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9/30/2010
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How The Avaya/Skype Partnership Will Impact SMBs

Two of the leading voice communications suppliers, Avaya and Skype, have teamed up to offer small and medium businesses more calling options. The partnership has potential but may not be a panacea for companies searching for more effective voice communications systems.

Two of the leading voice communications suppliers, Avaya and Skype, have teamed up to offer small and medium businesses more calling options. The partnership has potential but may not be a panacea for companies searching for more effective voice communications systems.The duo announced a two phase agreement where they will jointly market their Voice over IP (VoIP) solutions and design tighter connections between their systems. Skype, which claims that 124 million individuals use its services each month, has emerged as leading supplier of VoIP wide area network services. The vendor's software lets users place calls over the Internet via PCs, laptops, and smartphones. Its lure has been low pricing, with international calls priced at a few cents a minute. Avaya has been a prime supplier of local VoIP services. Its VoIP PBXs enable companies to offer employees sophisticated calling features, such as Find Me, Follow Services, so they can become more productive.

While Skype has been popular, the vendor has struggled to turn a profit with its services. Consequently, the company has been focusing more on the business market, increasingly trying to deliver services to SMBs. After its purchase of Nortel, Avaya emerged as the industry's top IP PBX supplier, and small and medium businesses have always been a focal point for the company. The agreement enables Skype to tie its WAN services more tightly to Avaya's premises based solutions and enable customers to use Skype services to place international calls.

It will be interesting to see how the relationship evolves long term. Skype has worked with other vendors, such as Cisco and Shoretel, to connect their IP PBXs to its services. The notion now is that Avaya will offer its users more features than those available other vendors' systems, but the validity of that point will become clearer only when such connections make their way out of the lab and into production systems. It would seem that Skype's best option is to be Switzerland and provide all IP PBXs with access to its service. The vendor plans to hold an IPO in the coming months, but questions remain about its long term viability as an autonomous entity.

Consequently, it has been linked to Cisco, which has made more than 125 acquisitions throughout its history. If Cisco were to buy Skype, then it would probably loosen its ties to other vendors' IP PBXs, starting with Avaya. In sum, Avaya customers will benefit from the agreement in the short term but could face problems further down the line.

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