ShoreTel Looks to Accelerate Adoption of Connect UC Platform
The potential is significant, Joos said. Hosted communications has only about a 10 percent penetration in the total addressable communications market, and the top four players have less than 50 percent of the hosted market. "In hosted [communications], several people can be successful over the next couple of years because there's not a lot of penetration," he said. Joos said the Connect platform will make it easier for the company to serve enterprise customers, but that its primary target is still the small to midsize businesses (SMBs)—those organizations with 5,000 or fewer seats. Channel partners were introduced to the platform earlier this year and will be key in driving growth, the CEO said. ShoreTel got into cloud communications when it bought M5 Networks for $146 million in early 2012 to complement its on-premises products. In 2013, Joos replaced retiring CEO Peter Blackmore and began driving the development of the Connect common platform. Two years later, the company is continuing to see the results of its cloud efforts. In its latest quarterly earnings, released Oct. 22, hosted revenues grew 19 percent over the same period last year, and cloud bookings grew 24 percent. Recurring revenue accounted for 51 percent of the $90.2 million in total revenue, and hit an annual run rate of $184 million. The company signed up 390 new cloud customers since rolling out the Connect platform, Joos said in a conference call with analysts and journalists.The CEO said ShoreTel engineers next year will focus on such efforts as integrating more applications into the platform and developing APIs to enable developers to create third-party apps. In addition, the company will push to expand the platform not only in the United States, but also in Canada and Australia, where cloud computing is most popular. According to Synergy Research, 95 percent of all cloud revenue generated worldwide come from the United States, UK, Canada and Australia.
"As Connect is now available to partners, we do expect it to make up a greater percent of our booking going forward," he said during the call, according to a transcript on Seeking Alpha. "The rollout of ShoreTel Connect was not an ending milestone, but rather a beginning milestone. As we progress throughout fiscal 2016 and beyond, the single common platform will enable faster release iterations and quicker introductions of new features providing us greater flexibility to address market demands."