ShoreTel continues to grow its unified communications capabilities through acquisition, announcing Feb. 1 its intention to buy M5 Networks for $146 million, a move that will enable ShoreTel to offer both cloud-based and on-premise solutions.
M5 Networks, a 12-year-old company headquartered in New York City, offers a suite of hosted unified communications (UC) products, including its M5 Scribe Voice Mail to Email Translation service, as well as fax, business application integration and a softphone offering.
The deal is the latest move by ShoreTel to become a vendor that can offer UC solutions in whatever way best suits the customer, according to company officials. It also enables the company to become a player in the cloud UC market, with ShoreTel pointing to a study by market research firm Gartner showing that the space could grow 36 percent, to $2.2 billion, by 2015.
It also follows on ShoreTel’s $11.4 million acquisition in October 2010 of Agito Networks, a deal that enabled the company to bring its UC solutions to mobile devices. A key part of that deal was to give businesses the capabilities to offer UC services to employees regardless of the mobile device they were using, which addresses the bring-your-own-device (BYOD) trend that businesses are trying to deal with.
“The acquisition of M5 positions ShoreTel as a leader in the fast-growing cloud UC market and delivers a suite of hosted telephony solutions that is unmatched in the marketplace,” ShoreTel CEO Peter Blackmore said in a statement. “This acquisition is a critical step in our evolution and enables the company to capitalize on trends in cloud computing and advance our enterprise communications strategy.”
M5 Networks officials said their company has more than 2,000 customers that get their enterprise-level communications through M5’s hosted solution. Fueling the growth in the hosted UC space are such familiar trends as cloud computing, virtualization, the drive by businesses to reduce their IT costs and the greater flexibility offered by services-based models, according to ShoreTel officials. Also, through a hosted solution, the worry about monitoring and maintaining the UC system is put on the vendor rather than the customer.
“M5 is proud to be one of the leaders in the UC cloud market,” M5 Networks CEO Dan Hoffman said in a statement. “We have achieved this position with a very strong management team and an excellent product offering that is the simplest in the industry.”
ShoreTel officials said the company is buying M5’s entire operations, from its customer base to distribution operation to its proprietary network. Most of M5’s employees will be given offers to join ShoreTel, the company said.
M5 Networks will become a ShoreTel business unit led by Hoffman, who will become president and general manager of the new business unit. The engineering groups from each company will remain separate but will work together to ensure the separate road maps will be able to leverage the combined skills.
ShoreTel’s channel partners also will begin to offer customers hosted services. The deal for M5 Networks is expected to close by the end of March, according to ShoreTel.
ShoreTel on Feb. 1 also announced its fiscal 2012 second-quarter financial results, with the company generating $58 million in revenue, a jump of 22 percent over the same period last year. The company narrowed its loss to $2.5 million in the latest quarter from a $3.7 million during the second quarter of its fiscal year 2011.
