Mitel has shown up in the news a bit this year, originally with their close to completed acquisition of Polycom, and later when the deal fell through. Once again, Mitel is popping up with news they will be selling off their mobile division to Xura, the Communications Service Provider.
On the surface, one might believe Mitel is in a bit of an odd spot – unsure of how to move forward, searching for a new focus and shedding weight in hopes to stay afloat. In fact, quite the opposite is true. Both of these are great moves for Mitel. Even the Polycom fall through, in the end, is only a good thing for Mitel.
Good-Bye To Mobile
To lay out all of the facts right away, Mitel announced on Monday, Dec 19 they will be selling off their mobile division to Xura for $350 million, plus equity interest. During their announcement phone call on Monday morning, Mitel CEO Richard D. McBee said that he sees the potential for growth for Mitel in the mobile space, as well as the enterprise and cloud-based service industries, but he understood that Mitel might not be large enough to take on both.
In fact, the Mobile Mitel division that is being sold off to Xura is the result of a 2015 acquisition of the publicly traded Mavenir Networks. This is a good thing, a really good thing. Mitel is moving in the right direction, and while yes shedding weight – its not struggling to stay afloat, but rather gaining momentum, hopefully with sights zeroed in on the finish line.
As McBee himself stated, there is room for growth in Mobile, and there is room for growth in UC and Enterprise. However, Mitel has to decide which path to take at this fork – and they decided to go the UC route. Good choice.
Enterprise solutions are Mitel’s core, its what makes up the brand and what they are known for. Ditching mobile now puts a nice wad of cash in the company’s pocket, helps remove any burdens holding them back, and allows the company to streamline into a more direct approach.
McBee explained, “the key aspect of our strategy is returning to the core. The mobile was an adjacency to the markets that we currently serve,” he said on the call.”
Who Needs Polycom
Many were surprised to hear of a Polycom and Mitel merger, and many more were surprised to hear the deal was not going to be completed. We were originally skeptical of the deal, as well. However, Mitel played this one smart, and absolutely came out on top for the sake of Mitel.
The idea made sense, Mitel sells the software so why not bring in the hardware, cross sell the markets? But Mitel was outbid, and made the incredibly strategic move to walk away.
As Mitel has clear plans to branch into the software market, with a cloud-based UC solution. So why would they even need Polycom? If Mitel is looking to spearhead into software, what’s the use of bringing in more hardware? If anything, Polycom would’ve gone the way of Mavenir in a few years, adding in another headache for Mitel to manage.
How Will Mitel Move Forward?
With some extra cash in hands, and one less clunky product to worry about, what will Mitel do next? While McBee did state the company has no acquisition plans so far for the future, there certainly are a few I could see the company snatching up.
- Branch into the SMB Market – It would make sense for Mitel to eventually branch into the SMB market, and focus on smaller players. While the Enterprise level is a great place to be, they might end up falling short with a smaller market. However, with the SMB side, Mitel will be able to focus on quicker sales, and more of them.
- Embrace BYoD – As it currently stands, Mitel requires users of their service to hook up their own, proprietary Mitel phones. And they’re good, just look at their smart phone integrated IP phones – however, its just the market is moving. Simply put, allowing clients to utilize their own hardware will allow Mitel to branch into even more offices.
- Bring In The Smaller Experts – McBee made it clear that Mitel does not have any future acquisition plans at the moment. However, if moving into the SMB market it would make sense for Mitel to snatch up those that are already doing it well.
- OnSIP – One provider that really is doing it well is OnSIP. As a leading cloud provider to the SMB market, OnSIP would offer a solid entry point for Mitel, without bringing in an excess of tech that needs to be integrated into their existing platforms
- Fonality – Fonality is doing well, but we see the marriage of Fonality and Mitel has one that would greatly benefit the existing Fonality user base. This would be Mitel get some feet on the ground, while starting with another solid existing platform.
- Dialpad – As what can be considered the leading cloud only provider, Dialpad’s softphone and software solution would make a great addition to the Mitel portfolio. We always like to see the best match up with the best.
Mitel In The Future
Like I said before, this is good news for Mitel. Both of these events, are good news for Mitel. McBee had also explained that this recent sale “enables [Mitel] to intensify our focus and capital in expanding our leadership position in the enterprise market as it prepares for large scale digital transformation of premise-based systems to the cloud.” Hopefully this includes some of the biggest UC trends coming in 2017.
So Mitel is looking ahead, and the rocky 2016 turned out to be a good year. Life has a funny way of working itself out, and what might first come as a stinging rejection can later be turned into a key realization. When one door closes in life, 20 more open. However, its up to you to pick the right door and walk through, which is what Mitel is doing. Focusing on the future, Mitel is now moving forward with a streamlined goal in mind.