We reported back at the end of July on Mitel’s latest move, snatching up ShoreTel for roughly $430 million. At the time, we took a look at why Mitel went with ShoreTel, especially considering they had tried before in the past. All in all, it seemed like the dots lined up for a good fit, with some good timing thrown in the mix.
Mitel was shedding some of their weight, and following the abandoned Polycom acquisition it made sense for the provider to search for a better fit. ShoreTel themselves weren’t doing as hot as they were a couple of years prior, as well. But that was our take on it, and today Mitel announced that the acquisition has finally completed, so we get to hear from the real brains behind the decision.
It’s All About the Digital Transformation
With the addition of ShoreTel, Mitel has “accelerated its move-to-the-cloud strategy,” bringing themselves to the number 2 market share position for UCaaS providers, according to their announcement. And this makes a lot of sense, we saw earlier this year just how Mitel was positioning themselves to move into a cloud focused, digital transformation.
President and CEO Rich McBee explained:
“Digital transformation is rapidly changing business models in every industry and every corner of the globe…For businesses, moving to a cloud communications and collaboration system inside their own organizations is a natural first step on their digital transformation journey.”
He went on to further state that “Mitel and ShoreTel are now stronger together and even better equipped to help take our customers to the cloud, seamlessly and simply.”
All-in-all, Mitel felt that ShoreTel brought the right cards to the table when it comes to a cloud-first strategy. By shedding some of their weight with selling off their mobile division to Xura, and now bringing in a provider already positioned in the cloud, it seems like Mitel is closer to the agile, digital platform they see as the future of business communications.
“Stronger Together with Rich Cloud Culture and Offering”
Mitel noticed how the market was constantly moving closer and faster to a cloud-focused paradigm — which is why the Polycom grab didn’t make too much sense to us. Like I said before, Mitel was already interested in ShoreTel just a few short years ago, and it only makes sense they’d want to grab what they already had their sights set on.
In fact, the announcement states that Mitel was a particular fan of “the success ShoreTel’s management team and employees have had in transforming their business to meet changing customer needs and delivering an exceptional customer experience.”
He went on to explain how ShoreTel team “have institutionalized and mobilized” the mantra of agile, simple, real-time communications. Their cloud-first portfolio combined with Mitel’s global reach should stand as a fairly strong competitor in this ever expanding UCaaS market, and I’d be curious to see what Gartner’s UCaaS Magic Quadrant will look like next year.
Analyst support seems strong in favor of the move as well, with this quote from Frost and Sullivan shared in the announcement:
“Regardless if you are a small business owner or the IT director for a Fortune 500 company, digitally transforming your organization to leverage business applications in the cloud, connect remote workers, and access collaboration tools that work in and out of the office, can be daunting. But it doesn’t have to mean ripping out everything already in place or stranding investments already made,” said Elka Popova, Vice President and Senior Fellow, Connected Work and Digital Experience, Frost and Sullivan.
“Companies need a pragmatic blueprint to move to the cloud, and with ShoreTel solutions now part of Mitel’s portfolio, Mitel is better-positioned to offer that kind of rational choice to more businesses so that customers can have their cake and eat it too.”
The Future of UCaaS
So, when I took a look at Gartner’s most recent UCaaS Magic Quadrant, the firm recognized how the market continues to move forward with new providers, tools and options popping up constantly. At this point, there’s a good number to choose from, but this can lead to a confusing buying process for most businesses. Both Mitel and ShoreTel stood as strong choices, but for different reasons – Mitel more on the on-premise UC side.
With Mitel bringing in the cloud based UCaaS offering, we’re seeing a bit of a consolidation in the market. Even the bigger Enterprise focused providers are looking to jump on top of the UCaaS market, as they see this approach becoming the new norm. Despite Avaya having some troubles and filing for Chapter 11, they even went ahead and launched their Zang platform to focus on UCaaS offerings.
I don’t think anyone sees UCaaS going away any time soon, in fact quite the opposite. On-premise UC might be fading away, falling into the shadow of cloud-focused UCaaS solutions — and if this acquisition is anything, it’s a fairly decent indication of just that.