ShoreTel just announced they are purchasing M5 Networks – both companies have been past participants in ITEXPO – I happen to be here at ITEXPO Miami where we have record crowds. And cloud communications is a hot space as evidenced by the interest in the technology by purchasing conferees here at the show.
And this is the reason for the acquisition. Many will credit the simplicity of ShoreTel PBXs as well as their “networking” based approach to design and deployment for some of their success. Obviously they are better at marketing and PR than most communication companies as well.
But the future is the cloud and M5 has been a regional player for a long time and although they have expanded their footprint they don’t have a strong enough brand to be the cloud-communications alternative to a strong brand like Cisco or Avaya. Now with ShoreTel behind them they have the money and the marketing expertise to be a serious player.
The biggest hit will likely be felt by 8×8 as they are a pure-play cloud communications company who has been getting a lot of investor love lately due to their great earnings announcements.
Cisco may now be forced to buy 8×8 and Avaya will likely make a move as well. This move could even push Vonage to go after the SMB space. Mitel is an interesting question – they have leading edge tech but a troubled stock to use as currency.
One thing is for sure – it will be an interesting time for M&A this year in cloud communications. And if companies don’t act fast they may not get a chance to compete in the cloud because the cable companies are not sitting still.
Update 2/16/12: Doug Mohney has some predictions about who will buy and who will sell in the cloud communications space over on TMCnet. Here is an excerpt:
You can put into the “buyers” category Avaya (News – Alert), Cisco, Digium, and maybe Microsoft. Avaya talked a lot about the cloud at ITEXPO East earlier this month, so it can’t be totally clueless to the fact that businesses are going to turn more to hosted services. Cisco has some cloud-based services already along with joint offerings with service providers. Digium (News – Alert) is likely looking around at this point because it may find that it needs to provide a hosted solution to its reseller base. Microsoft has been promoting hosted everything by everyone, so it may not want to upset its current relationships and offer its own-branded service to compete against its channels.