Mitel Buys ShoreTel

For those of you who may not have heard: Mitel recently completed its acquisition of ShoreTel for $530 million.

Since this was first announced at the end of July, I’ve been asked repeatedly what I think about this deal.  What does it mean for Barry Communications as a partner?  And what does it mean for both existing and potentially future customers?

Although I knew there was a high likelihood that ShoreTel would be sold, it was still a shock to hear the news. And I must admit that my first reaction was not positive. Like most people, I can be uncomfortable with change, especially big change. Having the manufacturer of our premier product line and a core technology of our cloud strategy be purchased qualifies as a big change!

However, as I read about it and had some time to think, I quickly realized that this is a completely positive change.

Over the past 15+ years, ShoreTel was a disruptive player in the business communications market.  Their original premise-based product brought enterprise-grade unified communications (UC) to the general marketplace. They delivered “Brilliantly Simple” products and software that were easy for all parties to understand and adopt. It was easy to understand, easy to implement, easy to use, and easy to maintain.  And all of that made it (relatively) easy for us to sell.

As the cloud phenomenon began to emerge, ShoreTel virtualized their software, allowing us to migrate customers to cloud data centers. With the migration of ShoreTel to the “Connect” platform, they became the first in the industry to have a single application that could run in a premise, cloud or hybrid implementation. ShoreTel continued to grow, both in market share and financial results.

All their success, however, made them a target for acquisition. In an industry that is continuing to consolidate, it became inevitable that ultimately, they would be acquired. Two years ago, Mitel made an unfriendly bid to buy ShoreTel. At the time, the Board of Directors rejected the offer, but set up a committee to review their strategic alternatives. Ultimately, the decision was made to accept an offer from Mitel.

For those who have been in the industry for a long time, Mitel is a well-known and well-regarded entity.  They have been a major global player in the telecommunications world since the 1970s. Barry Communications had significant experience with Mitel back in the 80s and 90s, and I personally worked with them into the 2000’s. Their products were always of the highest quality and reliability. They have always been a dominant force in the hospitality and education sectors, and among the top five in the general business marketplace.

From my standpoint, however, they fell behind as the UC market evolved.  This is why we adopted ShoreTel, which was a pure UC product.  ShoreTel was not burdened with having to maintain legacy phone systems and migrate old technology to new, which made them far more agile and gave them the ability to start with a “clean sheet of paper”.  In side-by-side comparisons, ShoreTel was always a better fit for business customers — compared not only to Mitel, but to any of the competitors — which is how they achieved such significant market share starting from zero.

Clearly, Mitel (privately) understood this, which is why they made such a strong effort to purchase ShoreTel.

When I look at the alternative potential acquirers – data networking companies, carriers, other cloud companies or private equity – I see no other company that would immediately understand the true value of ShoreTel, have such a deep knowledge of the UC marketplace, and have the manufacturing capability and historical commitment to quality that Mitel brings to the table. Any other acquirer would have had a long learning curve, which would have made all of us extremely uncomfortable.

Instead, Mitel has made it clear that they have a plan and a place for ShoreTel in their product line and that it is highly synergistic. They have a history of acquisitions that have been very successful — for them, and more importantly for the customers of the companies that they have acquired. They have made significant efforts to reassure us that our investments and our customers’ investments are not only secure, but that the long-term return on these investments will be improved.

With this acquisition, Mitel is now the number two company globally in the UC business and they have set their targets on being number one!

At the end of the day, businesses are truly made up of people. I have always been impressed by Mitel’s people. I have now been through several presentations and have met directly with executives and local representatives from Mitel. I have not only been impressed by their depth of knowledge and professionalism, but as importantly, by their longevity with the company. This gives me a sense of stability; the people who are making promises today are most likely going to be the people who will be around to deliver on those promises tomorrow, next year, and in the years to come.

As I have told the customers who have reached out to me directly: this is all good. For those who were concerned that Mitel might “phase out” ShoreTel’s technology, my reply is: “Why would a company spend more than half of a billion dollars to destroy what they purchased?” And if they were not going to develop the Connect platform, why would they put their name on the platform within 24 hours of purchasing the company?  It is now “Mitel Connect”.

Which leads to my only real problem with all of this. After 10 years of talking about ShoreTel, I now have to retrain myself and start saying Mitel! And that’s a problem I can handle.

Please feel free to reach out to me directly if you would like to discuss any of this.

Andy Mehlman
amehlman@barrycommunications.com
508-926-7142