Mitel CEO Positions UC Company for Cloud, Mobile

By Jeffrey Burt  |  Posted 2015-09-14 Print this article Print
Mitel CEO

Mavenir brought with it more than 130 mobile customers—including 15 of the top 20 global mobile carriers—and broad capabilities in 4G LTE mobile solutions, voice-over-LTE (VoLTE) and voice-over-WiFi (VoWiFi, or WiFi calling). As carriers move to all-IP LTE mobile networks, there is growing opportunity to bring broad consumer and enterprise communications capabilities to myriad devices. It's an opportunity Mitel could pass up, the CEO said.

In a conference call in August with analysts and journalists to discuss second-quarter financial numbers, McBee pointed to a deal announced in June in which T-Mobile in the Netherlands chose Mitel as the key technology supplier for the carrier's cloud-based Cloud and Clear unified communications-as-a-service (UCaaS) offering.

"We expect that other mobile carriers will follow this type of innovative service launch in their other markets," he said during the call, according to a transcript on Seeking Alpha. "This is a sign not only of cloud adoption in Europe, but also an early indicator of the convergence of mobile and enterprise markets, what we call 'mobile enterprise,' which was a key part of our deal thesis in acquiring Mavenir. That convergence is happening much faster than we anticipated and we are excited to have new light house customers who are working with us to roll out a new category of mobile enterprise solutions."

Mitel is seeing success in its efforts. According to second-quarter numbers, revenue for the company's cloud business hit $37.2 million, a 36 percent increase, and the number of cloud seats grew to 235,000, jumping 76 percent. Mobile revenue increased 35 percent, to $45 million, and the company announced 10 more wins during the quarter.

However, both cloud and mobile sales still account for a relatively small percentage of Mitel's overall revenues, which hit $292.3 million in the quarter, and revenue for its CPE business is slowing down. In addition, McBee and other executives are working to transition the company and its partners from upfront on-premises revenues to the recurring revenues from the cloud and mobile businesses. The CEO acknowledged the challenge, but noted the numbers are going in the directions he expected.

"This was kind of a long-term strategic play for us," McBee said.

Zeus Kerravala, principal analyst with ZK Research, said Mitel's aggressiveness in the market is important given the number of competitors currently in the UC space. UC is moving to the cloud, and while Mavenir initially may not fit neatly into that picture, if McBee believes there will be a convergence of cloud and mobile, "the acquisition of Manevir is very strategic," Kerravala told eWEEK. "It gives Mitel a fairly interesting asset."

The UC field has Cisco Systems and Microsoft at the top, along with an array of other vendors, many of which are also undergoing transitions, he said. For example, ShoreTel is moving to its common platform, Alcatel-Lucent is being bought by Nokia Networks and Unify a year ago released Circuit, its UC platform. There are a lot of vendors, and only so much business to be had.

"There's not enough revenue for all companies to win," Kerravala said. "Vendors must be willing to put both feet into the new [cloud] world and embrace it, and not sacrifice the future for their legacy businesses."

And McBee's promise to continue to be aggressive in regard to acquisitions in a consolidating market will make Mitel a company to watch.

"It's always better to be a buyer," the analyst said. "That way, you control your future."



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