Avaya announced today that its president and CEO, Lou D'Ambrosio, is stepping down due to "medical reasons" (about which no further details were given), and that he'll be replaced on an interim basis by Charlie Giancarlo, who left Cisco late last year to join the private equity firm, Silver Lake Partners, that acquired Avaya almost exactly one year ago. The Avaya announcement is here and my No Jitter analysis is here (we'll be following the story at No Jitter throughout the day). The timing couldn't be much worse for Avaya, as a slowing U.S. economy threatens to stall growth for the enterprise voice market in North America.

Avaya certainly isn't alone among enterprise communications vendors in facing a challenging 2008. The technology is in transition from first-generation, basic IP telephony to the more complex Unified Communications model, and the entry of Microsoft (and IBM) into the UC market is posing a major challenge to the legacy players. Already battered by Cisco's successful challenge (it supplanted Avaya as the PBX market share leader last year), traditional PBX players like Avaya, Nortel, Siemens, and others are grappling with the problem of where they fit into the new UC architecture.

In the short term, no one expects Microsoft Office Communications Server to displace enterprise PBXs, but that's certainly Microsoft's long-term goal, and so the traditional players have to find a way to play alongside OCS while also providing value that Microsoft can't match.

One area where Avaya has been placing a lot of emphasis recently is the contact center, where they have a strong product and market leadership position. They've also been positioning themselves as a middleware provider, offering software products that enable communications-enabled business processes (CEBP), which is the technology that integrates communications capabilities with business process applications. Avaya also recently announced its Intelligent Presence Server, which attempts to link or federate disparate presence engines. It's widely believed in the industry that the presence capability will supplant the PBX as the core of the next-generation communications system driving Unified Communications.

D'Ambrosio's departure will be keenly felt, as he was widely respected in the industry and had a lively, upbeat style that was a breath of fresh air for a company whose roots were as part of the Bell System. However, in Giancarlo, Avaya has probably the best available replacement for D'Ambrosio, even if it indeed turns out to be only an interim assignment. Giancarlo was widely understood to be the presumptive successor to John Chambers as Cisco's CEO, until it became clear that Chambers wasn't leaving any time soon.