A Good Buy For Microsoft?

What could Microsoft do to strengthen their unified communications story? Do they need to or can OCS take them to the promised land? They're already well known as a collaboration and Web 2.0 player and by bolstering their UC position they could dominate the market with a killer value proposition around Universal Collaboration.

Obviously to this point they have been relying on OCS as their UC platform. However, they've changed their go-to-market strategy a couple of times already which suggests they could use some help. Now, they could buy time for the next 2 years, waiting for OCS to mature but I doubt Microsoft, nor their customers have the patience. The other alternative, that seems to becoming more and more likely, is for Microsoft to acquire a more mature UC vendor and take market share inorganically. I would assume now that a Yahoo takeover is off the table, Microsoft has some M&A cash to burn.

On the surface, the most obvious target for a UC acquisition would be Nortel, especially considering they have the ICA agreement in place already. But not so fast...in most people's eyes the ICA has all but disintegrated; Nortel's technology hasn't been exactly cutting edge over the past 4 years and they've had a ton of financial difficulties.

More recently, Microsoft sunk some investment dollars into Aspect so they may be a target. But Aspect would only give them some niche Contact Center applications. That said, they could probably also pick up Interactive Intelligence pretty cheap as well. But I think they are thinking bigger than that...bigger than just contact center.

I believe the biggest bang for Microsoft's buck right now is Avaya. Avaya was purchased last October by the private equity combo of TPG/Silverlake. The leveraged buyout was done for $8B...well below the $45B Microsoft was willing to pay for Yahoo. For the right price, I am sure Charlie Giancarlo and company would be willing to part with their investment. Avaya's appeal comes in several flavors - TPG/Silverlake have spent the last 8+ months getting Avaya into "fighting shape", making it a more efficient operation; Avaya owns significant market share in both Contact Center and UC; Avaya has spent the last 2 years building integrations into many MS apps; Avaya is well positioned going forward to take advantage of advances in SIP, CEBP and cloud computing (with its acquisition of Ubiquity in 2006/07); Avaya has a mature pro services organization; and finally, Microsoft wants to beat Cisco in a real bad way.

The only potential roadblock could be the fact that Google has been rumored to be interested possibly acquiring Avaya as well, having spent "a significant amount of time" at Avaya's HQ in Basking Ridge, NJ lately.

Industry pundits suggest that a Microsoft acquisition of Avaya could happen as early as this summer...turning Microsoft into the undisputed global leader in UC and contact center maketshare over night.