Around the Internet today – twitter, blogs, LinkedIn – most agree that Avaya called it quits.

After coming lighter out of bankruptcy almost two years ago, Avaya was looking to sell itself. When that didn’t happen – probably due to the price tag and the debt load – Avaya agreed to a $500M investment from RingCentral and exclusivity as a joint partner. This JV doesn’t seem much different from other ILEC JV’s that RC has. For example, AT&T resells RC as @Hand.

The pair will launch an exclusive UCaaS offering, “Avaya Cloud Office by RingCentral” in 2020. This will likely chase after the 600K Avaya IP Office seats that sit out there now.

Imagine having $3B in revenue, 4700 partners, 100M users. Imagine that and then imagine calling it quits. This is what is fundamentally wrong with the HPBX/UC space. A bunch of quitters and copycats.

Now if the other UC players – the other 2000 providers out there who did not just buy the Avaya customer list for $500M – can get out there and steal some business since this definitely marks the day Avaya premise is done.

I don’t know how Mitel survives this. They tried to merge – which would have been a disaster. Now with Avaya waiving the flag, Mitel has to ratchet up the cloud noise even more – or face collapse.

The sad thing for Mitel, Shoretel, Avaya, NEC. Panasonic and the other PBX boxes is that they have had 15 years to figure out the cloud and transition over. 15 years! It reminds me of bookstores and newspapers.

Avaya basically followed Panasonic. Panasonic did a deal with Star2Star as the cloud service, effectively marking the end of life to the Panasonic PBX division.

NEC and Mitel now need to scramble. The Mitel and NEC partners are watching all this and are making plans. They have their own businesses to worry about.

The biggest problem Avaya, Mitel et al faced was how to transition to cloud while still preserving hardware. They kept the same personnel (salespeople and SEs) and didn’t change compensation enough to force sales to the cloud. They were hedging their bets

The only one who had a decent plan was Shoretel. But Shoretel would have been better off keeping the cloud comms as a separate company – a competing company. It should have compensated Shoretel sales for referrals to cloud. It could have kept running the old Shoretel as it was, just getting leaner over time. Meanwhile, the New Cloud Company could have built itself up without the premise mentality mixed in.

Oh are the next 12 months going to be interesting.

Good look at the details of the deal HERE.

Back in 1969, Ries and Trout wrote an article describing Positioning as a battle for the buyer’s mind. A Brand occupies at most 1K of space in the brain. It is an accumulation of thoughts, facts, feelings associated with that company or product. Most times that 1K is blank – the buyer has no data on your brand, product, service or company. Ogilvy defined positioning as “what a product does, and who it is for”. “Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors.” It is mainly about the differentiation.

Positioning is closely related to the concept of perceived value. Value is the benefit above the costs that a customer gets. [ Value = Benefits – (Cost+Risk) ]

One way I like to put it is: “Why you and not them?” That is the Value Proposition. “A value proposition is a statement which identifies clear, measurable and demonstrable benefits consumers get when buying a particular product or service.” [source]

Jill Konrath writes about how to craft a value prop HERE. Davis Kahle writes about Value Prop HERE. You talk to your clients. I suggest a 360 degree view where you talk to your employees, partners and customers. [My slides on this topic are HERE.]

Your Value Prop is the basis for marketing.

Another way to do positioning is through Laddering. NYU Prof. Scott Galloway writes, “Laddering is an attempt to de-position a competitor by highlighting one of your strengths, which just happens to be your competitor’s weakness. You cast yourself in a positive light, while at the same time casting a negative light on them.”

“Laddering is effective, as it’s a twofer — people are organically reminded how much your adversary sucks, and by contrast how wonderful you are. We have an easier time believing people are bad vs. good — a survival mechanism.”

Some people like to boil all this down to a unique sales pitch (USP). Doesn’t matter what you call it, you better have a way to explain how you are the choice over the other guy. Coke and Pepsi, McDonalds and Burger King, Tide and every other detergent, Budweiser and other beer – this has been going on for years. Sometimes the slogan is mistaken for a USP. It is all about Why buy mine instead of theirs.

Vonage, RingCentral, 8×8, Nextiva and the other 2000+ UC providers have to figure it out as it is a commodity now. They better figure it our for Cloud Contact Center and CPaaS fast.

In 2019, crafting Value Propositions has been a majority of the projects I am working on. Need help with yours call the office at (813) 963-5884.

I was contacted by an agency about how Windstream Enterprise is using referral dollars (called renewal credits) to entice customers to renew their contracts. This is in lieu of paying the partner on the account.

On a $1K/mo Internet circuit the client was offered a $5K renewal credit.

When a Windstream VP said that sales were back on track, I figured there was a hole in the story somewhere. For one, partners HAD to sign the new contracts which required new sales (and quota) in order to continue collecting those evergreen commissions. This meant new sales were going to occur – and some customer churn would become retention.

Two, some partners were cut. Those commissions went to the bottom line for WIND. In bankruptcy, every penny counts.

Three, paying renewal credits amounts to paying the customer for a sale. It is one way to cut out the partner. No idea what WIND does at the next renewal.

Paying out $5K on a $1000 per month circuit – which would pay out a maximum of $250 per month to a master agency – is about a wash over two years. The Master Agency would have collected $6K, but WIND is giving $5K upfront. Basically, five months free. We are back to being underwater.

It’s just shady activity. This is probably tied to the $20.1M in bonuses for the management team. The only KPI must be revenue or contract value. So do everything to bring in revenue and all else be damned, so that the geniuses that got Windstream into this mess can exit with some change in their pockets. Got to love telecom, where mediocre people can have a lifetime career.

Windstream gave an update to Channel Partners in DC about how great everything was going. What spin!

Partners are back to selling WIND because all of the contracts were updated to include quota – or commissions stop!

According to comments, Paetec evergreen commissions have stopped. Any accelerators are not making it to the partners. This does not end well.

Curious how this all works out now that all the stakeholders are suing UNITI. UNITI owns the network that a majority of the customers ride on. Stop paying the lease and that network stops. 60+% of UNITI’s revenue comes from WIND’s lease. It’s a cluster.

How do you fix this mess? The lousy management that got here are still running the ship.

Here are some thoughts: bring in a new CEO. Dump the current management. They got you in this mess. They followed the David Rueberg’s playbook. Getting big isn’t a strategy.

Sell off some of the UCaaS business lines. There are too many lines of UC business: Allworx, Mitel, Shoretel, Avaya, a Broadsoft softswitch, Metaswitch business (especially from EarthLink), and Broadview. I understand this is all revenue – but what is good revenue and what is bad revenue?

Spin off Allworx. Focus on Broadview. Sell the bases of Avaya and Mitel while you can.

Publicize the lit buildings. In every lit building the second customer is profitable. The third and fourth are extra gravy.

If you are going to continue with fixed wireless, map it, publicize it, market it! Make an MVNO deal to add a 4G/5G backup plan. Don’t half-ass this stuff like you have been doing.

Data centers can be a fixed wireless POP for you. Every data center that you have fiber in should be a POP. Start getting smarter about leveraging fixed wireless with SD-WAN, fiber and 4G.

Create a retail sales SWAT team again. EarthLink was killing retail with SD-WAN and Airtight.

Then do that with Hospitality. Windstream was already trying to specialize in Hospitality UC. Go big or go home.

Define your Value Proposition. SD-WAN and UCaaS are table stakes. Every CLEC sells both plus resells network. So what makes WIND so different? It can’t be what it was: The cheapest, selling underwater.

Pay your partners. All of them.

What are mid-market* and enterprise* businesses looking for in Cloud Comms?

A solution that brings together voice, conferencing and Slack-like communications with a contact center, say enterprise telecom consultants. I guess they do want a platform – one integrated system. You don’t get best of breed that way. You get mediocre across the board, but if it scales, is reliable, and works – okay.

As a UC provider you need to have serious answers to the following questions if selling to mid-market or enterprise – or be cut out of the deal says CDW:

• If the customer has Avaya, what is the Avaya Plan? Forklift upgrade? Migration? Have a plan/procedure ready. (see RC’s answers)
• If they want Zoom for video conferencing and calls, how do you work with that platform? Is there integration?
• If they have Microsoft Teams (E3 license, not yet the E5), what is the plan? Since going to E5 and adding in voice capability adds about $30 per seat.
• If they want to keep Slack?

These are the scenarios in winning enterprise level accounts.

What happens to Avaya? The numbers on the surface at Avaya look good, right? $700M+ revenue per quarter (~$3B in annual revenue), 23% EBIDTA, 3M cloud seats, 100M+ seat base, $1.1B market cap with $3B in long term debt and net losses. There are 3 possibilities.

• They get bought. Since Mitel and RingCentral looked at it and walked away without a deal, I would say that being acquired will happen as a fire sale – not in the next 9 months.
• The RingCentral joint venture would be a big win for RC; however I don’t see what Avaya gets out of giving away the customer list without a sale. RC likes JV’s like they did with AT&T and other ILECs, but that won’t work for Avaya who needs more than incremental revenue — they need a plan.
• Microsoft, Cisco or some giant (Amazon or Salesforce) buys them for $4.5B just to grab the customers. It won’t be a Cloud Contact Center company like Five9, InContact or Genesys, they don’t have the market cap (hence ability to raise the debt needed).

There has been chatter about the fact that Zoom added phones but may suck at the telephony piece. Salesforce didn’t get into the telephony business either. Amazon didn’t. Google and Microsoft have with the assist of bandwidth.com so maybe Zoom just needs a partner like that.

The UC field is still open but it is certainly tilting toward the bigger players in the enterprise space (Cisco & Microsoft have the advantage here). In mid-market it is about replacing premise based systems but keeping legacy functionality while adding next gen features like omni-channel. Legacy PBX companies like Mitel and NEC have to make a decision too. Panasonic did by choosing to joint venture with Star2Star. NEC and Mitel have cloud products but do they have a plan to migrate their customers to them before they get poached by a cloud provider?

*What is mid-market? My definition is 500-1000 employees but everyone has a different definition. SMB is up to 500 employees, representing 90+% of all businesses in the US (some 25 million companies). There are only 32K midmarket businesses with annual revenue less than $1B and more than $50M.

*Enterprise to me is more than 1000 employees, which many agree with and includes companies with more than one billion in annual revenue. There are about 15K of these companies.