Spectel customers could suffer in Avaya acquisition

9 Aug 2004

Leading industry analyst Gartner has expressed its approval of Avaya’s strategic acquisition of Irish conferencing firm Spectel in an all-cash deal worth US$103m. However, while Avaya customers stand to benefit, Gartner warns that Spectel customers must ensure that the new ownership meets their needs, particularly because despite Spectel’s open standards focus, Avaya may maintain an emphasis on proprietary standards.

Last Tuesday, US networking technology giant Avaya acquired Dublin-based conferencing technology firm Spectel for a massive sum of US$103m in cash. The transaction is expected to close within 60 days and is subject to regulatory approval, Irish laws and customary closing conditions.

Spectel was once hotly tipped to float on the Nasdaq and Dublin stock exchanges but pulled its IPO at the last minute as the recent technology downturn started to bite. The acquisition is the second largest acquisition to take place in the Irish technology market this year, following the acquisition of Irish banking software player Eontec by global CRM giant Siebel in a similar all-cash deal for US$130m.

Gartner analyst Bob Hafner commented: “Overall, Gartner believes the Spectel acquisition will benefit Avaya and its customers, as it will strengthen and broaden Avaya’s product set. Spectel customers should review Avaya’s plans as they evolve for the existing Spectel platform and consider whether Avaya will continue to invest in the stand-alone product.”

In his analysis Hafner said that Avaya’s acquisition of Spectel continues a trend in which a telephony server’s value is shifting away from the base hardware and toward software applications associated with the larger communications environment. Conferencing (both audio and video), messaging (voice and unified), presence awareness and collaboration tools are all examples of value-added applications that leading telephony vendors now offer.

“Avaya’s addition of Spectel audio conferencing technology will enhance Avaya’s overall product line by strengthening its conferencing capabilities and enabling Avaya to better compete against players such as Cisco Systems, whose acquisition of Latitude Communications in 2003 gave it a superior conferencing offering. Spectel’s offering should help Avaya bring a similar conferencing product to market far quicker than it could have if it had developed one on its own.”

Hafner said that Avaya also plans to integrate Spectel technology with its internet protocol (IP) communications applications suite to expand its converged conferencing offering. Converged conferencing brings together Web, video, audio and data conferencing on an IP network. Spectel technology employs an open, standards-based approach that can ease development of converged conferencing systems industry-wide.

“However,” Hafner warned, “Gartner believes that, despite Spectel’s focus on open standards, Avaya’s offerings will continue to use proprietary extensions to provide enhanced capabilities.

“For the deal to succeed, Avaya must integrate Spectel products with its own, plus provide interfaces to key applications. Some of the application integration will occur quickly — for example, with Microsoft Exchange and IBM Lotus Notes — but other functions, such as presence, and Session Initiation Protocol integration with Avaya’s Communication Manager and Converged Communications Server, will not be available until 2005,” Hafner said.

By John Kennedy