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How low can Avaya VoIP go?

The communications networking company's latest voice over Internet Protocol product is aimed at the low end of the small and medium-size business market.

Avaya is targeting the low end of the small and medium-size business market with its latest offer for voice over Internet Protocol.

The company, which builds and manages communications networks, announced Tuesday the launch of its IP Office?-Small Office Edition, a product designed especially for companies or remote locations with no more than 28 users.

The product provides firewall, Internet access, wireless connectivity, messaging features and three-way calling in a box that is roughly the size of an 8.5-by-11?inch ream of paper. It's designed to give small businesses the same kinds of features and functionalities offered to larger companies through higher-priced products.

Basking Ridge, N.J.-based Avaya has also partnered with American Express Business finance, a division of American Express' small-business network, to provide financing to small-business operators who are enrolled in its program.

Through March 15, 2004, Avaya and American Express are offering 36-month, no-interest financing for qualifying business owners for equipment purchases of $2,000 or greater. The product itself lists for $1,900.

The Small Business Edition helps round out Avaya's growing portfolio of small and medium-size business products. The company has been targeting this sliver of the market more intensely after recently closing on its acquisition of Expanets, a company that provided networked communications and data services to small and midsize businesses.

Earlier this month, Avaya announced a deal for its IP Office product with Colorado Springs Credit Union.

Avaya is hoping for a big payoff in this market. Dave Johnson, group vice president of small and medium-size business products for the company estimates the market to be worth over $10 billion by 2007.

"Small and medium-size businesses are an increasingly important part of the overall market," said Deepinder Sahni, vice president of small and medium-size business consulting services for AMI Partners.

"VoIP is still fairly new to this market, so there is a high growth curve. And even though the products are priced much lower than higher-end products, companies can get a lot more volume sales in this part of the market," Sahni said.

It's no wonder that the Internet telephony market for small and medium-size businesses is getting crowded. Traditional enterprise VoIP companies, like Alcatel, Cisco Systems and Nortel Networks are already targeting this market with their own scaled-down VoIP wares. Others, such as 3Com and Mitel Networks, are also aiming for this portion of the VoIP market.

Johnson says that Avaya's support for existing legacy telephony services gives his company an edge over some of these competitors.

Unlike other companies that require IP handsets to be used throughout the entire network, Avaya's IP Office products work with existing analog, digital or wireless phones, allowing companies to slowly migrate toward full Internet Protocol capability.

Furthermore, the products also allow customers to connect over a variety of technologies including cable modem, digital subscriber line, wireless or via the standard telephone network.

The product is being sold directly to customers through Avaya's resellers, but the company also plans to sell the gear to carriers such as SBC Communications, which can use it to provide managed services for small and medium-size businesses.