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Businesses can now rent Avaya phones

Businesses looking to reduce large one-time capital expenditures can now rent Avaya phones for a monthly fee.

Businesses can now rent Avaya phones rather than buy them. The new subscription offering comes as the vendor looks to boost hardware sales by making its phones compatible with the software of any vendor.

Avaya now offers rental contracts of one, three and five years for several of its desk phones, conference room phones and touchscreen devices. Businesses will be able to add hardware to their plans or upgrade to more expensive models at any time.

Avaya had already let customers finance the purchase of its phones through monthly payments over three years. With the new subscription offering, customers won't own the phones and can choose to return them at the end of the contract term. (Businesses will also pay a fee for canceling a contract early.)

The device makers Plantronics and Polycom also let businesses rent certain devices. However, it's unclear how much demand exists for such subscription plans given that desk phones typically have a long shelf life, said Irwin Lazar, analyst at Nemertes Research.

"The phone subscription model isn't one that I think will resonate, given companies tend to buy phones and keep them for a long time," Lazar said. "It seems it would be more expensive to go with a subscription model, and there aren't enough new innovations in desktop phones to warrant regular upgrades."

The most significant benefit of renting is avoidance of a large one-time expense upfront. Avaya plans to refurbish rental phones that businesses return and use them to replace customers' broken devices.

Avaya is grappling with a yearlong decline in revenue from its unified communications products, attributable in part to a failure to invest enough in cloud products. Revenues in that segment were down 1% in fiscal 2018.

Avaya has taken strides this year to become a cloud-first business, culminating in the launch this week of an online store for its UC cloud products. Still, with only 200,000 multi-tenant cloud UC seats, it barely registers as a player in the market for unified communications as a service (UCaaS).

As UCaaS adoption grows in the coming decade, the market for open SIP devices is projected to increase at an average annual rate of 11.8% through 2024, according to Frost & Sullivan. Avaya is looking to capture some of that revenue while it plays catch-up in the software market.

Avaya added more than a dozen open SIP phones -- which companies can link with any IP-based communication system -- to its portfolio last month, and plans to release several additional devices of that kind in the coming weeks.

Hardware sales comprise 18% of Avaya's revenue. That's down from 22% last fiscal year, as the vendor continues to pivot toward selling more software and services.

In the company's latest earnings release, executives said that endpoint sales were trending upward following long-overdue upgrades to its portfolio of Avaya phones and other devices in 2018.  

In addition to desk phones, Avaya has begun making headsets and recently unveiled new wireless handsets. It has also released a line of Avaya Vantage touchscreen devices designed for hotels.

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