Mitel Focus on UCaaS

Following the announcement that Mitel is to acquire rival ShoreTel, Ian Hunter at Comms Business Magazine talked to Graham Bevington, Executive VP Business Development Global at Mitel about the deal and what kind of changes we are likely to see as a result in the UK channel.

Ahead of speaking to Graham Bevington at Mitel, I had a distinct feeling of Déjà vu. Here I was, about to interview a senior executive at Mitel about their acquisition of a US based rival company that had established a large base of customers in North America but failed to make significant inroads in to the UK and other European markets.

However, this was not 2007 and the Inter-Tel acquisition but instead the 2017 takeover of ShoreTel. It just so happens that it was once again the two of us doing the talking.

Comms Business Magazine (CBM): It sounds like you have been very busy these last few months?

Graham Bevington (GB): You could say that. Last month we closed the deal on the acquisition of Toshiba’s Unified Communications business which means that effective immediately, Toshiba customers and partners have a clear path forward with Mitel, including ongoing access to existing Toshiba products and services.

That transaction reflects Mitel's strategy to focus on expanding its position in the UCC market as digital transformation accelerates demand for cloud-based business communications solutions and business productivity applications are reshaping organizations globally.

The acquisition of ShoreTel further extends that strategy and whilst we had looked to purchase the company previously, clearly the right time had arrived and both boards agreed the deal.

CBM: This move increases your UCaaS market share, is that significant?

GB: Yes it. It’s a big change to our business and doubles our UCaaS revenue to $270million. Importantly in today’s market our recurring income increase considerably as a result and globally our reseller base has now increased to some 3200 partners.

CBM: Mitel has made significant vendor acquisitions and therefore has a mix of solutions and a mix of partners that are familiar (and unfamiliar) with various UC products and services. There can’t be too many reasons to keep two UCaaS products in development in the long terms can there?

GB: We see ShoreTel and Mitel UCaaS solutions as being complimentary in that the ShoreTel solution has found most of its success in under 500-user applications whereas Mitel UCaaS solutions are highly successful in larger deployments. We want to create a ‘best of both worlds’ and with virtualisation, markets are not so black and white anymore. As a result it is not a case of anyone feeling that they have won or lost.

Our next steps in the acquisition are a series of pre-deal planning and integration meetings. There are business rules governing how we manage this process and until the deal is closed in September we will continue to operate as two distinct businesses. The combined company will be known as Mitel but the product names will be retained as both are well known in the market.

We are targeting our ‘Next’ partner event to be held in Munich this November to have a ShoreTel component and announce a positioning of the portfolio for both the channel and the end user.

CBM: The North American market is significant in global terms so how would you characterise it right now?

GB: The problems at Avaya have impacted this market. They have sold their data networking business to Extreme but are still in Chapter 11 bankruptcy protection Avaya having just applied for a 60-day extension to that status.

Avaya has been in this position for seven or eight months now and overall the market is stalling with port sales are down by 10%. The latest Gartner UCaaS Magic Quadrant report sees Avaya being downgraded due to the uncertainty – it’s difficult for a consultant to recommend the product.

As Gartner says in their report, if this Chapter 11 process lasts for a year or more it will make Avaya's task of business recovery more difficult. Additionally, Gartner's client inquiry service, together with evidence from Gartner Peer Insights, indicate that Avaya is struggling with after-sales support across its portfolio.

CBM: Looking for UK reseller reaction to the Mitel ShoreTel deal we spoke to ShoreTel’s biggest UK reseller, Solar Communications, who just also happen to be a Mitel reseller as well.

John Whitty, Chief Executive at Solar, told us, “As ShoreTel’s only Platinum and one of Mitel’s Gold partners in the UK, we are pleased to see our two main UC technology partners joining forces as a massive opportunity to take the best of both portfolios and deliver under a single brand. Both companies offer great innovative products and hope that the same investment and support continues in each product line.”