Networking

Cisco and Avaya vie for VoIP dominance

Companies both announce deals with Merrill Lynch for major Internet telephony deployments.
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By Marguerite Reardon
Staff Writer, CNET News.com

Merrill Lynch is the prize in an increasingly competitive tug-of-war between Cisco Systems and Avaya over emerging Net phone services.

Earlier this week, both companies announced they are supplying the financial management powerhouse with Internet-based telephony equipment.

Cisco originally deployed VoIP, or voice over Internet Protocol, gear at Merrill Lynch in 2000. But in July 2003, the company replaced some of that gear in its main New Jersey office and an office in Japan with equipment from Avaya.

Cisco announced on Tuesday during its quarterly conference call that it was back in the Merrill Lynch account. More than 14,000 financial advisors in 600 branch offices will use Cisco's VoIP gear.

On Wednesday, Avaya followed Cisco and announced it has expanded its contract with the brokerage firm. It said Merrill Lynch will use its S8700 IP telephony products in Merrill Lynch's corporate offices worldwide. These include facilities in Australia, Brazil and several locations in the United States--including the company's world headquarters in New York City. Between 15,000 and 18,000 Merrill Lynch employees will use the Avaya IP telephony system, said Lou D'Ambrosio, group vice president for Avaya.

"I think it would be insincere to say we wouldn't have liked to have been chosen for the branch office deployment," he said. "Merrill Lynch is an extremely well-managed and sophisticated company. We are happy to be expanding our relationship with them to deliver IP telephony globally."

VoIP technology uses the Internet to carry calls over the same network that companies use to carry their data traffic. Because the calls are routed over their corporate networks instead of the regular telephone network, companies such as Merrill Lynch, with branches throughout the world, can significantly cut costs.

The split in the Merrill Lynch account between Avaya and Cisco shows just how competitive the IP telephony landscape has become. Both companies have announced strong growth in their IP telephony businesses. During Cisco's most recent conference call, CEO John Chambers said the company's VoIP business had grown 40 percent from the same quarter a year earlier. Avaya on its quarterly conference call said its IP telephony business has grown 57 percent since the same period a year ago.

The two companies have taken different approaches to the IP telephony market. Cisco, which comes from an IP data networking background, does not have a traditional TDM telephony offering. Its product solution requires companies to replace their old PBXs and digital telephones with its CallManager software and Cisco IP phones.

Avaya, a spinoff of AT&T spinoff Lucent Technologies, has a heritage of selling traditional telephone equipment that goes back more than 100 years. Many of its IP customers are also traditional telephony customers. As a result, Avaya's voice over IP offering is designed to let customers slowly migrate toward IP while maintaining their existing phone infrastructure.

Merrill Lynch declined to comment on the specifics of its contracts with either Cisco or Avaya.

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