Mitel to Come Out Swinging, Will They Connect?

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Mitel to Come Out Swinging, Will They Connect?

This past January I wrote a piece which compared Mitel to ShoreTel titled Is ShoreTel filling the Nortel Void and since the post Mitel has been in a state of flux with a new CEO Rich McBee recently joining. When the opportunity presented itself to come to the Mitel Business Partner Conference titled Mitel Freedom – in Florida, I jumped at it in order to get more perspective on Mitel’s strategic direction and future.

The conference officially kicks off tomorrow morning but I wanted to give my readers as much information as possible before things got going. Tonight I had a sashimi (no, the other one – without the rice) dinner with Ron Wellard, GM and EVP of Mitel Communications Solutions, Jim Davies the CTO and Jay Nichols the VP of Sterling Communications – the PR firm handling Mitel. It was a candid discussion allowing my readers and I access to a wealth of information about the company and where it sees itself in the future.

In short, there is an opportunity being opened up in the reseller channel by the Avaya acquisition of Nortel and Mitel says some Avaya customers aren’t happy with the way the integration is being handled. This they see as a huge opportunity to become the number two option to Avaya in very large accounts.

One way of looking at such a statement is asking what is taking so long? After all, in October of 2009 Mitel CEO Don Smith and President and COO Paul Butcher told me the same thing more or less – and obviously the results haven’t backed up the rhetoric. Moreover, my article discussed virtualization and how Mitel’s early lead was going to give them a competitive advantage. My dinner conversation went down the same path.

In fact, I am told that more than half of the Mitel channel partners have sold a virtualized solution. We all know of course from experience that when a reseller sells one of anything new, this doesn’t mean they know what they sold or how to configure it, etc. If you have been in the communications space long enough you remember the learning curve it took to get from TDM to IP. Still, this figure is impressive.

And this takes back to the premise of why Mitel is doing so much more poorly than ShoreTel. I mentioned part of the problem had to do with simplicity of ShoreTel solutions compared to Mitel and others. Last month, ShoreTel CMO was proud to mention (video) simplicity and lower TCO are part of the reason for the company’s success.

 

So in response, Mitel is embarking on simplifying its product lines and core businesses. They see what ShoreTel has done and are reacting accordingly. Another area of improvement I stated was the company has been “dark” which from the media and customer point of view means the company isn’t in the news, being discussed, putting out releases, etc. We can expect this to change according to my dinner conversation.

Another interesting discussion point was that the ShoreTel approach was to make voice look like a data solution via an appliance-driven model. This was mentioned in a complimentary fashion – because as we know IT is making more voice decisions each day.

But Mitel has a not-so-secret plan to out ShoreTel, ShoreTel when it comes to simplicity and the secret-sauce as you may have guessed is virtualized communications solutions. If you think about it and voice is indeed an application in a data center, why does it need an appliance? It should behave like other applications and be allowed to run on virtualized systems so they can be hosted in the cloud if needed and managed like other virtualized servers. This is where Mitel’s close ties to VMware come in – other communications server (or PBX if you are old enough to know the term) companies are also rolling out virtualized solutions but Mitel tells me they are farther ahead in this space than others. I will learn more tomorrow at the conference and will be sure to share.

So the point is that Mitel thinks they can leapfrog ShoreTel in simplicity by providing the easiest virtualized communications solutions – including client products and BTW don’t expect the company to roll out a tablet now or in the future thank you very much – they will be device-agnostic. But they do believe that in the post-PC world we live in (I am typing this on a laptop so the phrase may be a bit premature – but you get the point) that virtualized communications solutions will make more sense. Especially when you realize in a bring your own device world, you may allow users to “own” their devices and the apps on it but when they want to work on anything in the corporation they will have to connect to a locked-down machine or instance of their apps and/or desktop.

Another interesting point is that some of Mitel’s customers are happy they embraced virtualization early as it allows traditional telecom types to have a career path within the data center beyond voice.

The new CEO Rich McBee comes from Danaher – one of the very few companies where I am a shareholder. I bought the stock years back because it was a diversified conglomerate and would be somewhat resistant to a downturn in any segment. Moreover in speaking with companies acquired by Danaher I was intrigued by the sophisticated processes the company brings to its portfolio of companies. But from a marketing perspective companies like Fluke and Tektronix are poor marketers. Both companies have tremendous brand equity and are able to survive based on reputations going back decades. As an example when I was in engineering classes at UCONN, the oscilloscopes were all made by Tektronix.

Mitel however is a different animal. It purchased Inter-Tel in the US which had a strong brand and replaced it with Mitel which wasn’t very well known. We have gone over how quiet the company has been so no need to rehash that.  Moreover we have discussed the hundreds of millions of lost value this merger produced primarily as a result of not continuing the successful branding Inter-Tel was doing. In other words, Mitel in the communications space does not have the brand equity of say Cisco. And now things are even more challenging as there is competition from more established open-source solutions, a renewed Avaya with Nortel more completely integrated and cloud communications vendors coming out of the woodwork. The only good news is Cisco is in relative disarray compared to its old self and many companies see this as a once-in-a-lifetime opportunity to take some market share.

But questions regarding better messaging and execution can only be answered by well – execution. Can the company brand all of this change successfully? Will dealers jump ship from Avaya, ShoreTel and others to carry Mitel solutions? Will customers learn what Mitel is doing and see the future or will they sigh and ask their current communications solutions providers to duplicate it? Time has a way of answering most questions but for the life of me I am not sure I will ever figure out why I ate raw conch tonight. Just kidding – it was really good.



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