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Avaya to put $165 million into Ontario R and D labs

When Avaya Inc.ย spent just over $900 million to buy the enterprise telecommunications business of Nortel Networks almost exactly a year ago, there were concerns about what it would do with the two Canadian research and development labs it acquired.

The company answered the question Monday by announcing it will invest $165 million over three years in the facilities in Ottawa and Belleville, Ont., so 350 staffers can continue to work on new unified communications and collaboration technologies. The Ontario government will add another $5 million.

โ€œAs we acquired Nortel Enterprise Solutions last year and married it with Avayaโ€™s development group we realized we had a real recipe for success here,โ€ Ross Pellizzari, president and managing director of Avaya Canada, said in an interview.

โ€œSo weโ€™re going to continue to invest in Ontario and retain and attract more skilled labour as we go forward and the business grows.โ€

The money, which will be used to hire staff and pay for lab facilities, helps fulfill a commitment Avaya made to Investment Canada to get approval for the acquisition of keeping at least 350 R&D positions in the province.

Avaya has about another 550 administrative, sales, marketing and support staff across the country.

Since buying Nortel, Avaya says it has increased research and development spending here by 25 per cent.

The other big buyer of Nortel assets, Ericsson Canada, has also been putting money in here. Patricia MacLean, Ericsson Canadaโ€™s director of communications, said Monday the company has hired 100 more staffers here since it paid over $1 billion for Nortelโ€™s wireless businesses.ย The Ottawa labโ€™s expertise in the next-generation wireless technology called LTE (Long Term Evolution), particularly for helping Nortelโ€™s CDMA-based carrier customers, was seen as a key asset.

In September, Ericsson took politicians and reporters on aย tour of the former Nortel wireless lab it runs in Ottawa to emphasize how important the facilities and staff are to the companyโ€™s operations. Before the acquisition Ericsson also had a research lab in Montreal.

Avayaโ€™s Ottawa lab works on web.alive, a virtual conferencing and collaboration environment, some application design and some work on the companyโ€™s small and medium enterprise applications. Belleville developers have done work on the interface for the upcoming Flare tablet.

But they also work on supporting legacy Nortel telecom and telephony equipment, as well as on merging certain Nortel capabilities into the Avaya Aura platforms. That includes the ability to link Aura systems to Nortel handsets through Avaya Session Manager.

For example, Pellizzari in current and upcoming releases of Avayaโ€™s IP Office platform for SMBs has features from Nortelโ€™s BCM (Business Communications Manager) line.

The integration, he suggested, has gone smoothly. โ€œEverybody wants to protect the products they designed,โ€ he said, โ€œbut when you put the two teams together they pulled the best out of both product lines.โ€

How many more people Avaya will add to its R&D labs depends on the companyโ€™s growth, Pellizzari said.

Given the recent uncertain economic news thatโ€™s not encouraging. But Pellizzari, who joined Avaya earlier this year, is positive. โ€œIโ€™ve been here six months and have been pleasantly surprised at the growth weโ€™ve had.โ€ He wouldnโ€™t give specifics because Avaya doesnโ€™t break out its Canadian sales numbers. However did add that โ€œIโ€™m cautiously optimistic weโ€™ll continue to see double-digit growth.โ€

While looking ahead to new products, Pellizzari also stressed one of the companyโ€™s biggest initiatives is to continue supporting customers with Nortel gear.

โ€œOntario is home to some of the companyโ€™s most critical R&D activities, facilities and personnel,โ€ said Avaya CEO Kevin Kennedy said in a news release accompanying the announcement. โ€œThis investment from the Government of Ontario reinforces our commitment to innovation in Canada and builds on the expertise of our Ottawa and Belleville R&D teams.โ€

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