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With ShoreTel's unified-communications-as-a-service platforms added to its portfolio, Mitel has arguably the broadest...
mix of public and private cloud offerings of any legacy UC vendor today, with a global footprint that its smaller competitors lack. The company hopes to capitalize on those strengths to make recurring revenues account for half of its total business by 2019.
That was the company's message to analysts at an event in New York City this week. Mitel executives predicted recurring cloud revenues would grow by 17% to 19% in 2018, from a base of $247 million last year, and on-premises revenues -- $1.078 billion last year -- would shrink by 4% to 6%.
Mitel wants to eventually move all 70 million of its users to the Mitel Cloud in some form. It can offer ShoreTel's UCaaS to small business and larger companies with simple needs, while providing private and hybrid cloud deployments to enterprises with more complex security and workflow demands, CEO Rich McBee said in an interview with TechTarget.
Opportunities and challenges for Mitel Cloud in 2018
The Ottawa-based company's tallest hurdle this year will be rebranding itself as a leader in the cloud market, McBee said. "We have to maximize our brand awareness as a UCaaS player. People still think of us as that old, stodgy PBX company, and we're far from it," he said.
But public relations won't be Mitel's only challenge in 2018. The vendor still lacks a foothold among large enterprise users, which are more often Cisco, Microsoft or Avaya customers. Mitel also faces fierce competition from pure-cloud vendors, like 8x8, Dialpad, RingCentral and Vonage, in the small and midsize markets, said Irwin Lazar, an analyst with Nemertes Research, based in Mokena, Ill.
Outside of the United States, meanwhile, service providers such as Orange, NTT DoCoMo, BT Group, Telstra and Deutsche Telekom are having success bundling UCaaS offerings with network service packages, Lazar said. "Those providers are often using platforms like BroadSoft to build out their own UCaaS. So, Mitel will need to stay aggressive to develop provider relationships, while also competing directly with them."
Rich McBeeCEO, Mitel
Mitel's $430 million ShoreTel acquisition in 2017 made the legacy vendor the second-largest UCaaS provider globally, behind RingCentral and above 8x8. Still, only 1.1 million of its 70 million seats are in the public cloud, while another 3 million users are in Mitel's private clouds.
The company took two other significant steps over the past year, as it repositioned itself to focus exclusively on unified communications and collaboration, selling its mobile unit and buying Toshiba's UC assets. The latter expanded the install base of potential future Mitel Cloud customers even further.
"Mitel has done a good job building out a cloud strategy -- and obviously adding customers -- but I'd like to better understand their approach for achieving continued growth in an increasingly competitive market," Lazar said.
Mitel Cloud strategy includes focusing on collaboration
Mitel is also investing in technology to add cloud-connected internet-of-things (IoT) devices into team collaboration channels, McBee said. "The third piece of our strategy is, once we get them in the cloud, we can give them many productivity-based applications to help them run their businesses more efficiently and save money," he said.
The company previewed its soon-to-be-released Mitel CloudLink IoT platform at its analyst event Tuesday. Mitel has also developed hardware that can be added to on-premises PBXs to link them to the cloud, according to McBee.
The CloudLink software could connect an IoT sensor in a grocery market refrigerator to a communication circle; if the freezer malfunctions, the device could alert team members with an automated voice call. Or, a bot could be used to track the cooler's temperature, eliminating the need for a worker to record that information with pen and paper.
A 2017-2018 Nemertes Research survey of several hundred businesses globally found 45% planned to implement IoT in some fashion by the end of 2019, according to Lazar. "We see the IoT market growing strongly over the next few years, with Avaya, Cisco and Mitel all making strong pushes to bridge IoT and communications," he said.