Category Archives: Unified Messaging

SIP Pioneer Reportedly No Longer at Adobe

I have heard reports that Henry Sinnreich, the “godfather of SIP,” has left Adobe Systems.

Some suggest that Sinnreich was included in the latest wave of layoffs at Adobe, but I haven’t been able to confirm those reports. While it appears Sinnreich is no longer at Adobe, I don’t know the circumstances surrounding his departure.

I’ve had the pleasure of working on SIP-related initiatives and partnership with Henry. I wish him all the best in his future endeavors, wherever they take him.

Rumor Musings: Avaya Acquisition of Polycom Plausible

Rumor buzz this week has intensified, and at least some it involves a mooted acquisition by Avaya of videoconferencing vendor Polycom.

Unless one is an insider — which, in this instance, I am assuredly not — one never knows whether rumors of these deals represent anything other than an optical illusion of smoke without fire. Insiders know what’s happening behind the scenes, but they’re not supposed to tell anybody, notwithstanding apparent evidence to the contrary as exemplified by the scandal involving Galleon Investments and others.

So, we’re left to play Sherlock Holmes in the technology markets, looking for clues and employing deductive reasoning to ascertain whether a given rumor possesses anything more than surface plausibility.

As it turns out, a case can be made for an Avaya acquisition of Polycom. It could happen. That doesn’t mean it will happen, and I am not advising anybody to bet the farm on such an outcome. It’s just that looking at Avaya’s strategic ambitions and how Polycom could further them, I could envision a scenario in which Avaya takes an acquisitive shine to its longstanding business partner.

The partnership, while not evidence that a closer relationship will ensue between the companies, represents coincident interests and a history of working together.

Additionally, let’s remember that Polycom might be amenable to a takeover in the wake of Cisco’s purchase of its primary videoconferencing rival, Tandberg. Polycom could continue to stand alone, but shareholders and other major stakeholders might be thinking that the timing and circumstances favor a sale.

Let’s also consider Avaya. The company bought insolvent Nortel’s enterprise business for more than $900 million at auction last fall. It’s still assimilating that purchase, dealing with product overlaps, roadmap questions, and channel issues. Still, when one considers the searing ambition that drove that acquisition and that continues to power the strategic thinking in Avaya’s executive suites, it would be folly to completely dismiss the potential for Avaya to make further M&A moves.

Avaya’s CEO is Kevin Kennedy, a former Cisco executive who subscribes to the same GE-inspired mantra as John Chambers regarding market focus, specifically the part about aiming to be first or second in every market a company enters.

Cisco and Avaya go head to head for market leadership in enterprise VoIP and unified communications. Meanwhile, video-based communication and collaboration are seen as the next major wave, with Cisco betting heavily on the space and Polycom moving into a prominent market position in videoconferencing on the back of its voice-conferencing franchise. Avaya could see ownership of Polycom as both a competitive necessity and a natural adjunct to its existing business.

Remember, too, that Avaya is a private company, richly backed by the munificence of private-equity houses Silver Lake and TPG. Being private, Avaya has more liberty than most public companies to devise and pursue a long-term strategy. Having the backing of Silver Lake and TPG potentially gives Avaya the means to swing for the fences.

There are reasons, perhaps many, why an Avaya-Polycom deal won’t transpire. This rumor, though, seems to have more plausibility than most I hear during an average week.

Cisco: Results Impress, Guidance Encouraging, Challenges Remain

Cisco announced encouraging second-quarter financial results at the close of trading yesterday. It also provided robust guidance for the quarter ahead, even if its optimism was of an understandably cautious vintage.

In the technology space, Cisco CEO John Chambers and his team rank near the top in the way they deal with the analyst and investor community. Cisco set up this “market beat” perfectly, and it struck the right tone regarding outlook. Really, Chambers and company are masterful in how they prepare for and execute these quarterly calls with analysts and investors. These calls are like performances, in that a lot of preproduction work goes on behind the scenes before the event itself.

Not that there’s any sleight of hand in Cisco’s actual results, though. The numbers were solid. As Cisco said, quarterly results were relatively strong across product lines, industry sectors, and geographies. Some were better than others, though, and I’ll touch on that later.

Cisco is happy enough with its results and, more important, with its business prospects that it will begin hiring in anticipation of continued growth in established market segments as well as in sectors that are relatively new to the company. All told, Cisco will add from 2,000 to 3,000 positions, though we don’t know where in the world those jobs will materialize or how they’ll be apportioned departmentally. We can keep an eye of the Cisco employment board to find out.

The networking giant signaled that it will be aggressive in partnerships and acquisitions, too.

After trending downward for a few quarters, Cisco’s operating cash flow spiked on both a sequential and year-over-year basis, with the company now holding cash and cash equivalents of more than $39.6 billion. A caveat is that most of that money — about $35 billion, by my back-of-envelope estimation — is held overseas. Cisco is unwilling to repatriate that money, and to incur attendant taxation, so it probably will seek purchases in foreign markets wherever possible.

Cisco obviously hopes that its stock will become more attractive as acquisition-related currency. Cisco is talking up the recovery, which the company says has entered a “second stage” (though those of us who weren’t playing the public markets might have missed the initial stage entirely). It also has continued its share-repurchase program. Obviously, to accept Cisco stock in lieu of hard cash, target companies and their backers would have to be confident that Cisco’s shares will appreciate rather than languish.

We know Cisco beat the Street’s expectations like a rented mule. It beat even the high-end revenue and earnings estimates of analysts. What’s more, it issued bullish guidance that was ahead of consensus projections from the analyst community. It’s all good, right?

Well, it’s good for now. That said, the price of business success is eternal vigilance, and Cisco must remain alert to both threats and opportunities. It must also be able to distinguish between the two.

Blemishes included a modest dip in gross margins and faltering performance in Europe and emerging markets (not including India and China, the latter where Cisco is reorganizing to position itself for better results against China’s homegrown Huawei and 3Com, which has a huge Chinese workforce as a result of its earlier partnership with Huawei).

Also of concern is Cisco’s nominal growth in its “advanced technologies” segment, which includes many of its emerging businesses in so-called market adjacencies. Revenue in advanced technologies grew just one percent in the quarter on a year-over-year basis.

Cisco will place considerable emphasis on improved performance in these segments, which represent the company’s future growth. Cisco saw some long-deferred equipment upgrades and refreshes from its North American enterprise customers in the just-concluded quarter, but it will need to sell them new products as well as replacement gear to drive meaningful, sustained growth.

Fully aware of this conundrum, Cisco must be concerned to see its video business down 12 percent. This puts the Tandberg acquisition into an interesting new light, explaining why Cisco heralded it when first announcing it back in October and why Cisco was disinclined to walk away when a significant percentage of Tandberg shareholders banged their fists on the table and demanded a sweetened offer.

Other areas of Cisco advanced technologies that were down include application networking, the networked home, and storage. Security was flat.

On the positive side, unified communications was up a whopping 17 percent, and wireless grew in high single digits. Chambers also reported that enterprises have responded favorably to the company’s Unified Computing System (UCS), with more than 400 customers placing orders.

I’m sure we’ll see Cisco working hard organically and through acquisition to get all its advanced technologies performing as well as its unified communications and wireless groups. It also will continue looking for more market adjacencies.

Avaya Wraps Deal for Nortel Enterprise Business, Prepares for Post-Merger Challenges

Now that Avaya has closed its acquisition of Nortel’s enterprise business, it must figure out how to meet new challenges as a bigger company with weightier expectations.

Owned by private-equity concerns Silver Lake and TPG capital, which bought the company for approximately $8.2-billion in 2007, Avaya now has paid $900-million for insolvent Nortel’s enterprise assets and $15 million for employee retention.

The pressure now will be on Avaya CEO Kevin Kennedy, a former Cisco executive who left to pursue his personal quest for a big chair after concluding that John Chambers wasn’t prepared to vacate his gilded throne. It will fall to Kennedy and his team to plot a course toward exit for the Nortel-engorged Avaya.

Kennedy might be on the clock, but he’s playing for time, too. In an interview with Reuters, he said an eventual exit for the company was contingent on external factors, mainly the global economy, as well as on his company’s strategy and execution.

The Avaya chief thinks the economy is recovering, but he said customers remain wary of making big investments and are targeting projects that provide near-term returns.

Said Kennedy:

“They speak as though there will be growth. But they are preparing for sometime during the calendar year for a setback. So they tend to be committing to projects that can be completed within six months rather than 12 to 24 months.

We believe that the economy will be some place between flat and up, cautiously up, I’d say. But we are also managing the company as though there could be a setback.”

Setback. He used that word twice in the two preceding paragraphs. A setback for the global economy would be a setback for Avaya’s customers, and that would represent a setback for Avaya and for its exit-seeking investors. (For those of you keeping score, I just used the word “seback” four times — five, if you include the reference in this parenthetical sentence — in this paragraph, thus trumping Kennedy in a competition in which he is an unwilling, unknowing participant.)

Kennedy prepared his company’s financial backers for a potentially long haul well before he spoke with Reuters last week, but it’s interesting that he is working so hard to temper expectations outside the Avaya boardroom.

Unwary industry observers, who are good at simple arithmetic but fail to take context into account, will add Nortel’s IP PBX market share to Avaya’s and conclude that the merged entity will have a combined 25 percent of the enterprise telephony space. They’ll excitedly point to that number and say that the Avaya-Nortel colossus will overwhelm Cisco, which holds about 16 percent of the market.

What they must remember, however, is that it won’t play out that way. Even though the Cisco of today doesn’t seem as invincible as the Cisco of yore, enterprise telephony and unified communications — the latter with its bandwidth-hogging video traffic — are areas where the computer-networking leader is unlikely to get lackadaisical.

More to the point, Avaya has to eliminate product overlaps with the Nortel portfolio. It also must deal with daunting channel-integration issues. A lot of customer confusion and uncertainty will result.

Taking all that into account, the keen industry watcher will realize that one plus one, in the case of post-merger market share, will not always equal three. Sometimes, as in this case, it doesn’t even equal two. When the dust settles about six to nine moths from now, Avaya will have done well to keep a market-share edge over Cisco.

Avaya has said it plans to sell and support all Nortel lines for 12 to 18 months. The company also said it will provide a migration plan for any products that it decides to phase out. With the Nortel brand not being part of the acquired bounty, future product releases from the Nortel side of the family will carry the Avaya name.

After closing its deal to acquire Nortel’s enterprises, Avaya now prepares for the heavy lifting.

Avaya Must Avoid Distractions in Nortel Integration

If all goes according to plan, Avaya will take possession of insolvent Nortel’s enterprise assets, won at auction for approximately $900 million in September.

It’s at that point that Avaya will face some difficult decisions and daunting challenges. As it integrates and assimilates Nortel products and employees — not to mention its channel partners — Avaya will contend with multiple overlaps and redundancies. In most cases, those overlaps will be resolved in favor of products within Avaya’s portfolio. Nonetheless, as an article at Network World suggests, Nortel products might prevail in rare exceptions.

Avaya will have to decide whether it wishes to prolong the lives of Nortel’s switch and security portfolio. These are the products — minus Alteon load balancers, small-office/home-office gear, and blade switches, which now belong to Radware, Netgear, and Blade Network Technologies, respectively — that Nortel inherited when it acquired Bay Networks for $9.1 billion in 1998, back when the Internet seemed a limitless, gurgling fountain of obscene wealth.

There’s not much of Bay Networks left standing within Nortel. What remains really isn’t worth Avaya’s bother of keeping it alive. The cost to Avaya wouldn’t just be manifest in the bills associated with maintaining, supporting and extending the product portfolio. Additional “opportunity costs” would be incurred in the form of lost partnerships with vendors that sell networking products similar to those, but (in most cases) better than, the Nortel switches and security boxes. (Current Avaya enterprise-networking partners include HP ProCurve, Extreme Networks, and Brocade/Foundry.)

Besides, the Nortel switches would be a distraction, a once-shiny, now-irredeemably tarnished bouncy ball that Avaya executives would be remiss to chase. They’ll get some useful things from the Nortel acquisition, but the ex-Bay stuff isn’t among them.

Avaya would be wise to keep its eye on its core enterprise-communications business. Whether those communications involve VoIP alone, or unified communications, it will face tough competition from Cisco. Avaya has neither the scale nor the resources to compete with Cisco right across the enterprise board.

Accordingly, the company should strive to keep Cisco’s enterprise-networking enemies among its allies as it wades into battle.

Considerable Product Overlap in HP-3Com Combination

An article over at Network World written by Jim Duffy, who has been covering the computer-networking industry for many years, reinforces much of what I wrote previously about significant product overlap in the switching-product portfolios of HP and 3Com, which the former bought earlier this week for $2.7 billion.

HP is trying to downplay this aspect of the deal, but it is significant. HP is saying that because of the open, standards-based technologies on which the switch families are based, customers will have no trouble adopting whatever products avoid the chop in the post-merger integration. That’s true, I suppose, but the same logic does not apply to product developers and managers connected to the offerings that are not carried forward.

Regardless of whether individual HP or 3Com products survive, it’s reasonable to conclude that cost-cutting HP will be looking to do more of its development in China, where it gains access to 2,400 3Com networking engineers.

Two areas where HP gets new products from 3Com — and where no overlaps exist — are routing, both at the enterprise edge and the core, and core switching. As Duffy says, those are ingredients that will further the networking aspect of HP’s converged data-center strategy.

Other areas where HP gains new products are in intrusion prevention systems (IPS), where it now owns 3Com’s TippingPoint subsidiary, and in VoIP PBXes, where it gets an outdated 3Com product line with negligible market share. I really cannot envision HP eschewing its unified-communications partnership with Microsoft simply because now owns 3Com’s VoIP products.

Regarding TippIngPoint, it has an impressive installed base, and it represents a solid franchise.

In recent years, however, product quality has seemed to slide as some members of the original development team have left the company. I don’t think TippingPoint was a critical factor in HP’s decision to pursue 3Com, but HP needed to strengthen its security capabilities and this represents a first step in that direction.

Avaya’s Nortel Deal Clears Most Regulatory Hurdles

Avaya’s acquisition of Nortel’s enterprise business assets, won at auction in exchange for $915 million in cash, moved nearer to fruition this week by clearing some regulatory hurdles.

The one remaining major regulatory hurdle is a foreign-investment review that was initiated under the Investment Canada Act in late September by Tony Clement, Canada’s industry minister.

The review was automatically triggered because of the size of the deal. Under Canadian law, the government can review a sale to a foreign company if it considers the deal a threat to national security or if the transaction value exceeds C$312 million.

In the case of Avaya’s proposed acquisition of Nortel’s enterprise business, the deal is being reviewed strictly on a valuation basis. Although no status update has been provided regarding the review, many observers believe the likelihood of the sale being denied is low.

Avaya expects the transaction to close in December.

Avaya Instructs Channel that Nortel Remains a Competitor

Avaya has advised its resellers to continue treating Nortel as a competitor until its deal to buy the insolvent Canadian company’s enterprise business is formally approved, according to a report in ChannelWeb.co.uk.

Combining the two companies’ channels will not be easy, and many of Nortel’s current channel partners might choose to leave the fold if it is acquired by Avaya. The product portfolios of Avaya and Nortel also conflict and overlap in key areas, and Nortel products will be on the losing end of most decisions involving which to keep and which to jettison.

All of this is occurring against the backdrop of a review by the Canadian government into Avaya’s $900-million acquisition of Nortel’s enterprise assets in a bankruptcy auction. The Canadian federal government is considering whether the acquisition is of net benefit to the country.

Siemens Enterprise Communications was the runner-up in the auction. If it had won, it would have agreed to keep the business’ headquarters in Toronto. Siemens also would have been more likely than Avaya to retain Canadian jobs and research and development.

As for Avaya’s channel decree that Nortel is to be treated as a competitor until further notice, it’s a prudent move. The acquisition won’t be a done deal until it fully navigates the approvals process, and it still has a major obstacle to clear.

Considering Chrapaty’s Move from Microsoft to Cisco

A senior Microsoft executive left for Cisco Systems earlier this week, setting off speculation about what the move signified.

Debra Chrapaty was Microsoft’s VP for Global Foundation Services, responsible for the company’s physical infrastructure, security, and global delivery operations. She would have been involved with data-center rollouts of Microsoft’s Azure, a cloud platform designed for intra-enterprise or Internet-delivered application services. She also would have been involved with the delivery of the online version of Microsoft Office.

It’s the connection to Office Web Apps that is particularly interesting about her move to Cisco, where she will become the senior vice president of Cisco’s collaboration software group (CSG). The group was previously run by Doug Dennerline, who left Cisco to become SalesForce.com’s executive vice president of sales for the Americas.

A few months back, Dennerline said Cisco might compete with Microsoft and Google in offering office applications, such as documents, spreadsheets, and presentation packages. He said Cisco was “thinking about it, but (is) not there today.”

What Cisco already has, of course, is WebEx, the web-based conferencing and collaboration service it bought for $3.2 billion in 2007. Cisco also competes against Microsoft and others in premise-based unified communications. It also is adding its telepresence to its collaborative portfolio.

Earlier this year, Cisco CEO John Chambers talked about “Cisco’s collaboration imperative,” terming it one of Cisco’s “market adjacencies.” Said Chambers:

“We believe that we are very well positioned in the industry from a vision, differentiated strategy, and execution perspective. We believe we are entering the next phase of the Internet as growth and productivity will center on collaboration enabled by networked Web 2.0 technologies. We are going to attempt to execute a strategy over the next decade that is similar to what we did in the early 90s and as we’ve said before, it powered our growth for the next decade.”

One could argue Cisco is on the brink of imperial overstretch, taking itself in too many ambitious directions at once. One could also argue that while Cisco has a sound collaboration strategy, and strong underlying products that show well against competitive offerings, it might be folly for Cisco to add online document, spreadsheet, and presentation packages to its roster. Are they something Cisco really needs? Is that it a battle it wants to fight?

Maybe the answers are yes, maybe they’re no. Nonetheless, Cisco plans to play a leading role in hosted collaboration, and it has a solid foundation on which to work.

Irrespective of why and how Chrapaty made her way to her new corporate home, Cisco attaches considerable strategic importance to the group that she’ll run.

Volpi’s Joost Tenure Key to Understanding Skype Saga

Perhaps the key to understanding the increasingly bitter battle for Skype can be found in what transpired during Michael Volpi’s tenure as the CEO of Joost, the video-sharing startup founded by Niklas Zennstrom and Janus Friis.

In the current context, what’s important about Volpi’s reign at Joost is that it coincided with an architectural change in how the company delivered video over the Internet.

I was reminded of Joost’s architectural overhaul by Julian Cain, an engineer who worked on Kazaa and is familiar with Joltid, bluemoon, and Skype. Cain, as you’ll recall, was a source for an earlier post I wrote on the deepening antagonisms between Skype’s founders and its current and would-be owners.

Zennstom and Friis originally set up Joost with the p2p architecture that formed the technological basis for companies the pair had founded previously, including Kazaa and Skype. In 2007, Michael Volpi became Joost’s CEO. Under his leadership, and evidently as part of a project he led, Joost slowly began an architectural transition away from its p2p roots. As Cain explained in a email message last night:

In case you don’t know how the Joost migration worked, well, it simply began to use p2p less and the long-tail providers more. Killing the Joost client for an ActiveX/NPAPI plugin with a p2p runner application for p2p services, and then removing the Joost plugin from download, is what abolished the p2p network for good. If the website could not load the Joost plugin, then it used Adobe Flash. It was seamless;, however, they didn’t have to deal with paid services and such a large user-base and other factors. Of course, look what Joost is now.

That architectural change looms as a central issue in the lawsuit Joltid, the company owned by Zennstrom and Friis, filed against Volpi and his colleagues at Index Ventures last week. That, of course, was the latest in a series of legal dustups between Zennstrom and Friis on one side and Skype and eBay on the other.

At the time of the architectural shift at Joost, Volpi claimed plausible reasons for the change. The justifications were commercial and technical. Other video-sharing sites, namely YouTube and Hulu, had proven far more popular. Meanwhile, some Joost users had complained that videos were slow to load.

Nevertheless, Cain contends those weren’t necessarily the only reasons Volpi pushed for the architectural overhaul.

Volpi’s move from p2p to Adobe Flash while at Joost wasn’t in any way to do with the lack of gain at that time. If they wanted to (do so), they would have been pushing HD content (both live and prerecorded) over p2p with long-tail back-off by now without any real competition . . . . . Volpi broke that into myths and theories based on what he wanted to do, not technical facts, trends, statistics or analytical data.

Still, Volpi had successfully transitioned Joost from the Joltid p2p foundation on which it was based. He’d moved it onto a server-based architecture that used Flash-based clients at the end points. He’s done it once. There’s no reason to think he couldn’t do it again, this time at Skype.

If the conflict plays out the way Cain believes it will, Zennstrom and Friis will not back down and neither will Volpi and his confederates.

In my last post on this topic, I suggested a settlement might be possible. Cain believes that isn’t in the cards. Both sides are playing to win, and neither is in the mood for accommodation. One way or the other, it will be settled in court.

I also said in my last post that eBay and Skype’s new majority owners would have to rebuild Skype from the ground up to obviate the lawsuit Joltid has filed regarding the disputed “Global Index (GI)” software, the patent for which became active early this year. While it remains true that Skype would have to be reconstituted from scratch, the reconstruction effort could be completed earlier than I anticipated.

A means of getting there faster is represented by technologies offered by Adobe. Henry Sinnreich and a team of SIP experts have worked for Adobe for a long time now, and Cain reminded me that Adobe Flash supports SIP p2p with NAT traversal. He explained as follows:

Don’t forget Adobe Flash has SIP and p2p with NAT traversal as well. This would be very easy to offload the client without much interruption; however you can kiss the desktop client and p2p network goodbye.

Om Malik wrote a post in 2008 that foresaw the implications of Adobe’s work in this area. Commenting on the advent of Flash p2p, Malik wrote:

The reason we should pay attention to this product is Adobe’s distribution strength. The company can easily upgrade its Flash clients and instantly become owner of one of the largest p2p services. What that means is that now anyone can contemplate a Joost-like service that works within a browser. Using AIR to extend those p2p abilities to the desktop would be fairly easy as well.

So, the move to a new client architecture could be achieved with relatively minor disruption to Skype’s operations. Meanwhile, the service’s registration index would have to be transferred to a centralized server-based model.

It appears Volpi and company have a solid plan in place, and one can assume they’re well on their way to executing it. Not for the first time — and certainly not for the last – I stand corrected.

Why Settlement with Joltid Appears Best Option for Skype’s Backers

Even as Skype continues to plot and execute what could be a lucrative enterprise strategy involving interoperability with SIP-based PBXes, a cloud hangs over it.

In the battle between Skype’s founders and its current owner and would-be investors, the sphere of engagement is not limited to the courtroom. There are unsettled technology issues, too.

Representatives of Skype and eBay have told the media that a technical “workaround” is being explored that would extricate them, and their prospective new investors, from the ongoing legal entanglements with Joltid and Skype’s original founders, Niklas Zennstrom and Janus Friis.

I have no question that Skype is assessing technical alternatives to the current Skype architecture, which is predicated and dependent on underlying peer-to-peer software licensed from Joltid. That software, which eBay had neglected to procure from Joltid when it bought Skype for $2.6 billion in 2005, is now the focus of a legal dispute between the parties.

The trouble for Skype is that a “workaround” does not seem technically possible. Instead, eBay and Skype’s new owners would have to recreate the service from the ground up, essentially starting all over again with a brand-new architecture. In this context, it is important to recognize that what is called Skype for SIP is just a server-to-server mechanism that provides interoperability between SIP PBXes and Skye, not a potential replacement for the Skype service.

Whatever emerges as a substitute might be called Skype, but it would be something else entirely, probably based on the industry-standard Session Initiation Protocol (SIP), which was mentioned above and has been widely adopted by wireless operators, telecommunications carriers, and enterprises of all sizes.

The current incarnation of Skype is based on Joltid’s proprietary P2P code. In its early days, the software did not play well with the evolving SIP standard, which was designed to facilitate and support not only voice communication but also videoconferencing and instant messaging. Skype supports voice, video, and IM, too.

For a long time, SIP and Skype developed on parallel tracks, providing similar functionality but not talking to each other, figuratively and literally. Skype got the market jump on SIP for a variety of reasons, some having to do with telco-versus-Internet political battles that encumbered and retarded SIP’s development in the IETF and other standards bodies.

Another major difference was that Skype, with its peer-to-peer architecture and its promiscuous approach to establishing communications sessions, was built to circumvent firewalls and network-address-translation (NAT) gateways.

From a technical standpoint, Skype’s facility for firewall and NAT traversal made it effective and easy to use. From a business perspective, the fact that it was free made it popular. That’s why Skype got off to such a great start, and why it has more than 480.5 million registered users.

If one’s strength also is one’s weakness, then Skye’s initial asset, its NAT-traversing peer-to-peer architecture, has developed into a potential liability, both legally and technically. With a key piece of the peer-to-peer architecture in Joltid’s hands, Skype and its current and aspiring owners must win the litigation or develop a technological solution that obviates the legal threat.

Unfortunately for Skype, as has been explained in this forum previously, a simple workaround – in the form of a patch or a software adjunct – doesn’t appear feasible. That means Skype and its backers must hope they prevail in the legal battle, or that they can build, from scratch, an entirely new service that will assume the Skype name.

Skype and its future owners won’t put all their eggs in one basket. They won’t sit back and count on winning in the courtroom. In fact, they’re exploring how to reconstitute Skype in a different form. The latter will take a lot of time, and presumably a lot of money. The cost, seemingly prohibitive, would have to be factored into any calculation of risk and reward.

There is one other possibility.

That third option involves a settlement with Zennstrom and Friis and their corporate vehicle, Joltid. Given the scenario I’ve just laid out, I think this alternative will be thoroughly investigated. There’s a good chance Joltid would drop the litigation if it were given an ownership position in Skype. Relevant questions then would be: How much do Zennstrom and Friis want, and how much would eBay and its new investors be willing to concede?

Regardless of how it ends, the story will be interesting to follow.

Nortel’s Enterprise Customers Advised to be Wary of Avaya

Some of you will recall my recent post regarding the challenges Avaya will confront as it attempts to integrate its acquisition of Nortel’s enterprise business. The challenges are real and substantive.

As I said previously, acquisitions rarely play out as they do on a spreadsheet. It would be folly for any acquiring company to expect that it simply will be able to augment its own market share with that of its new possession. It rarely plays out so seamlessly or uneventfully.

That’s because people are involved. The outcome of an acquisition doesn’t only depend on how well products and technologies are integrated into their new home. They key to success is how the people are handled — not just the new employees, but also the new channel partners, the technology partners, and, most of all, the new customers.

In a Network World piece, Jim Duffy consults a few market analysts who advise Nortel customers to keep a watchful eye on how Avaya handles the post-acquisition integration.

Said Bob Hafner of Gartner:

“There may be some surprises there. These are going to be two large companies coming together. It’s not the easiest thing to do. These things never go without issues, problems or concerns.”

Indeed.

Henry Dewing of Forrester makes a related point:

“The biggest issue for users is, ‘Show me the [product] road map,.’ They want to see hardcore product plans [and] how they are going to actually consolidate product lines.”

Avaya got Nortel in the bankruptcy auction. Now the hard part begins. This is when we’ll find out whether Nortel’s enterprise business will become a fully realized asset or a partial liability for Avaya.