Richard McBee knew what direction the market was moving in, and he knew how he wanted to get there.
When McBee in 2011 took over as the CEO of Mitel, he soon began making changes to the unified communications (UC) technology vendor, from reorganizing the company's business units to transforming its sales approach to revamping the executive leadership. He wanted to more sharply focus Mitel's product portfolio and roadmaps.
"Mitel has a huge amount of technology, and we were doing a lot of little things [rather than] a lot of big things we needed to be doing and have done right away," McBee told eWEEK just months after taking over the top job at the company.
At the same time, McBee knew the UC space was changing. It was moving away from traditional customer premises equipment (CPE) solutions and toward the cloud, and it was a market ready for consolidation. He wanted to make sure Mitel was a buyer and not a seller, and saw acquisitions as a key way to not only remove competition but to get the company ready for what was coming.
"We saw the transitions going on in the industry," the CEO told eWEEK in a recent interview. "It was transitioning to the cloud and, with BYOD [bring-your-own-device] going on in the enterprise, to mobile."
During McBee's tenure, Mitel has been an active buyer, with few acquisitions more important than the $392 million it spent in 2013 to buy Aastra Technologies, a UC vendor that brought with it a $100 million cloud business and helped Mitel become a $1 billion business. The deal gave the company significantly more heft and a much larger presence in the burgeoning cloud UC space, and Mitel has leveraged the technology inherited through the Aastra acquisition in a broad range of products.
Mitel also offers its UCaaS (unified communications as a service) MiCloud solution that includes MiCollab, MiVoice and Micontact Center as foundations. In addition, the company sells private cloud-based UC products.
The company last year tried to increase its cloud capabilities with its high-profile takeover bid of rival ShoreTel, which was in the process of developing a single management platform for both its on-premises and cloud-based UC solutions. McBee eventually withdrew its $574 million bid, blaming the decision on the refusal of ShoreTel officials to discuss the possibility of a sale. ShoreTel last month launched ShoreTel Connect, a single, common platform for both its on-premises and cloud-based UC offerings.
The move to cloud-based UC—for Mitel as well as other vendors—makes sense. It's what customers are looking for. According to a survey of midsize and large enterprises in North America done by IHS Infonetics in March, more than half of the respondents said that by 2016, they will be running at least some of their UC services over private or public clouds.
"Businesses continue to migrate their unified communications applications to the cloud, citing flexibility as the key reason," Diane Myers, principal analyst for voice-over-IP (VoIP), UC and IP multimedia subsystems (IMS) at Infonetics, said in a statement. "Cloud solutions are inherently more flexible than premises-based solutions, offering businesses the ability to scale users up and down, centralize management and deploy new features and applications quickly."
Mitel made a significant move in the communications market in March when it spent $560 million to buy Mavenir Systems, which sold cellular network software to telecommunications companies. Many industry observers questioned the reasons behind the move, noting there was little synergy between the two companies and few if any common customers. "There was a lot of skepticism," McBee admitted.
However, to Mitel's CEO, the move makes sense for his company. The world is not only moving to the cloud, but the enterprise is becoming increasingly mobile, and those two trends are continuing to merge. By bringing Mavenir into the fold, Mitel is extending the reach of communications capabilities deeper into the mobile space and expanding its customer base beyond the enterprise and into the telco space.
"Mitel already had a strong presence in the enterprise business," he said, adding that through the Mavenir deal, "we would really be able to get a good footprint in the other half of the market."