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You've mentioned the fact that your bigger competitors have lots of distractions. Cisco's are well-documented, so are Avaya's, and you do see quite a few partners looking to make their line cards more strategic and align themselves with fewer vendors who can support them in more strategic ways. How is that trend helping ShoreTel right now?
I think it's helping a lot, and our credibility is helping a lot. It's yin-and-yang: we're more aware to them because of the growth of the last 18 months, and we also have a more aggressive philosophy. If you talk to our partner team, we have two sales forces in the U.S.: one to grow the business with the installed partners, and the other to go after new partners and look after them in the first 12 months and make sure things are going well.
We're going to continue on that trend, and what the team would also tell you is, there are certain partners that wouldn't have returned our phone call 12 months ago. Now they'll return our phone call. Doesn't mean we'll be signing them up but the openness, the willingness to have a dialogue is just extraordinary. We've got a pipeline of prospective partners that we've never had before. We want quality, not quantity, but the fact that it's happening illustrates our point.
Hosted is obviously something many partners are experimenting with and looking at in terms of the raw potential, and we do see that take-up in the sub-50 trending along the same way all hosted and cloud based solutions are, with that bottom of the SMB embracing the model fastest. How are you going to grow ShoreTel's hosted business?
The take-up depends. You can't dictate to a CIO the way they want to go. They're going to write the RFP the way they want it, so either we're going on-premise or hosted. I've never seen an RFP come out that says, "I don't know." The CIO normally says what they want, and that almost defines the market. Then you have partners that have both capabilities that can respond to both, and the partners that don't have to drop the bid or go after something else.
To be fair, it's building very slowly, and even people like Gartner are saying maximum 15 percent [penetration] in five years time. So that's not significant. But they could be wrong, that could change, and I don't want to miss out on a very natural opportunity if that accelerates, so it's just being very aware.
Are there holes in the portfolio from a product perspective?
Video, obviously, we have a point-to-point through presence and standard software, but for the large on-screens we partner with Polycom and others. Call center we have a very capable offering. The level of product sophistication improves every release, and we have a very disciplined release schedule. We just released 12, and one of the big ones there was that we scale up to 20,000 seats in the unified messaging. That takes us well into the enterprise space and removes us from having a glass ceiling. The 50 to 5,000 seat market is 70 percent of the market, and when you've only got 9 percent of market share, 70 percent of the market is your sweet spot, so you should continue to focus there. But we will go upmarket at the same time.
Will you look to make additional acquisitions?
If appropriate, yes. Something like Agito was very thoughtful, filled a clear need in the market, and made us very much more relevant to everyone because the world's going mobile. We did have a mobile offering but it was nothing as good as the Agito.
Is your management team where you want it?
The management team's good. I joined the company and I was able to do a lot of due diligence. The management team's very solid and obviously performing well -- the results speak for themselves. I did add one person in services; we brought in a very good Avaya executive, Don Joos. But I'm pleased with the team, and the board is excellent for a company of this size, offering very good guidance and help to me.
Let's just grow the company. It's fantastic to have a situation like this because it many cases you've got a great opportunity but you've got to fix this and fix that. I've just got to grow the company. I'm oversimplifying, but there aren't too many distractions.
NEXT: What Blackmore Is Hearing From ShoreTel Partners