Fergie's Tech Blog

Why Did Avaya Survive Where Lucent Stumbled?

Justin Fox writes for Fortune's "The Curious Capitalist" (via CNN/Money):

Avaya was the dowdy stepchild of Lucent, spun off in Oct. 2000 so the glamorous parent could concentrate on "next-generation communications networks." The Internet was changing everything, so Lucent stuck Avaya with pre-Internet businesses like telephones and voice mail.

What's happened since? Lucent imploded. Avaya, while it has certainly had some troubles of its own, has done an awful lot better.

This sounds a little bit like what's been going on lately with Viacom and CBS, where the supposedly slow-growth half of the company has outperformed its glamorous former spouse since the two broke up at the beginning of this year. That makes two examples of the duller party prevailing in a spinoff, which is tantalizingly close to three, the magic number at which journalists are officially allowed to declare the existence of a trend. It's better to be dowdy! It's better to be dowdy!

But D'Ambrosio, who was head of global sales and marketing for Avaya before taking over as CEO in July, steered me in a different direction. It wasn't dowdiness that saved Avaya, but VOIP. Four years ago, he said, 20 percent of new business phone lines used voice-over-internet-protocol. Now it's 60 percent.

posted by Fergie @ 9/28/2006 10:38:00 AM