May 11 2016

Mitel’s Polycom Deal Could Signal More Personalized Business Communications

The merger of the telephony company and the videoconferencing player may herald a maturing enterprise communications ecosystem — and new options for businesses.

Mitel’s $2 billion deal to acquire Polycom could lead to something much larger and significant than renewed competition with the likes of Avaya, Cisco and Microsoft.

For businesses, it may signal an evolution in the enterprise communications market, and lead to more customized services as vendors focus on how to improve companies’ bottom lines through their offerings.

The transaction, announced in mid-April, is expected to close in the third quarter, and while it will likely take some time for the companies to work through their integration, Mitel has recently worked through smaller acquisitions. Polycom will be Mitel’s sixth acquisition in four years, according to the Wall Street Journal. “We have a solid view for how the market is going to come together and we’ve been strategic in pulling the pieces together,” Mitel CEO Richard McBee told the Journal.

Mitel also thinks the two companies are highly compatible. “The visions of the companies are almost identical,” McBee told communications industry trade journal Light Reading in April after the deal was announced. “Seamless communications and collaboration for us. For them, it's about making collaboration simple.”

An Evolving Communications Marketplace

Mitel has historically been strong in the telephony market, while Polycom’s strengths are in the videoconferencing and collaboration sectors. Jeff Orr, research director at ABI Research, told BizTech in an interview that the deal shows that the the unified communications vendor ecosystem is maturing. He notes that Mitel has traditionally been an equipment maker, while Polycom has focused on “layering technology that has evolved with the Internet,” including high-definition voice and cloud collaboration solutions. The new Mitel, he says, is setting itself up to succeed as business communications evolve.

Most workers at companies still type out notes from calls and engage with each other through video and audio-based solutions, Orr says, but the deal will allow Mitel to provide all of the communications capabilities that have been evolving in siloes. The deal will let Mitel take advantage of trends in cloud communications that let companies support distributed regional and even global workforces, Orr says.

According to Orr, the idea of “unified communications” is becoming a somewhat overused term that signifies how organizations can use communications technology to gain some operational efficiencies, cost savings and flexibility. “It’s a terminology that enterprise audiences and decision makers are going to be familiar with today,” he says. “I don’t know we’ll be talking about that in two years.”

Orr says that even more change could be on the horizon for the enterprise communications market. CIOs and IT leaders are trying to get a handle on how the cloud, Internet of Things and forthcoming 5G networks will change how their workers communicate. Those leaders can’t do much today besides educate themselves on which firms are taking part in those trends so that their companies can prepare themselves for those transitions, he says.

In the future, though, companies are likely going to “take more ownership” of their communications strategies. “I think we’re going to be talking about enterprises leading the discussion,” he says. “Rather than looking for partnerships, they’re going to be looking for how they can privatize their operations.”

Long-term, Orr says, communications solutions providers, including large incumbent players, will need to “evolve to be able to provide a solution that is more personalized and customized for specific enterprises.”

In the interim, those vendors will need to appeal to IT decision makers who are focused on improving operational efficiencies — what will save companies money, improve their workflows, and reduce security threats.

What Happens Now with Mitel and Polycom?

Orr notes Mitel has experience with mergers and acquisitions, but that “the ability for them to integrate and not miss a step is a key.”

There is always a risk that some companies that are in the midst of making partner or supplier decisions will pause in the face of uncertainties, but Orr thinks that most customers of Mitel and Polycom will carry on with business as usual.

“If the new Mitel organization can talk about their ability to integrate their portfolio and their solutions into an organization’s workflow and processes and IT mandates, if they can address that and talk about how they can streamline that, I think that’s a really good message,” he says.

Yet to be truly successful, the combined Mitel and Polycom will need to do more than demonstrate how to connect workers through voice, screen-sharing and collaboration tools, Orr says. The new company will need to articulate to businesses how they are going to make them more effective.

“And that either needs to be demonstrated through how they are going to enable organizations to make more money through these tools,” he says, “or how they are going to help them save money.”


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