The Mitel acquisition of ShoreTel made waves in the telecom industry last week. This news is especially exciting for us because it spells success for Unified Communications as a Service (UCaaS) companies like Jive.
The acquisition also proves a prediction we made earlier this year. Jive joined with other industry leaders to predict how the UCaaS market would play out in 2017. One key prediction was the continued consolidation of competitors:
“There will be pressure on the UCaaS market to consolidate because scale is a major cost factor both on the operations and customer acquisition fronts. Telecom is an acquisitive space in general, and larger players are scrambling to get their piece of the cloud-based market.”
Mitel CEO Rich McBee echoed this in his statement on the acquisition:
“This is a very natural combination that enables us to continue to consolidate the industry and take advantage of cost synergy opportunities while adding new technologies and significant cloud growth to our business.”
The Mitel acquisition also confirms predictions that communication companies would continue migrating to the Cloud. Mitel’s shift toward cloud communications has included the merging of its cloud and enterprise divisions and the acquisition of Toshiba’s UC services. The addition of ShoreTel’s cloud-based solutions to Mitel’s offering should create a platform that helps Mitel accelerate customer adoption of the Cloud.
Mitel’s Acquisition of ShoreTel
Mitel acquired ShoreTel for approximately $430 million. This isn’t the first time Mitel bid for ShoreTel. Mitel made an offer to buy ShoreTel back in 2014, which ShoreTel rejected. Since then, ShoreTel’s stock price peaked and then dropped, and the company experienced major layoffs. When Mitel came back with another offer, ShoreTel took it.
The move is seen generally as a beneficial one. According to Frost & Sullivan’s analysis of the UC marketplace, this acquisition secures Mitel into the top 10 providers in the space. The question now is how Mitel will consolidate the very different technologies and platforms it’s assembled.
Here’s what else we’ve learned:
- The combined ShoreTel/Mitel company will continue as Mitel.
- It’s headquarters remains in Ottawa, Canada.
- Together, the two companies will have a combined workforce of 4,200 employees.
- It will also have 3,200 channel partners.
- Estimates state the acquisition should double Mitel’s UCaaS revenue to $263 million.
What Does This Mean for Businesses?
The big takeaway for businesses? Don’t fear switching to the Cloud.
Despite persistent concerns over reliability and security, the Mitel acquisition is a signal that cloud communication technology is maturing. And as it matures, it’s becoming increasingly essential. Elka Popova, Vice President and Senior Fellow of Digital Transformation at Frost & Sullivan, made this same point in her report on the acquisition:
“With premises-based solution revenues steadily declining, vendors such as Mitel are compelled to look for ways to rapidly establish presence in the UCaaS market. Still highly fragmented, the UCaaS market creates huge opportunities for more agile and financially stable providers to consolidate and emerge as leader ahead of numerous smaller competitors.”
At Jive, we focus on helping customers realize real competitive gains in cost and productivity by migrating their communications to the Cloud. So take a note out of Mitel and Jive’s book and join us in the Cloud!
If you have questions about the Cloud, download our Exploring Cloud Guide below to learn more.