Don't Underestimate Silver Lake - or GiancarloDon't Underestimate Silver Lake - or Giancarlo

By Marty Parker Last week's news of Charlie Giancarlo's move to Silver Lake created a flurry of comments about what Charlie might be doing with Avaya, Silver Lake's most recent private equity acquisition. Yet, as Charlie's move sinks in, it seems to me that assuming Charlie Giancarlo made that move so as to "fix" Avaya would be a gross underestimation of both Charlie and Silver Lake.

By Marty Parker Last week's news of Charlie Giancarlo's move to Silver Lake created a flurry of comments about what Charlie might be doing with Avaya, Silver Lake's most recent private equity acquisition.

Yet, as Charlie's move sinks in, it seems to me that assuming Charlie Giancarlo made that move so as to "fix" Avaya would be a gross underestimation of both Charlie and Silver Lake.Look at Charlie's history in two dimensions. First, notice that Charlie was the architect of Cisco's technology-driven growth-through-acquisition model. Silver Lake could well give Charlie the platform from which to launch another such industry-transforming move. Silver Lake may have bought Avaya as a bet that the PBX model will last longer than most predict, but that can't be the end of it. How about a global communications company that adds a major European element and a major Asian player to round out Avaya's North American strengths? How about creating a real enterprise communications software company by linking Avaya resources to other Silver Lake assets, such as IPC and/or Netscout Systems, with perhaps some Thompson media processing and some SunGard hosting thrown into the mix? It's the season to "... dream by the fire," so perhaps you have your own scenario. Add a Post below, if you do.

Second, Charlie's roots are with the company that invented Ethernet switching. Who's to say that he doesn't see another such breakthrough in the industry, perhaps even one that runs counter to Cisco's business model, such as emphasizing peer-to-peer functionality or somehow extracting some switching value from the routers? Not that Silver Lake is in the software development business, but they could certainly fund or acquire ownership in innovative companies that could do that, and even link that back into adding value to their Avaya investment.

Certainly, Silver Lake had a plan for successfully managing Avaya before they even made their offer almost a year ago, i.e. well before Charlie made his decision. My attention will be on the synergistic and innovative results from Charlie Giancarlo's move, not on the management blocking and tackling. How about you?