Avaya Breaks New Ground

The vendor's midmarket assault, unveiled last week at Interop Las Vegas 2006, also included the launch of new premise-based IP telephony gear, all aimed at customers with 100 to 500 employees.

The new wares include Avaya On Demand hosted services, a new MultiVantage Express all-in-one communications product and a new S8400 Media Server Linux blade designed to upgrade some of the company's older products to the latest version of Avaya Communications Manager.

The new offerings help fill a gap in the vendor's portfolio, according to solution providers.

"One of the things we've said for quite some time is that Avaya has had a void in that midmarket space," said Mike Taylor, vice president of emerging technology at Strategic Products and Services, a solution provider in Cedar Knolls, N.J.

Under the vendor's new Avaya On Demand banner, the company is offering managed services such as IP Telephony On Demand, Contact Center On Demand and Messaging On Demandall out of its own data centers.

Avaya plans to sell the services, which are based on its own communications software, to solution providers via a wholesale model that enables them to set their own prices and create their own services bundles, said George Humphrey, director of Avaya On Demand.

"The key is that each channel partner creates its own solution," Humphrey said, noting that partners will have the option of selling the services under their own label or under the Avaya brand name.

Basking Ridge, N.J.-based Avaya expects the IP Telephony On Demand service to carry an average street price of $25 per user per month, while Contact Center On Demand will sell for about $50 per user per month. Messaging On Demand will be priced at about $5 per user per month, Humphrey said.

Avaya Chairman and CEO Don Peterson said he expects the vendor's channel partners to embrace the hosted services after seeing some successes from its direct sales force.

"I believe that we'll need to demonstrate a little more to the satisfaction of channelsand perhaps end usersthat this can be done effectively and so forth," Peterson said in an interview with CRN at Interop. "Once there's greater comfort with that, then I think we'll see channels reaching out to embrace it."

Peterson estimates Avaya has invested somewhere between $10 million and $20 million over the past few years to build up its managed services offering.

Still, he concedes some uncertainty as to whether or not customers will want to buy hosted offerings from a vendor rather than a service provider.

During the company's recent earnings call, Peterson said that uptake of Avaya's existing managed services portfolio has been slower than expected.

Some solution providers said they are unsure how Avaya On Demand will be received.

"We will offer it to customers, but I'm not certain what the response will be," Taylor said.

Others are more bullish.

"I've been looking for this for a long time," said Jeff Hiebert, CEO of ROI Networks, a solution provider in San Juan Capistrano, Calif., of the new wholesale services.

Hiebert said Avaya's hosted services will provide ROI Networks with an annuity stream without requiring the company to finance a huge infrastructure build-out.

To sell the services successfully, Hiebert said he will have to undertake a retraining effort for ROI Networks' sales and services personnel. He also expects to have to educate his customers on the benefits of hosted services.

"I don't have a lot of customers asking for hosted services because I don't think they are fully educated yet. We'll need to educate them," Hiebert said.

Avaya plans to offer training to its partners to guide them in positioning and selling the services, and to help them understand the impact of an annuity model on their own businesses, Humphrey said.

The new services expand Avaya's existing managed services portfolio, which includes service provider offerings as well as high-end messaging services, Humphrey said.

For midsize customers that prefer to purchase premise-based equipment, Avaya also launched MultiVantage Express, a single-server offering that includes Avaya Communications Manager IP telephony software, mobility applications, messaging, six-party conferencing, auto-attendant and softphones.

Avaya's channel partners played a significant role in the development of the product, which is scheduled to ship in June for $850 per user, including phones.

The company also launched its S8400 Media Server, a Linux server blade that upgrades the vendor's Definity ProLogix, IP600 and S8100 Media Servers to IP telephony and the latest version of Avaya Communications Manager. Solution providers also can offer a server/gateway bundle for new customers.

Avaya's S8400 Media Server is priced at $4,500 for upgrades to existing systems and $6,200 for the server/gateway bundle.