The busy conference season is coming to a close. I normally try to do a blog post on each conference, but that just seemed impossible this summer. So I thought I would do a single longer post on the past three I've attended: NEC, Mitel, and ShoreTel.
NEC
NEC hosted NEC Advantage in Jacksonville FL. The event was geared toward channel partners and consultants. In US telephony, NEC is mostly known for its UNIVERGE SV8000 systems, but the company also produces the UX5000 (formerly Aspire) and Sphericall platforms.
Even though this conference was about NEC's telephony and unified communications solutions, the larger company is a fascinating global conglomerate with 2010 sales of $37.5B coming from 283 diversified subsidiaries. NEC has been a big communications player in the broadest sense of the word. Radio, television, fax, PBX, and of course unified communications. The company has been in telecom as long as there has been a telecom--dating back to the days when it produced corded switchboards.
The mood at the conference was good, sales were up. NEC claimed to grow its market share 10% in 2010, now holding 22.6% in US SMB sales. Larry Levenberg, Vice President and General Manager, took the audience through a 2010 report card--including its previously stated major goals; all accomplished. Two of those goals stood out as portents of the future; online dealer training and the introduction of Sphericall.
It would be difficult to miss how NEC truly respects, values, and appreciates its channel, and for the most part that seemed reciprocal. That's a good thing, because every major vendor is discovering the transition from PBX to UC takes a channel. It isn't trivial; dealers are expected to retool their skills and services from basic voice to server platforms, presence, SMS, smartphones and tablets, virtualization, and more. NEC's announcement that all technical training will continue to be free to dealers went over pretty well.
At the conference, NEC precariously straddled its present (SV8000) and future (Sphericall) platforms. The company knows Sphericall is its future, and needs to get its dealers engaged--but isn't willing to jeopardize its current portfolio, which is doing just fine. This dichotomy was evident throughout the event.
Case in point, the Showcase floor offered a glimpse at two new NEC phones: A new DECT wireless handset and a concept (not a released product) of a phone base that docked with a Samsung Android tablet. These phones were about 20 feet apart in space, but a decade apart in market fit. The DECT phone was proprietary, narrowband, and could only work with the SV-8100. The tablet phone was SIP, HD, and ran every Sphericall application natively (even future unreleased applications due to NEC's commitment to RIA [Rich Internet Application] architecture).
Sphericall is a software product. The platform is web-centric in design and implementation--standards based, cloud ready, XML, SSL, JAVA, SOA, virtualized, and every other web buzzword--prominently displayed with the new Sphericall Contact Center 8.0 which utilized a rich desktop client that could also run on tablets. The portable device can provide detailed contact center information to the tablet via wi-fi or 3G/4G.
The future represents a whole new era for NEC, which has historically been a hardware company. Sphericall looks promising, and NEC is working hard not to over-complicate it: No additional licenses for redundancy; maintenance is a simple percentage of price; graphical rich desktop clients; and more. The timing seems right--and the channel knows it.
Bottom Line: NEC is in a solid position with a robust product line that continues to sell well today. Its vision for its next generation is comprehensive and largely complete. The transition, though, is a major one, and NEC is working hard to prepare its loyal channel for the task.
Mitel
Next up was Mitel, which hosted its Business Partner Conference in Hollywood, FL. The company showed negligible growth in 2010, and named a new CEO, Rich McBee, last January. For many, this was the first time to hear and meet McBee. Mitel made some big changes, including management, organizational structure, and its go-to-market strategy. The analogy of changing engines in flight was used, as Mitel isn't a small company. Mitel recently reported FY 2011 results at $650 million.
The company's 2007 acquisition of Inter-Tel was was more complex and more difficult than expected. It took longer to integrate the products and channels, and it introduced direct/indirect channel conflict. As a result, McBee and Phil Keenan, the new EVP of Sales (formerly of Polycom) put an end to Mitel direct sales. This approach is more consistent with both the industry as a whole and Mitel internationally. Keenan announced direct sales staff are being reassigned to prospect for the channel while the company also intends to recruit new channel partners.
The entire event was centered around three consistent messages; virtualization, mobility, and channel. Virtualization and mobility are product strength areas where Mitel has focused considerable R&D over the past few years. The channel is its go-to-market commitment. Mitel made it clear it's a channel-centric company moving forward; this is why Mitel renamed its conference from Mitel Forum to the Business Partner Conference.
Product-wise, Mitel is focusing on MCD and the 5000 (from InterTel), which now share phones and applications. MCD is available as an appliance, software only, or can be sold VMware-ready--and it is the latter that Mitel clearly sees as both its primary growth opportunity and key differentiator.
Mitel has put a lot of effort into virtualization; its entire MCD portfolio is VMware ready and can co-exist with other business applications. Mitel offers its products prepackaged for VMware, and system user licenses are independent of how the server is deployed. Mitel also integrated into vCenter, VMware's management solution.
VMware seems fairly agnostic on the channel side, but does recognize Mitel's efforts. Carl Eschenbach, VMware Co-President, Customer Operations, did a compelling keynote on the VMware/Mitel proposition. VMware is onto something; the company grew its annual operating income 90% last year. VMware presented Mitel the Global Technology Innovator Award at its conference last year. Mitel reports that 300 of its partners have sold its virtualized solutions.
Mitel made major investments in its mobility solutions. The portfolio is fairly comprehensive, with rich mobility features in the Call Director platforms, smartphone clients, desktop features through UC-Advanced, carrier based solutions through its CLEC offerings, and deep integration with RIM's MVS platform. Mitel hinted single-sign-on with VMware View will soon hotdesk with an associated telephone. Mitel's smartphone clients now passively update call routing based on a user's physical location.
Bottom Line: While Mitel focused on its product line in recent years, it lost sales momentum during the process. If the channel conflict is truly to blame for the lack of growth, then Mitel's actions may be sufficient, but re-energizing a channel is difficult work. Mitel needs to attract fairly sophisticated dealers, ideally savvy in Mitel UC as well as VMware with mid-market momentum.
ShoreTel
Most recent was the July ShoreTel Partner and Industry Analyst Conference in Chicago. Here was the first time many partners got to hear and meet CEO Peter Blackmore, who joined the firm last December.
This conference had a celebratory mood. The company will announce its results for the year on August 9, but the results for third quarter showed revenue at $51.6 million, up 39% over the prior year. ShoreTel seized well upon the opportunity presented by distracted and bankrupt competitors.
That's a tough act to follow for a new CEO, so Blackmore reasonably communicated his U.S. strategy was largely to continue the same course. His strategy focuses on simplicity and customer satisfaction with little change in the US. Regarding international expansion, he outlined a more focused approach in specific markets than ShoreTel had been implementing. He also sees mobility as critical for ShoreTel--including both ShoreTel Mobility (Agito acquisition) and its calling platform software, including the collaboration and Communicator products. ShoreTel Mobility today is a fairly separate product targeted at large enterprises, which can be deployed in conjunction with UC solutions from other vendors.
Blackmore claims two principles drive every decision at ShoreTel--simplicity and customer satisfaction--and ShoreTel is doing well by both measures. Don Girskis, Senior VP of Worldwide Sales, expanded on customer satisfaction with details on the Net Promoter measure that sums up satisfaction with a single question: "Would you recommend this brand?" Third-party testing put ShoreTel up there with brands like Google, Apple, and Harley Davidson.
ShoreTel has several factors in its favor, including sales growth, a strong and growing channel, favorable ratings from both investor and sector analysts, high customer satisfaction, and strong branding. The company refers to this as a "Virtuous Cycle", and it's impressive.
ShoreTel has built an enviable channel, including two two-tier distributors and many large service providers that offer equipment. The company hosted some 30 partners in its solution hall. This is a competitive group--poking fun at competing vendors was far more blatant and common here than most conferences.
ShoreTel's commitment to simplicity came across as more than a tag line. It was repeated in every presentation including customer and dealer panels. The message seems to work particularly well with smaller businesses; 69% of its customers have less than 500 extensions, and its larger customers comprise an impressive list. ShoreTel intends to grow its average-customer size with an aggressive product road map.
While praising the virtues of ShoreTel's simple solution, two of the three customers presenting at the conference stated they also implemented (and integrated) Microsoft's OCS solution. To stem this tide, ShoreTel recently launched its SA100 collaboration appliance. OCS is, presumably, a bigger threat with larger accounts, such as these two (14,000 and 2,500 users). The company has done well with its IP PBX offering and doesn't see that slowing. It also identifies unified communications as an emerging category that will drive productivity through multi-participant, multi-modal, and mobile communications.
Bottom Line: ShoreTel has some real momentum and a clear value proposition that has worked well for the company. Its approach to simplicity has clearly resonated with buyers and separated it from its competitors. However, the company intends to expand more into unified communications and larger accounts, which will challenge its mantra of simplicity.
Together, all three conferences communicate that this industry remains highly dynamic and competitive. What I find most interesting is how the vendors aren't playing leap-frog as they did with TDM features. In the past, the feature differences among competitors were less significant and shorter lived. These vendors are instead creating unique value propositions. Unfortunately, the customers didn't get the memo and are still trying to largely compare each system on features instead of organizational alignment.
It is for exactly this reason that the vendors are so reliant on channels. Customer awareness and education is most efficiently delivered via the channel, and customer education requirements around UC sales are increasing due to the widening scope of the solutions.
There is also no indication that R&D was negatively impacted by the recession--all of these vendors are showing new innovative solutions with improved feature and operational benefits to their customers.
Dave Michels is a frequent contributor and blogs about telecom at www.PinDropSoup.com
