Mitel – what next for ShoreTel Partners & Customers

Rob's Blog

4
mitel acquisitions
Unified Communications

Published: July 28, 2017

Rob Scott

Rob Scott

Publisher

This week Mitel announced an agreement to purchase ShoreTel in an all-cash deal worth approximately $430 million. This is probably one of the unified communications industry’s biggest pieces of news since Avaya filed for chapter 11 in January earlier this year.

Interestingly the deal that Mitel has just done is $110 million less in value than what they offered ShoreTel shareholders about three years or so ago.

Mitel’s recent deals

  • 2007 Mitel acquired Inter-Tel
  • 2013 acquired prairieFyre software Inc
  • In November 2013, Mitel purchased Aastra Technologies for $400 million
  • 2014, Mitel acquired contact centre supplier OAISYS for an undisclosed sum 2014, Mitel’s first bid for ShoreTel was rejected by ShoreTel ($574 million)
  • 2015, Mitel announced intentions to buy Mavenir Systems for $560 million
  • 2015, Mitel acquires global hospitality specialist TigerTMS
  • April 2016, Mitel announced intentions to buy Polycom for $1.96 billion – however, the acquisition did not happen.
  • 2017, Mitel sells off Mavenir Systems Xura and loses $175 million
  • July 2017, Mitel acquires Toshiba Corporation’s Unified Communications business
  • 2017, Mitel announces they are acquiring ShoreTel for $430 million

Why is Mitel acquiring ShoreTel?

ShoreTel and Mitel are similar companies with very similar portfolios, therefore the synergies are very strong between the two companies.

Mitel has a history of land grabbing in recent years, so having similar product portfolios and the opportunity to acquire thousands more customers is a big tick in the box for Mitel.

Here’s what their latest portfolios looks like:

Mitel versus ShoreTel Comparison Mitel ShoreTel
On-Premises PBX/UC Yes Yes
Hybrid UC Yes Yes
Dedicated Cloud UC Yes Yes
Multi-tenanted UCaaS Yes Yes
CPaaS No Yes
Contact Center Yes Yes
Global Cloud Comms Yes Limited
Proprietary IP Phones Yes Yes (Limited range)
Open SIP Phones Yes No
DECT / Wi-Fi Sets Yes Yes (Limited range)

ShoreTel also goes to market via channel partners in the same way. Although Mitel also have a direct model (predominantly in North America) it’s a good guess that Mitel will be retaining the sales model for ShoreTel partners.

What’s interesting is that here in the UK ScanSource Imago distribute ShoreTel and Trust Distribution distribute Mitel’s SMB products. It’s anyone’s guess what will happen there. If either one loses out, then the consequences aren’t good for the losing party.

In a nutshell

  • Market share – Mitel slips into UCaaS #2 allegedly
  • Customers – More systems to upgrade, displace and migrate
  • Innovation – ShoreTel has Summit (previously Corvisa) their own CPaaS platform
  • Product Range – Mitel can extend their portfolio across ShoreTel’s product catalogue
  • Cost Savings – Mitel will naturally be able to reduce ShoreTel’s overheads due to operating in the same geographic locations and having many people doing the same jobs
  • Talent – ShoreTel have some exceptional skills in areas Mitel do not

What next for ShoreTel Partners and Customers?

If we briefly look back at Mitel’s most recent PBX acquisition of Aastra Technologies not a great deal changed for Aastra partners. Mitel’s strategy seems to show complete support for more platforms in their portfolio. In fact, with the recent announcement of Mitel CloudLink, they are even developing a software platform that will help integrate and connect up 3rd party phone systems like Toshiba (now Mitel owned).

  • Mitel will inevitably value ShoreTel’s partners
  • ShoreTel partners and customers will enjoy a great range of products and services in more countries
  • ShoreTel’s products will continue to be developed

Expect some change…

Mitel has been making some cutbacks recently in terms of staff, which kind of makes sense knowing now what they’ve been working on in the background. The ShoreTel acquisition expands Mitel’s global workforce by another thousand or so employees, I’d expect to see some restructuring once the dust settles and more centralisation back to Mitel’s North American ‘HQ’ in Dallas. Naturally for customers this means changes in processes and possibly people, but you’ll also win on the flip side.

Will ShoreTel’s products continue to be developed?

Yes at least for now. However, Mitel now have a huge bunch of overlapping call managers (PBXs) in their portfolio – here’s a list:

  1. MiVoice Business (Mitel’s flagship on-premise and cloud platform)
  2. MiVoice MX-One (Aastra)
  3. MiVoice Office 250 (Inter-Tel)
  4. MiVoice Office 400 (Aastra)
  5. MiCloud Office (Telepo via Aastra acquisition)
  6. ShoreTel Connect ON-SITE and CLOUD
  7. ShoreTel Summit (CPaaS via Corvisa acquisition)

Merging this portfolio is where CloudLink comes in, however what many customers and channel partners have seen in recent years is a slowdown in R&D and innovation from Mitel due to growth in the business. Too many call managers in one portfolio can’t be healthy surely? This is where newer UCaaS vendors have a distinct advantage over vendors like Mitel.

Hopefully now Rich McBee has done another big deal for Mitel shareholders, he will get the business back on track with differentiating Mitel from other vendors with market leading innovation and advancements in communications technology.

To summarise, revenue isn’t everything when it comes to being a world class technology company nowadays. Agility and time to market is key, all customers and resellers want to be shown is a bit of love by seeing new features and real business benefits coming through from their chosen vendors.

At Enterprise Connect this year an analyst said to expect more vendor churn in the future, they’re absolutely right. Failing to integrate quickly and slowing down innovation will be a huge threat on McBee’s SWOT analysis for sure.

The pure play UCaaS providers like RingCentral, 8×8 and BroadSoft are growing fast and there’s a queue of new vendors right behind them with disruption written all over their t-shirts. (Amazon being the largest!)

Are you a Mitel / ShoreTel Channel Partner or Customer? Share your opinion with me, comment below.

ChannelDECTMergers and Acquisitions
Featured

Share This Post