Hewlett-Packard made another move last week in its campaign to overtake chief rival Cisco in the network equipment market, announcing a new three-year strategic agreement with Avaya that goes beyond the reselling of Avaya products that it was already doing.
Under the agreement, HP will embed Avayas unified communications (UC) and contact center products in its HP Unified Communications and Collaboration (UC&C) services portfolio for enterpriseswhich HP will then sell and deliver.
The two companies say the combined offerings will be cheaper in the long term than competitors (read: Ciscos) products.
The Avaya deal follows on HPs acquisition earlier this year of 3Com, which added some, though not many, IP voice products to its portfolio, but very little in the way of market share in the voice systems market. The new partnership with Avaya is clearly designed to strengthen HP in this vital area.
"A good chunk of money is spent on network upgrades to enable voice and other real-time applications," says Matthias Machowinski, directing analyst for enterprise voice and data at Infonetics Research. "[Selling voice systems] has been a huge driver for Cisco. HP is fully aware of that and it is trying to get a piece of those upgrades."
The same strategy was clearly at work in HPs announcement last month of new UC offerings in the SMB market that bundle HP server, storage, and networking hardware, as well as IT services, with Microsofts UC platforms.
HP has engineered a similar bundling of products and services for the enterprise under the new Avaya deal. It will offer Avaya Aura Unified Communications architecture and applications, Avaya Contact Center applications, and Avayas range of end-user client applications and endpoints as part of HP UC&C Lifecycle Services.
The crucial difference from past reselling agreements between the two companies is that the Avaya hardware and software will now be bundled with a full "cycle of services and support" from HP, including help on needs evaluation, strategic planning, design, implementation, ongoing management, and training.
The two companies are also saying they have extensively tested and certified each others products to work together.
"Whenever you see the word strategic used in an announcement like this, you know its a much closer alignment of companies than just reselling somebody elses gear," says Machowinski. "I think the biggest piece is the services wrapped around the Avaya products."
Customers will also now be able to outsource ongoing operations of their UC applications and infrastructure to HP with the HP Managed Service offering for Avaya Aura.
The new agreement, Machowinski notes, means Avaya will "feature more prominently" in HPs UC&C portfolio alongside other voice systems partners such as Aastra, Mitel, and Microsoft. Could that mean less prominence for Microsoft, with which HP has had a long-standing and tight relationship on several fronts?
Machowinski says HP will be very sensitive to any stress on the Microsoft relationship which is hugely important to it, but the Avaya agreement shouldnt be a problem, at least for now.
"Microsoft is really a pure unified communications-type solution," he says. "Yes, theres definitely some overlap, but I wouldnt call it a hugely competitive [situation]yet."
Microsofts UC solutions are more apt to play in environments where companies want to layer unified communications capabilities on top of a legacy PBX rather than implement a new voice solution, he says.
There is also the potential for conflict within the partnership itself on the network equipment side. Avaya also sells network gear.
"It seems there is going to be some friction there," Machowinski says. He adds, however, "Its possible that HP is getting Avaya into [selling] opportunities it never would have got into in the first place, so its all an extra bonus for Avaya."
Whatever Avayas perception of the trade-offs between voice/UC system sales gained versus network equipment sales possibly lost, there is no question what HPs position will be.
"If an HP sales person is going to sell Avaya UC products," Machowinski says, "[which companys products] do you think hes going to recommend for the network portion?"
A cornerstone of HPs evolving strategy in the network market is its notion of "converged infrastructure," introduced earlier this year. HP is touting its ability to provide all of a companys data center needs, including tightly integrated servers, storage products, and network infrastructure, as well as network security and professional services.
Does the companys continued reliance on partners for voice systems weaken this one-stop-shop proposition, we wondered? Machowinski says no.
Voice and UC are just applications running on the infrastructure. The lack of native voice and UC applications and products doesnt hurt HPs case anymore than the lack of other applications in its portfolio.
"HP doesnt offer Oracle-type [database] applications either. It doesnt offer e-mail. I dont see it as a weakness," Machowinski says.
"[This way] customers can still pick and choose what they want to put on that infrastructurealthough with the partnerships, it makes it easier [for customers] to walk down a certain path because the products are better integrated and tested to work together."
Nor is it likely that HP will move to develop its own voice applications, he says. "Would they acquire somebody? Maybe." But any move to reduce its reliance on the partnership with Microsoft is unlikely to seem a very good idea, he says.
"They have to be very mindful of that. They dont want to upset Microsoft."
So long, that is, as Microsoft holds the balance of power in the relationship.