Avaya enters Chapter 11 – beginning of the end for On-Premise? January 19, 2017Posted by Dominic Black in Uncategorized.
One of the giants of the Telecom’s world, Avaya, just filed for Chapter 11 bankruptcy after months of uncertainty around the financial security of the business. This will give to time to potentially reduce its debt load of about $6.3 billion, but Avaya has stated it will not sell its Call Center business. Reuters reported that Avaya had attempted to sell its Cell Center business unsuccessfully to buyout firm Clayton, Dubilier & Rice LLC for around $4bn earlier this year.
Avaya’s revenue had fallen to $958 million in Q4 2016 from $1b in Q4 2015 and this had resulted in a net loss of $750m for the year. Avaya also announced that the company’s foreign affiliates are not included in the filing and will continue normal operations although whether they are sold at a later date remains to be seen.
What does this mean for the market?
Avaya’s 300,000 customers worldwide, which includes 3.1m UC ports and 500k contact center agents, may now be looking at a different solution for the future. A large majority of these will be on long term contracts but there is a huge opportunity for rival providers to start discussions with end customers and Avaya partners alike.
Avaya has around 70 partners in the UK who are authorized to sell a UC (Voice) solution and will be interesting to see who these partners look to work with in the future. Most of these are also selling Avaya’s Contact Center solution, which although will not be sold by Avaya, will raise questions for potential purchasers in the future on the feasibility of investing in an Avaya solution.
This could potentially have a huge impact on the reseller market as partners who have traditionally sold on-premise PBX’s may the move to sell a Hosted VoIP solution. When Cavell researched the reseller market in the UK in 2014, only 60% of the 500 resellers we examined were currently selling a VoIP solution. We have heard of a number of Service Providers already targeting Avaya resellers with a view to them moving away from selling Avaya solutions.
Matt Townend – Director of Research and Consulting at Cavell Group:
“Although predicted by the market for the last few months, the reality of arguably the biggest player in Enterprise communications entering Chapter 11, is surely going to shake up the market”
Cavell is starting our next round of research and will be looking to launch our reports at the European VoIP Summit on the 9th March in London – tickets are still available.