Avaya — Investor Day (November 2003)

51 slides from Avaya's investor day presentation, Nov 6, 2003

Slide 3: Forward Looking Statement
Forward Looking Statement The use of words, such as “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “intends”, “future”, “potential” or “continue”, the negative of these terms and other comparable terminology are intended to identify forward- looking sta
Slide 4: Agenda
AGENDA 9:00 – 9:10 Introduction 9:10 – 9:20 Communications Application Demo 9:20 – 10:10 Corporate and Business Segment Strategy 10:10 – 10:25 Break 10:25 – 11:15 Business and Financial Performance 11:15 – 12:00 Q&A 12:00 – 2:00 Lunch/Product Tours 4
Slide 5: Unified Communication Center Speech Access Demo
Unified Communication Center Speech Access Demo
Slide 6: Unified Communication Center softphone demo screenshot
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Slide 7: Microsoft Outlook demo screenshot
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Slide 8: Microsoft Outlook calendar demo screenshot
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Slide 9: Outlook contacts demo screenshot
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Slide 11: Agenda
Agenda • Investment Thesis • Accomplishments • Market Opportunity • Strategy • Portfolio Overview • Segment Overview • Summary 11
Slide 12: Investment Thesis
Investment Thesis Strategic Leverageable Differentiation Business Avaya Model Cash Earnings Shareholder Value Growth Technology Transition 12
Slide 13: Accomplishments in the Past Year
Accomplishments in the Past Year • Stabilized revenue • Financial execution • Gained market share and mind share • Momentum in IP telephony • Significant sales wins • New and deepened partnerships • New IP telephony and services offerings • Strategic M&A transactions Avaya is WELL POSITIONED today 1
Slide 14: Gained Market Share
Gained Market Share Global Leadership TELEPHONY Position Share Position Share Position Share Position Share Position Share WW Enterprise Telephony (revenue) [1] #5 7% #2 14% #7 3% #3 11% #1 18% WW IP Telephony (lines) [2] #5 8% #1 20% #2 19% #3 17% #4 8% US Enterprise Telephony (lines) [3] #14 1% #1
Slide 15: Gained Market Share: Momentum in IP Telephony
Gained Market Share Momentum in IP Telephony Worldwide IP Telephony Market Share – Q2 CY03 50% Avaya 40% Cisco Nortel Market Share Alcatel 30% Siemens 20% 10% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q CY00 CY01 CY02 CY03 Time Period Source: Synergy Research Group 15
Slide 16: Gained Mind Share
Gained Mind Share Challengers Leaders Cisco Systems Avaya The Siemens Gartner Magic NEC Nortel Networks Quadrant Ability to Execute Inter-Tel Mitel Networks North American 3Com Alcatel Enterprise Telephony, Shoreline Communications Vertical Networks September 2003 Niche Players Visionaries Completen
Slide 17: Gained Mind Share: Gartner Magic Quadrants
Gained Mind Share North America EMEA Worldwide Contact Center Contact Center Unified Communication June, 2003 July, 2003 February, 2003 Challengers Leaders Challengers Leaders Challengers Leaders Avaya Nortel Genesys Avaya Avaya Ability to Execute Ability to Execute Ability to Execute Nortel Alcatel
Slide 18: Strategic Differentiation
Strategic Differentiation • Clear focus on the enterprise • Voice experience and expertise • Leverageable installed customer base • Global services organization • Comprehensive suite of industry-leading applications 18
Slide 19: Market Opportunity: Global Addressable Market
Market Opportunity Avaya’s Global Addressable Market $136B 140 CAGR ’03-’07 = 10.7% $123B $112B 120 $100B $90B 100 Billions of 80 end-user $US 60 40 20 0 CY03 CY04 CY05 CY06 CY07 ($B) Segments Total CY03 Total CY07 CAGR CY03-07 ECG 21.7 38.4 15% SMBS 8.1 12.6 12% Services 60.5 84.6 9% Data sources i
Slide 20: Market Opportunity: Driven by Shifting Paradigms
Market Opportunity Driven by Shifting Paradigms • Customer demands – Converged network reduces costs – Communications applications enhance productivity and drive revenue • Technological transition – Migration to IP telephony • Marketplace imperatives – The need to create growth opportunities 20
Slide 21: Opportunities Created by IP Adoption
Market Opportunity Opportunities Created by IP Adoption • Adoption of new technologies creates demand for services from an experienced vendor • Adoption of IP platforms based on open standards – Unlocks the value of previously bundled offerings – Drives value to the software layer Hardware- Centric
Slide 22: IP Telephony Strategy: Capturing the Opportunity
IP Telephony Strategy Capturing the Opportunity • Avaya installed base – Compelling evolutionary choices and ROI – Leverage established brands • Greenfield opportunities – Lead with rich applications offering, established brands, and professional services capabilities – Leverage channel and partner
Slide 23: IP Telephony Strategy: Pursuing the Global Installed Base
IP Telephony Strategy Pursuing the Global Installed Base • Average age of the installed base = ~ 9 yrs • Typical lifespan of a PBX = ~ 7 to 10 yrs • Global installed lines = ~ 400M • Global installed IP lines = ~ 7M 400M North Migrate America Global 300M installed Leverage 7M of IP TDM base services
Slide 24: Telephony Line Shipments Growth
IP Telephony Strategy • U.S. IP adoption first Migrating Installed TDM Base • 10-plus year migration • Voice complexity = High • Incumbent advantage U.S. IP Telephony Line Shipments Growth WW IP U.S. IP U.S. Traditional WW Traditional WW IP 2002 Indexed To 100% WW Traditional U.S. Traditional 2002 2
Slide 25: Leveraging Services Capabilities & Global Voice Applications Leadership
IP Telephony Strategy Leveraging Services Capabilities & Global Voice Applications Leadership North America Call Center Western Europe Call Center Asia Pacific Call Center 47% 50% 50% 50% 40% 35% 40% 33% 40% 30% 24% 30% 30% 17% 20% 20% 20% 13% 12% 12% 7% 7% 7% 7% 6% 10% 5% 10% 10% 5% 0% 0% 0% Avaya
Slide 26: The Avaya Portfolio
The Avaya Portfolio IP Telephony Avaya MultiVantage Communications Applications Telephony, Contact Center, Messaging, Unified Communication Offering Customers Path, Pace, and Choice Mobile worker Home office Branch office Unified Communication IP Office, IP Softphone, Small office IP Office, Surviva
Slide 27: The Avaya Portfolio: Focus Areas for Future Product Launches
The Avaya Portfolio Focus Areas for Future Product Launches Helping customers transition Managed Services Increasing productivity and lowering costs with endpoint choices Maintenance Services Implementation & Integration Services Network & Applications Consulting Services Convergence Services Unifie
Slide 28: The Avaya Portfolio: Full Life-Cycle Services
The Avaya Portfolio Full Life-Cycle Services Multi-channel Multi-Channel Go-To-Market services and solutions delivery Targeted Solutions Professional Maintenance & Strategic Services Implementation Outsourcing Global, multi- • IP Migration • Managed Maintenance • Security Services vendor solution Se
Slide 29: Avaya Labs: Delivering the Vision
Avaya Labs Delivering the Vision Access Converged • Natural language Communications • Secure wireless multimedia content delivery • Hi-Fi conferencing and telephony • Rich multimodal user experience • Dynamic Applications applications • Orchestrate communications services • Comm-enabled • Presence &
Slide 30: Channel Strategy
Channel Strategy Areas of Focus • Strengthen sales channels in key customer segments • More revenue through fewer business partners • Selectively recruit new business partners • Business partner development and growth • Build relationships with service providers, system integrators, and independent
Slide 31: Channel Strategy: Go-to-Market Model
Channel Strategy Go-to-Market Model Direct Indirect Sales Sales on ati Premier Dedicated Business uc Partners Ed AVantage Account Teams and ca ctor nd (Global Enterprises) System Sales Support la e, lic Se Integrator Financial Svcs & Insurance Lo , S Pub Premier Communications Dedicated client execs
Slide 32: Enterprise Communications Group
Enterprise Communications Group Segment Overview
Slide 33: ECG Addressable Market
ECG Addressable Market $38B 40 CAGR ’03-’07 = 15% $34B $30B $25B $22B Billions of end-user 20 $US 0 CY03 CY04 CY05 CY06 CY07 ($B) Segments Total CY03 Total CY07 CAGR CY03-07 Enterprise Applications 9.4 17.6 17% Contact Centers 7.9 11.8 11% Unified Communication 1.5 5.8 40% Enterprise Telephony 8.4 1
Slide 34: Enterprise Communications Group FY03 Highlights
Enterprise Communications Group FY03 Highlights • Market share gains • Significant sales wins – Merrill Lynch – 7,600 IP/TDM endpoints – Grupo Santander – 12K IP endpoints – University of South Florida – 16K IP/TDM end points • Significant product announcements – Strategic alliance with Extreme Netw
Slide 35: Enterprise Communications Group FY04 Focus Areas
Enterprise Communications Group FY04 Focus Areas • Increase emphasis on software business model • Target verticals • Enhance distribution channels • Build on international presence • Launch new product offers • Grow base of partners 35
Slide 36: DeveloperConnection Program
DeveloperConnection Program The DeveloperConnection Program (DevConnect) brings solution innovators and industry leaders together to work toward a common goal - to blend their complementary products, services, and technologies and create a new generation of innovative communications solutions. Benef
Slide 37: DeveloperConnection Program Focus and Growth
• Focus on solutions for industry verticals • 150% increase in developer solutions in 2003 • 175 members and growing to 250 by end-of-year 2004 • Increased confidence in vendors through testing 37
Slide 38: Avaya and Extreme Networks Strategic Alliance
Enterprise Communications Group Avaya and Extreme Networks Strategic Alliance • Joint development and marketing of converged communications solutions • Avaya will resell Extreme Networks’ portfolio of data networking products and provide comprehensive planning, design, implementation and management
Slide 39: Small & Medium Business Solutions
Small & Medium Business Solutions Segment Overview
Slide 40: SMBS Addressable Market
SMBS Addressable Market 15 CAGR ’03-’07 = 11.6% $13B $11B $10B $9B $8B 10 Billions of end-user $US 5 0 CY03 CY04 CY05 CY06 CY07 ($B) Segments Total CY03 Total CY07 CAGR CY03-07 SMBS Applications 1.4 3.1 22% SMBS Contact Centers 1.0 1.6 12% SMBS Messaging 0.4 1.3 38% SMBS Unified Communications 0.0 0
Slide 41: Small & Medium Business Solutions FY03 Highlights
Small & Medium Business Solutions FY03 Highlights • Market share gains • Shipped 21K IP Office systems and 1 millionth Partner system • Strategic alliances with HP and Microsoft • Significant sales wins – Jenny Craig – IP Office at 450 centers across the U.S. and Canada – McConechy Tire – IP Office
Slide 42: Small & Medium Business Solutions FY04 Focus Areas
Small & Medium Business Solutions FY04 Focus Areas • Target geographic and vertical markets • Target SMB and branch offices • Leverage alliance, SP, and ISV relationships to enhance competitive differentiation • Offer customers bundled solutions and lower TCO • Continue to invest in technologies and
Slide 43: Global Services
Global Services Segment Overview
Slide 44: Services Addressable Market
Services Addressable Market 100 CAGR ’03-’07 = 8.8% $85B $78B $72B $66B 75 $61B Billions of end-user 50 $US 25 0 CY03 CY04 CY05 CY06 CY07 ($B) Segments Total CY03 Total CY07 CAGR CY03-07 Data 21.5 27.9 7% Installation 7.9 13.3 14% Maintenance Management 12.8 14.4 3% Professional Services 4.8 10.5 21
Slide 45: Services Strategy: Reinvent, Grow, Enable
Services Strategy Reinvent, Grow, Enable • Reinvent maintenance – IP telephony transition opportunities – Direct sales focus on contract renewals – Focus on customer value and ROI Accelerate Reinvent Growth • Accelerate growth initiatives Maintenance Delighted Initiatives – Professional services Cus
Slide 46: Educating Customers on Value of Maintenance
Services Strategy Educating Customers on Value of Maintenance A Leading Pharmaceutical Company Incremental downtime costs Total Savings $8.9M – Service Agreement Cost $1.4M attributed to 204 remote resolutions without EXPERT Systems remote capabilities $8M Incremental downtime $6.3M costs attributed
Slide 47: Global Services FY03 Highlights
Global Services FY03 Highlights • Reached collective bargaining agreement with unions • Strategic alliance with IBM • Acquisition of Vista assets • Significant sales wins – Sheppard Air Force Base – Installation and 4-year service and support – 5-year contract renewal with U. S. General Services Adm
Slide 48: Global Services FY04 Focus Areas
Global Services FY04 Focus Areas • Parallel focus on renewal and incremental business • Continue to evolve and renew maintenance contracts • Accelerate professional services and outsourcing offers • Expand remote diagnostics and service capabilities • Focus resources on top 10 international countrie
Slide 49: Summary
Summary The Future • Focused on profitable market share gains The Present • Leverage competitive advantages • Global leadership The Past • Well positioned for • Strategic vision the imminent wave of • Gained market share • Operating leverage technology transition • Gained mind share • Energized • Re
Slide 50: Building on the Momentum
Building on the Momentum • Reached the “inflection point” in telephony • Gained global leadership in IP telephony • Larger customer deployments • Growth in IP line shipment • Stabilized maintenance revenue 50
Slide 51: Break
Break

Avaya — Investor Day (November 2003) on 6ix

Avaya — Investor Day (November 2003)

Slide 1: 2003 Investment Community Conference

Slide 2: Garry K. McGuire, Sr., CFO and SVP Corporate Development

Slide 3: Forward Looking Statement

Slide 4: Agenda

Slide 5: Unified Communication Center Speech Access Demo

Slide 6: Unified Communication Center softphone demo screenshot

Slide 7: Microsoft Outlook demo screenshot

Slide 8: Microsoft Outlook calendar demo screenshot

Slide 9: Outlook contacts demo screenshot

Slide 10: Donald K. Peterson, Chairman and CEO

Slide 11: Agenda

Slide 12: Investment Thesis

Slide 13: Accomplishments in the Past Year

Slide 14: Gained Market Share

Slide 15: Gained Market Share: Momentum in IP Telephony

Slide 16: Gained Mind Share

Slide 17: Gained Mind Share: Gartner Magic Quadrants

Slide 18: Strategic Differentiation

Slide 19: Market Opportunity: Global Addressable Market

Slide 20: Market Opportunity: Driven by Shifting Paradigms

Slide 21: Opportunities Created by IP Adoption

Slide 22: IP Telephony Strategy: Capturing the Opportunity

Slide 23: IP Telephony Strategy: Pursuing the Global Installed Base

Slide 24: Telephony Line Shipments Growth

Slide 25: Leveraging Services Capabilities & Global Voice Applications Leadership

Slide 26: The Avaya Portfolio

Slide 27: The Avaya Portfolio: Focus Areas for Future Product Launches

Slide 28: The Avaya Portfolio: Full Life-Cycle Services

Slide 29: Avaya Labs: Delivering the Vision

Slide 30: Channel Strategy

Slide 31: Channel Strategy: Go-to-Market Model

Slide 32: Enterprise Communications Group

Slide 33: ECG Addressable Market

Slide 34: Enterprise Communications Group FY03 Highlights

Slide 35: Enterprise Communications Group FY04 Focus Areas

Slide 36: DeveloperConnection Program

Slide 37: DeveloperConnection Program Focus and Growth

Slide 38: Avaya and Extreme Networks Strategic Alliance

Slide 39: Small & Medium Business Solutions

Slide 40: SMBS Addressable Market

Slide 41: Small & Medium Business Solutions FY03 Highlights

Slide 42: Small & Medium Business Solutions FY04 Focus Areas

Slide 43: Global Services

Slide 44: Services Addressable Market

Slide 45: Services Strategy: Reinvent, Grow, Enable

Slide 46: Educating Customers on Value of Maintenance

Slide 47: Global Services FY03 Highlights

Slide 48: Global Services FY04 Focus Areas

Slide 49: Summary

Slide 50: Building on the Momentum

Slide 51: Break