumstances, GARGANTUAN.

Avaya is a large Telecom player and certainly has the resources and brains to make this a success – it won’t be an easy task though.

Something about this auction process that has me somewhat surprised is Cisco’s lack of presence or mention at the bargaining table. Cisco is the undisputed worldwide leader in voice and data technology. At one time Nortel was their biggest competitor. And it seems that Cisco has almost ceded their fate into someone else’s hands. With the addition of Nortel, Avaya is now the number #1 voice player, by far, and now has control over Nortel’s switches and routers, clearly stepping into Cisco’s sandbox. Clearly the folks at Cisco were aware of this. I suspect they decided to let Avaya take control over this asset, mess it up, and then clean up the mess. I can’t think of any other reason why they weren’t at the table.

Either way, today marks the end of a Telecom dynasty, and the beginning of a new one.

What are your thoughts ? Is this a good move for Avaya ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Telecom 2.0 – Where are we headed ? Nortel, Mitel, Avaya, Cisco, ShoreTel …

I did a guest post on AllAboutNortel.com yesterday. You could read the entire post here: , or, I have re-posted my guest post on TheTelecomBlog.com I know, seems strange that I am re-posting my own blog posting, but, I actually did this as a guest post for another site. Mark Evan’s has been a great help and a big supporter of this blog.

No, I don’t have a crystal ball but I wish that I did. I am looking at the next generation of telecom, and wondering where this rapidly evolving market is headed. I’ve been in the telecom business for 19 years – it’s almost like a 6th sense (although my sense is sometimes off).

With that in mind, let me offer my take of where the enterprise telecom market is going in the short and long term. Keep I mind I’m writing this post at a time when the customer premise-based equipment (CPE) market is at a crossroads.

Nortel’s bankruptcy and uncertain future has left many current and prospective customers wondering where to take their new telecom equipment business. Does it make sense for an existing Nortel customer to spend money on upgrading Nortel equipment, or, as my father explained in my early years in business, “never throw good money after bad”.

In other words, many of my clients are now throwing out their older Nortel gear in favor of new hardware, rather then spend dollars on upgrading their older Nortel systems.

Either way, Nortel is still a large player in the market but their absence at the table has left a void filled by their competitors. Of course, over the near term this issue will be resolved.

And what will follow in the enterprise telecom market?

In the short term, many customers looking for CPE will gravitate toward some of the larger players such as Cisco, Avaya, Mitel, and NEC. I believe these players will continue to shuffle market share around ever so slightly. There are also some smaller players in the CPE market – notably ShorTel, Asterisk / Digium, and Microsoft.

Some thoughts on some of these players:

- Microsoft hasn’t become the competitive threat I suspected they might – the enterprise market hasn’t adopted Microsoft’s OCS or Response Point telecom equipment – yet.

- Cisco is obviously making headway into the larger space but their SMB products haven’t been that widely adopted – yet.

- Asterisk, although a threat, isn’t taken that seriously within the enterprise market – yet. It seems that customers need a “manufacturer” to scream at!

The other spectrum of the enterprise equipment space is the looming threat of Hosted VoIP, Google, and Skype, which is hanging over the CPE vendors like a very dark cloud.

The world is gravitating toward an IP-centric model, and the “cloud” at a rapid pace. Over the next few years, there will a gradual adoption of cloud telephony. In time, the technology will be widely adopted as the technology evolves and becomes more reliable.

As a CPE vendor, I view the threat that companies such as Google and Skype hold over the CPE market with some fear. Not today, but certainly in the future. Cloud telephony represents a paradigm shift – something to be watched, and shortly, feared. I am going to label this next generation of telephony as “Telcom 2.0”.

What does Telecom 2.0 look like ?

Speaking along the lines of paradigm shift, the next generation of phone systems will be a highly intelligent server, much as they are now. The talk/communicate medium will not necessarily be the bulky phone on your desk, but rather a variety of end point devices.

Skype, Google, Facebook, iPhone, Blackberry – these all-in-one appliances will be the talk/communicate path, and the server at the back end will bridge these technologies together. And with the recent news of Silver Lakes (Avaya’s parent company) being part of an investment group buying a 65% stake in Skype, it will now bring together the old and newer emerging technologies.

In the meantime, I’m now watching the race for Nortel’s enterprise asset – the winner will change the landscape considerably.

What do you think? Where is Telecom 2.0 heading?

More: AllAboutNortel.com received some amazing, very insightful comments which can be read here.

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

The CPE Race is on ! Cisco, Avaya, Nortel, Mitel, NEC

Leading the way in the North American CPE’s race to see who the #1 Market Share company in the CPE sector is proving to be quite interesting.

At the halfway point it looks like Cisco has taken the lead, but there is a lot of year left, and some fantastic competitors.

These top 5 companies have gobbled up the lion’s share of the CPE sector, providing nearly 66% of all Customer Premise Equipment in North America. An amazing statistic, but it’s actually down from 70% in 2008. There are some strong competitors that are making up the rest of the market, but the top 5 are the companies to watch.

A bit about them and some explanations for their current success according to Allan Sulkin with nojitter blog:

- The “Marketing machine” that makes Cisco so ubiquitous has helped to establish the brand, while top-rated dealer support and training ensure that the support is there when the customer needs it. Being known as the safe choice doesn’t hurt, either.

- Consistent focus on aggressive pricing has enabled Avaya to stake it’s claim on the market behind Cisco. Bundling the UC All-in-One license fee with the Aura Communications Manager Enterprise Edition is unbeatable, and their licensing fee for the Standard Edition – only $50 – is one of the best deals around.

An aggressive pricing strategy combined with a strong product lineup allow Avaya to be a serious competitor, both at the Enterprise and especially the SMB level. As an Avaya dealer, I know that Avaya has some very aggressive (mostly Nortel targeted) discounts on right now.

A fiercely loyal customer base has allowed Nortel to hold onto the third place position. Though they may be losing some of their market share in the high end of the market, Nortel has been able to achieve stability in the lower risk/more economical market segment. The future of Nortel is certainly unpredictable at this point, but one thing is for sure – with a solid 12% of the market, there is still some value in Nortel.

Sulkin explains that NEC was able to slide into the 4^th place position over Mitel because of their recent improvements in the larger line size segment in the past quarter. Launching the UNIVERGE SV8500 system has allowed NEC to reclaim the customer base equipped with the NEAX2400 systems. In a welcomed change from the past, NEC is now using webinars to provide more company and product information to the consultants and analysts that can help spread the word about the changes in NEC.

Mitel has traditionally focused on the lower end of the enterprise market, but over the past few years they have been growing the capacity of their product lineup which has helped them gain more market share. Doubling the port capacity of their flagship 3300 and acquiring Inter-Tel has provided new direct sales/service opportunities as well as a solid team, skilled in selling managed services.

Well, in the top half of the year these five companies have shown solid and consistent performance. The competitors, many with less than 1% of the market but in total over 10%, are nibbling away at the leaders, hoping to break through the back of the pack and emerge as a real contender. With an estimated 5.5 million line stations in F2009 – this could make, or break, these companies.

Jeff www.digitcom.ca

Nortel’s Enterprise acquisition by Avaya is being investigated by the US Dept of Justice. Canadian Jeff Wiener writes to DOJ with reasons to back the deal

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U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001, USA

To Whom it May Concern:

It has recently come to my attention that the Department of Justice has taken interest in Avaya’s acquisition of Nortel’s Enterprise division. While I understand why the DOJ might be interested in this acquisition, I believe any competitive concern is without merit. As a result, I would encourage the DOJ to allow the acquisition to proceed.

I write this letter to the DOJ as both an active Avaya dealer, and a telecom industry insider. The Avaya link is important to the extent that I speak from an Avaya perspective, while my industry knowledge from nearly 20 years in the telecom market, which has provided me with intimate knowledge of the competitive landscape.

It appears the customer premise equipment (CPE) business market consists of five major players, which hold the following market share:

Cisco = 20.9%
Avaya = 15.4%
Nortel = 11.5%
NEC = 8.3%
Mitel = 8.2%

These five companies hold nearly 65% of the worldwide market share for CPE equipment, and although the company I work for, Digitcom.ca, represents both the Avaya and Cisco product lines, the technologies representing the biggest competitive threats moving forward are surprisingly not on this list.

What are those technologies, who are those companies?

Microsoft
Skype
Google
Hosted VoIP

The CPE industry is going through a paradigm shift with a VERY rapid migration away from the CPE market toward alternate means of communication, including the four threats listed above. These are the technologies that are changing our industry. The fact that Avaya is acquiring assets as part of Nortel’s bankruptcy protection process is proof the CPE industry needs some consolidation to better prepare for the future.

Nortel, Avaya, Siemens, RIM, Matlin Patterson. Things are heating up.

Looks like things could get interesting in the race to acquire Nortel’s assets.

Matlin Patterson has submitted a $725 Million bid for Nortel’s CDMA assets. Looks like this offer trumps Nokia Siemens offer by $75 Million. It also looks like RIM is interested in acquiring some of Nortel’s assets.

RIM is of course a Canadian company and could clearly take advantage of some of the BILLIONS in R&D tax credits, BILLIONS that Nortel has on their books in tax losses, and hundreds of telecom and IT related patents. Seems like a no brainer ? Or you would think anyway. BUT, it seems that RIM was told if they wanted to make an offer on the Nortel CDMA business that they could not submit offers for other Nortel assets for a year.

Whose interests does this serve ? Certainly not the bondholders, pensioners, employees, and even Canadian’s … Isn’t this bankruptcy process intended on maximizing the remaining value of assets to maximize pay-put to these groups ?

Is this a Nortel imposed limit, or a federal limit ? Either way, there should be an exception.

Avaya’s offer for Nortel’s assets is a first step. It’s a $475 Million offer. We’re months, many court proceedings, and multiple offers away from any of this closing. I suspect the $475 Million offer by Avaya is a first offer that will no doubt be trumped by competing bids over the next month. Cisco has been sitting on the side lines which I find rather surprising. Avaya’s acquiring some of this Nortel technology will clearly put Avaya into more of Cisco’s cross hairs. RIM’s got some big tax losses, patents, and R&D credits that they could apply. Nokia Siemens is now at the table, Matlin Patterson is obviously watching and bidding, and I’m sure other bidders will now throw their offers in. Looks like the capital markets are easing quite a bit, the recession is dissipating, and dollars are now getting spent. I’m going to check my piggy bank and see if we can come up with $476 Million :

Managing QoS on a VoIP LAN / WAN network

Touching on some of the issues I addressed in previous BLOG postings about VoIP and Quality of Service (QoS), we have addressed LAN and WAN VoIP related issues. IN particular, on the LAN side, it is certainly possible for an internal corporate network to itself get flooded with data, and in turn, experience packet loss, delay, jitter, echo …

On an internal network you can install a QoS (quality of service) switch which will prioritize the voice packets over the data packets on the internal network. Installing a QoS enabled router between two offices with data packets running over the Internet will NOT necessarily fix voice-related issues. That is because the voice packets are still running over the Internet, and remember, there is NO guarantee when sending voice over the Internet.

How do we overcome these issues? QoS is probably one of the most critical pieces. If we can GUARANTEE QoS, then we can GUARANTEE voice (as much as anything can ever be guaranteed). Therefore, if we wish to connect two offices together in a VoIP mode, or have someone working from home using VoIP, and you want perfect voice, then you will need to purchase POINT-to-POINT bandwidth.

This has been a frequent issue when dealing with customers. Perfect costs money in a VoIP world. I have many customers connecting home workers in the branch offices in Toronto, Montreal, new York, Chicago…without any problems whatsoever. I have other customers connecting two offices together, one two blocks away from the other, with terrible voice quality. If you use the Internet as your point of medium, then, and I will repeat what I said earlier, your voice will be subject to the vagrancies of the Internet.

My VoIP engineering rule: Garbage In = Garbage Out

And as I have said before, it doesn’t matter whether you are using an Avaya, Nortel, Mitel, Cisco phone system, they are all subject to the same issues.

Jeff Wiener
Digitcom.ca, 250 Rimrock Rd., Toronto, Ontario

SIP Trunking – a new line beginning

Let’s simplify this otherwise somewhat complicated concept.

SIP Trunking is the mechanism used to connect phone lines into an organization’s business telephone system, and is emerging as a viable alternative to legacy (TDM PRI and analog lines). A SIP trunk is essentially a telephone line, or series of telephone lines and DID’s brought into the office over a broadband (Internet) connection. The SIP trunk is a viable option, although the technology is relatively new and still not that well understood by the carriers. The problem with a SIP trunk, which must be addressed, is that since the telephone line is coming in via a broadband / Internet connection, the quality of the data line from the organization’s offices into the SIP providers premises is absolutely critical.

Digitcom has been researching SIP trunk providers, we have done 4 deployments so far (3 on Avaya IP Office, and 1 on Cisco Unified Communications Manager Express) including our own office, and have had excellent success. All of these deployments have been in Toronto. We’re finding it quite challenging finding reputable carriers although we’re making some progress. This is obviously a work in progress, so we’ll keep you posted.

Jeff