Alternative Vendors: VoIP
Cisco holds 42 percent of the IP-PBX market and 28 percent of the IP phone market, according to Yankee Group Research Inc. But it faces stiff challengers, whether it's voice-focused Avaya Inc., networking rivals 3Com Corp. and Nortel Networks Corp., open-source player Digium Inc., newcomer Microsoft Corp., or even itself, in the form of its Linksys division. When VARs do turn to alternative VoIP vendors, they said it's because they find increased margin opportunities, better price/ performance, improved support or competitive differentiation, sometimes in combination.
Westron Communications Inc. has eschewed bigger-name VoIP players in favor of ShoreTel Inc. because the seven-year-old partnership is a profitable one, said Dave Casey, principal at Westron, Carrollton, Texas. "The benefit for us is it's a very profitable product line for us to sell for two reasons. We have a good discount rate from ShoreTel, but the second thing is that we have very high customer satisfaction ratings with it. Our customers give us tons of referrals because they like the technology," Casey said.
On accounts that are 500 seats or smaller, Westron typically pulls in margins of 20 percent to 30 percent on ShoreTel deals, including services, Casey said. Hardware margins tend to drop by 5 to 7 points on larger deals, but Westron's blended margins for big ShoreTel sales still come in above 20 percent, he said.
Casey said he has been surprised to find that the delta between the up-front costs of a ShoreTel VoIP solution vs. a Cisco one is not as large as expected, typically running 10 percent to 20 percent less for ShoreTel. But that gap increases as total cost of ownership is considered over the long haul once maintenance, ease of expansion and other factors come into play, he said.