Avaya, Mitel and ShoreTel All Taking Their Taking Shots in the PBX Wars

The Times, They Are a’Changing…

I’ve always been a student of the PBX industry. As a reseller since the mid-80’s, I like to think that I’ve seen it all:

• Spectacular lift-offs (Rolm, Nortel, Isoetec) and fiery corporate deaths (Nortel, TIE).

• A cozy duopoly (Nortel & Lucent) that co-hyped themselves as two brawling competitors. 

Being the outspoken sort, I’ve always provided my two and a half cents about the PBX industry. I raised so much hell one year, that I was the subject of a mock hanging at a Nortel Dealer Conference. And as recently as last month, after sharing my opinions on a blog, I was attacked by an anonymous person for my inadequate level of education and that I should “go sell another phone system to a Doctor’s office.” So, it is in the spirit of unabashedly sharing my opinion without giving a whit about self-preservation, in which I write this piece.

Over the past month, several PBX industry analysts have written articles about the changes taking place amongst some of the top providers. When taken as a whole, it seems as though the winds of competitiveness are blowing in new directions, with a new round of winners and losers.

Avaya – the Awakening Giant

Recently, Avaya has gotten serious about the PBX mid-market (approx. 100 – 1,000 users) and has used their engineering talents to bolster their substantial product line. They also have gotten religion about modern-day marketing techniques.  Being a target of smaller competitors for many years, Avaya has decided to come out swinging in 2013, in particular targeting Shoretel. As Dave Michels pointed out in his recent blog, “Avaya Targeting ShoreTel,” – “Avaya’s timing finds Shoretel at a vulnerable time.”  Michels goes on to share the recent results of a Tolly that the Avaya IP Office had a 32% savings when compared to the Shoretel product.

It looks like the $5B giant Avaya is taking direct aim at the $200M teenager, Shoretel, after being taunted for years by its younger competitor.

Mitel’s Surprising Turnaround

It was as little as a year ago, several industry and stock analysts were describing Mitel as mortally wounded and were concerned about the company being able to survive. The company had a rocky IPO and seemed to struggle to consolidate after their ill-advised acquisition of InterTel.

However, today Mitel has put the heartburn behind it and has quickly embraced, if not led the drive in the disruptive technologies that many of their competitors have ignored, namely in the virtualization and cloud spaces.  

As Jon Arnold wrote in his article, “If I was a Channel, Would I Partner with Mitel?”, 

“Some (vendors) are getting it right and others are imploding, but nobody can risk standing still – things are moving too fast.”

Unlike many other providers of business phone systems, Mitel gets the message that we are nearing the end of the era of expensive hardware. They seem to understand that voice is really just an application on a data network and that the future is application software, customization and delivering it as the customer wants to consume it – as a product or a cloud-based service.

In addition to aggressively moving their company forward into tomorrow’s technologies, the company has awakened to prevailing best practices in their marketing efforts. I personally get sick and tired of all the “look at me, I’m the greatest” marketing that most people in our industry churn out. What’s in all of that for the customer? Nothing, it’s all just ego-driven babble. It seems that Mitel woke up one day and decided that listening to customers and marketing in a way to empower them makes more sense. It might be the fact that they hired Martyn Etheringon on as CMO, known to be a brilliant marketing mind.

The Mitel of today looks damn smart and spiffy. They can clearly see the future of telecom and they are convincingly executing on that vision.

In Mitel Reinvigorated, a July 1^st article by telecom analyst Blair Pleasant, states

“…it’s clear that Mitel is on the right track and is reinvigorating its partners.”

They could quite possibly be THE rising star of the next few years. And no, TeleDynamic Communications is not a Mitel dealer – rather these are the words of an observant competitor.

Shoretel’s Sky is Falling

Since the mid-2000’s, Shoretel has been the darling of the business where they could do no wrong nor spend too much on marketing. They had a pretty decent story, made better by their non-stop evangelizing. Many customers still believe that they own the “world’s best phone system.”

To be fair, Shoretel took it to the old PBX makers, Nortel, Avaya and all the rest when they first started. Their product was less complicated, had a great resiliency story and the company swaggered with engineering and marketing savvy. However, the market has changed under their feet over the past few years while they have continued with their same storyline. While it was probably a smart move to get into Virtual PBX, the acquisition of cloud-based M5 has been confusing to resellers and customers. They are at the opposite end of the technology spectrum – ShoreSky (as it was re-badged) is based on the cloud and open standards; while the ShoreTel system is a proprietary hardware. It makes for a confusing product choice for customers. Recently, something has dramatically changed at Shoretel. The C -Level has been clearing out at a rapid pace. In the first six months of this year, ShoreTel has seen eight senior executives walk, including their CEO and several long termers. As Dave Michels said in a recent blog titled, “The Good News: ShoreTel is Hiring” –

“The short term doesn’t look great for Shoretel. It will lose some momentum….As sales drop, so will revenue and subsequently so will the stock price.”

So, the ultra-expensive advertising at AT&T Ballpark and the glitzy relationship with the Williams Formula 1 auto racing team might be the last of the glamour we’ll see for a while from this player while they try to formulate a new recipe to remain relevant in this new market.

Who Wins in 2013-2014?

In summary, the times are rapidly changing for PBX makers and it looks to this observer that the deck is getting a major re-shuffle, beginning in 2013. So, you the reader might ask,“just what the heck does this matter to someone who sells a product not even mentioned in this article?” The answer is that Digium seems to be content in growing their Switchvox sales over 40% a year, developing their vision of the future, while letting the other guys duke it out in public.  

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