Big Deals: The Year in Mergers, Acquisitions, and Consolidation
Mitel and Oracle were responsible for the most intriguing deals of a year with few blockbusters.
Note: This is the first in a series of posts we'll be doing as the year winds down, looking at some of the key trends and developments in the enterprise communications industry this year.
Though they weren't the biggest in dollar-value transactions, Mitel and Oracle drove the most significant mergers and acquisitions in enterprise communications in 2013.
Mitel made the most straightforward consolidation play with its November announcement of plans to acquire Aastra. The deal was generatlly received well within the industry: The two companies play in the same market, with communications platform offerings for both CPE and the cloud, but their geographic regions of strength tend to complement each other, with Mitel strong in North America and the UK, and Aastra ranking higher in several European markets.
But Aastra was actually Mitel's second acquisition of the year; in June, the company acquired PrairieFyre, whose contact center software integrates with Microsoft Lync and which has been a longtime OEM to Mitel. Combine this with Aastra's position as one of only 3 maufacturers of certified Lync-compliant phones, and Mitel took some significant steps toward strengthening a Lync-focused Text to link herestrategy they announced in June. This strategy positioned Mitel voice products as the right choice for companies deploying Lync IM/presence and possibly other apps, but not wanting to deploy Lync Enterprise Voice .
The other acquisitive company to watch in our industry is a name that we've all had our eye on for some time as a potential player in communications: Oracle. At various times in the past, Oracle has looked like it might leverage its position in CRM to dive into the broader enterprise communications market; the company nominally has a UC/collaboration product called Beehive, though they've made little effort to push it as an alternative to the incumbent UC products.
However, when Oracle announced in February that it was acquiring Acme Packet, the company placed itself squarely within enterprise communications deployments that are already taking place--Acme Packet has been fighting it out with Cisco for market leadership in the enterprise Session Border Controller (SBC) space.
Though the acquisition was basically a hardware play for a firm known as a software company, it made a sense that Oracle would try to leverage an emerging platform at the networks' edges--not just private-public, at the enterprise access level, but also public-public, as most of Acme Packet's revenue came from carrier SBCs, connecting diverse public networks. As Zeus Kerravala put it in his post analyzing the deal, Oracle was buying network control with Acme Packet.
That point became clear less than two months later, when Oracle announced the acquisition of Tekelec, a company that made signaling, policy control, and subscriber data management products for carriers. In case anyone missed the synergy, Oracle highlighted the roles of the two newly-acquired product capabilities in its Tekelec press announcements.
The bottom line is that Oracle wants to supply software that runs and connects network services, be they public, private, or hybrid. Their 2013 shopping spree made them one of the leading contenders in a market that's likely to see plenty of innovation and emerging business and deployment models as cloud services continue to expand.
So those were the 2 sets of deals that most directly affected the enterprise communications industry. Not blockbusters, but in the case of Mitel, a step toward industry consolidation, and in the case of Oracle, a potential move by one of the world's biggest tech companies, toward a new model of providing communications capabilities to enterprises.
Really Big Deals
The two genuine blockbuster, big-dollar deals in the industry didn't necessarily change a lot of the landscape for enterprise decision-makers, at least in the near term. Instead, they largely altered the terms of existing relationships: Verizon paid a whopping $130 billion to buy out Vodafone's stake in Verizon Wireless; while Microsoft paid $7.2 billion to acquire the phone and smart device business of Nokia, with whom Redmond was already closely aligned. But the fact that these were the two biggest deals in raw dollars shows how the mobile industry has come to dominate the overall communications marketplace.
Contact Center Consolidation
The one market niche that saw a fair amount of consolidation in 2013 was contact center software, where Genesys was the most active acquirer. Having been spun out from Alcatel-Lucent and sold to private equity in late 2011, Genesys got aggressive this past year, with the following acquisitions:
The deals positioned Genesys to continue its momentum coming out of the ALU spinoff, with an offer for enterprises of various sizes, covering both premises and cloud. (Contact center is one of the few areas in enterprise comms where cloud really is a significant trend in actual deployments.)
The other noteworthy acquisition in contact centers came from Aspect, which acquired the highly-respected cloud software company Voxeo in July. Voxeo was widely considered one of the innovators in cloud-based contact center software, and their Voxeo CXP product was chosen this year's Best in Enterprise Connect award winner.
Other Odds and Ends
The usually-voracious Cisco was pretty quiet in the enterprise communications space in 2013; its most significant M&A move probably was a company it un-acquired, Linksys, the consumer-WiFi router company that it spun out early in the year.
A few other acquisitions worth recalling as the year wraps up:
* IBM bought Mobile Device Management (MDM) vendor Fiberlink
* Genband acquired fring, a Skype-like Over-the-Top (OTT) application player
* Social software vendor Newsgator bought Sitrion, which made business process integration software
* Japanese carrier NTT bought Virtela, an IT service provider
Finally, in deals that didn't happen, the satellite TV provider Dish Network made an unsuccessful bid to buy Sprint, which instead closed its sale to Softbank this year. The other big deal that didn't happen, of course, was BlackBerry's plan to sell itself to Canadian financial firm Fairfax Holdings, a deal that fell through in November, at which point CEO Thorstein Heins left and new management came in to try and sort out the future of the struggling smartphone maker.