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On mobility, [Agito] was a great acquisition. We see huge potential. The company we bought was obviously very strong on intellectual property, but didn't have any depth of revenue because it was a small company. So we spent a lot of time training our partners and adding a lot more R&D, not because the R&D was acquired was not complete in many ways -- it was, and we've lost nobody in R&D, the two [Agito] co-founders have stayed -- but for us to be a major player we've got to greatly strengthen the R&D team so we can remain PBX-agnostic and smartphone-agnostic. The cycle of what happens with smartphones is very fast, and you've got to have releases shortly after people put new systems out. We think we're getting that right.
We're also looking at new types of partners. You can't automatically get the mobility authorization, you have to go through a different process. We're looking at partners that can legitimately target Fortune 500 companies. A lot of our partners are built on VoIP systems sold to 50 to 5,000 seats. With mobility, we're not constrained by that. You're not putting it on a ShoreTel PBX, at least initially, but you are putting ShoreTel on a competitive PBX, and that's fine, that's what Agito designed. It's our Trojan Horse because we can enter these companies very effectively, find them a high return on investment with a cost effective system, and then ShoreTel becomes a branded name in that establishment, whereas today we're not yet known.
The partners that can do it are some of our current partners, and also new partners like Dimension Data who came to us purely because of mobility -- they're a big Cisco partner, as you know. So there will be growth in our partner ecosystem, and we're quite ambitious there.
The other area to keep an eye on is hosted. Our system does work in a private cloud and we have partners that sell it today and it's fine, but I'm sort of keeping a watchful eye on this just to see how quickly it takes off. It's taking off in the below-50-seat [businesses] quite quickly, but it's not yet showing high growth in the midmarket. I'm cautious because as still a small company you don't want to put investments anywhere until the time is right. It's not a lack of R&D -- we could have the capability -- it's how much we push that versus on premise. I'll be guided by a lot of what our partners tell us as to when the timing is right.
We see a unique time in this industry -- one in which we've got a unique value proposition and one I think justifies the customers' and investors' confidence in us. But also our competitors, and no disrespect to them, are distracted to one extent or another. It's an extraordinary time in the industry where we have momentum and they have other things to worry about, let's put it that way.
ShoreTel traditionally has been known as an SMB-focused company, but now that you have the mobility capability with Agito -- that's the Trojan Horse as you said -- it gets you into Fortune 500 accounts. As you go after enterprise accounts, do you want the established ShoreTel partner base to be the ones challenging for those accounts or do you see it more the partners who are approaching you or that you're approaching with a global focus, like a Dimension Data?
It's both. One of our largest partners is putting very aggressive mobility plans together, and they sell some Avaya and they're quite happy to sell ShoreTel into that base. There's a need to complement our channel. It's not "instead of," it's "as well as." Remember we are still growing the channel so we are looking for partners who can grow upmarket for us.
A lot of partners, they're sort of happy with the revenue stream they have and good luck to them, we're happy with them. But to help us meet our ambitions we need partners who will scale with us, and we need more of them. It's quality, not quantity as you know. You don't want lots and lots, you just want the people who can really help you and who also have the balance sheet to allow them to make investments with you along the way.
NEXT: Competition and Hosted Telephony
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