Avaya furthers SMB ambitions

The communications specialist outlines its latest strategy, which includes partnerships and acquisitions, to break into the marketplace.

SINGAPORE--With the acquisition of Nimcat Networks, Avaya is now ready to capture a slice of the small and midsized (SMB) market, according to a senior company executive.

"We've been focusing on the larger companies, especially in Asia-Pacific, and not so much on the SMB. The acquisition of Nimcat has opened the SMB market to us, because of Nimcat's disruptive technology," said Mark Leigh, president of Avaya Asia-Pacific.

In Sept. this year, Avaya acquired Nimcat for CA$46 million (US$38.7 million) in cash. Canada-based Nimcat makes peer-to-peer communications software called nimX that places intelligence in office phones. This eliminates the use of costly hardware, such as processing and application servers for handling call features such as voice mail and conferencing.

Nimcat's software enables SMBs to reduce their business costs, which especially benefit firms that do not have existing communications servers or have low cash flows, Leigh said.

Up until the Nimcat acquisition, Avaya's play in the SMB market has largely been through its IP Office product which was launched in January 2002 targeting at the top 25 percent or higher end of the segment. The IP telephony player was not hitting the lower end of the SMB market, and the Nimcat acquisition would serve to fill that gap, he added.

"But overall, we've got more work to do with SMBs in Asia-Pacific. The SMB market is a whole new battleground," Leigh said.

Tom Cheong, managing director of Avaya in the Asean region, said scaling enterprise-class applications and systems down to a level where it is affordable to SMBs poses a bigger economic challenge than a technological one, Cheong said.

Therefore, he added, the company is counting on partnerships with hosted communications service providers to tap into the SMB space. Such partnerships, he added, will give Avaya economies of scale to move down-market.

"Our partnership with IBM (in Japan), as part of our hosted telephony portfolio, will use blade servers to deliver telephony to the masses. We can increase the number of corporate users on a given piece of hardware and spread the cost among them."

Besides IBM, Leigh said, other partners hosting Avaya's communications solutions include outsourcing companies like TeleTech in Australia.

He added that Avaya would host telephony services on its own, only if no one in a given market is interested in hosting similar services. "But we are not there to compete with our customers. We are pretty cautious of that."

On how Avaya expects to perform in the SMB market, Leigh said it is too early to set targets. "We will spend the next few months segmenting the (SMB) market, and look at how we can increase our (market) shares," he noted.

The company currently leads the Asia-Pacific Net telephony market with a market share of 38 percent in the second quarter this year, according to analyst firm IDC.

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