Mitel's $723 million acquisition of Inter-Tel for may herald a new
trend of consolidation that will better position
VoIP vendors to compete against the incumbent big boys like
Cisco and Microsoft.
The combination of Mitel and Inter-Tel, a full-service business
communications solution provider, allows the two vendors to better
target small and midsized businesses
(
SMBs), which have been gobbling up VoIP solutions as the
enterprise VoIP market has started to dwindle. Both vendors offer
tools for unified communications, network management and
applications such as messaging, contact centres, mobility and
collaboration.
According to a statement released by Mitel, the deal positions
the merged company to gain traction in the SMB space while also
allowing for expansion into enterprises. Mitel is typically known
for its global reach, while Inter-Tel has a strong channel and
support.
In a statement, Mitel CEO Don Smith said: "By bringing together
the unique strengths of each company, this transaction accelerates
our growth strategy. Inter-Tel's achievements, particularly in
North America, include creating successful managed service
offerings that we intend to extend to Mitel's resellers and
customers worldwide. Mitel's scalable solutions and broad
geographic reach will drive growth in the large enterprise sector,
complementing recent moves by Inter-Tel to expand its addressable
market."
Yankee Group senior vice president Zeus Kerravala said the
acquisition, which he billed "a consolidation play," is a sign of
things to come.
"It gives Mitel a very strong footprint in the SMB space,
although I think Mitel's vision and technology were much better,"
he said, adding, "Inter-Tel had a decent size channel."
Nemertes Research analyst Irwin Lazar agreed, noting that the
acquisition's "impact to other players is a more competitive SMB
market, with Mitel gaining new channels and visibility."
In the short-term, Mitel users will see little impact, Kerravala
said, but Inter-Tel customers will benefit from Mitel's strong
vision in the VoIP space. He added that SMBs will be the first to
reap the benefits of the pairing.
"They'll get better products faster than if [Inter-Tel] had
remained stand-alone," he said. "Mitel has been one of the most
innovative companies in the IP telephony space."
Kerravala compared the Mitel/Inter-Tel acquisition to the recent
partnership of Microsoft and Nortel Networks -- an innovative
company pairing with a struggling company to offer more VoIP
options.
"I think we'll see further consolidation between vendors that
have vision of where the market is going and ones that don't," he
said. "I think Microsoft partnering with Nortel was an example of
that. Microsoft has a very unique vision of the market. Nortel was
old and tired."
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The Mitel/Inter-Tel deal also draws attention to the rapid uptake
of VoIP solutions in the SMB arena, where deployment has been swift
and continues to grow. Most of the larger vendors -- Microsoft,
Cisco and now Mitel -- are competing to corner an SMB market that's
ready to explode.
In his blog, Lazar
noted that both Mitel and Inter-Tel competed in the SMB VoIP
market, and both have strong solutions, although there is some
overlap that may create challenges when the deal is finalized.
"My guess is that Mitel saw two primary gains with this
acquisition," Lazar said. "The first is Inter-Tel's large network
of service and support offices throughout the U.S.; the second is
Inter-Tel's strength in the SMB market. Inter-Tel also offers
managed services that Mitel can build upon."
Kerravala said the acquisition is in line with VoIP vendors
setting their sights on SMBs as massive enterprise deployments
start to fizzle out.
"All large vendors are targeting SMBs, because VoIP is being
adopted by SMBs, where it's sluggish in the enterprise space,"
Kerravala said. "VoIP is complex. [It's] easier to deploy in small
environments and easier to prove the value."
For enterprises, VoIP's complexity is fueling a decline in
deployments. It requires many more moving parts and large-scale
network upgrades, and it forces companies to split their resources
into datacom and telecom groups -- all challenges that are
virtually nonexistent in SMBs.
Kerravala said he envisions more consolidation plays in the near
future as vendors fight for the growing, but relatively fresh, SMB
VoIP market.
"I think you'll see a little more consolidation," he said. "It
takes a company with good technology and vision [Mitel] and adds a
strong U.S. channel [Inter-Tel]. One plus one equals three."