ShoreTel Makes Splash With M5; VARs Ponder The Ripple Effects

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Rick Hirsh, CEO of Transcend United Technologies, a Springfield, Pa.-based solution provider and ShoreTel's largest non-carrier VAR partner, urged ShoreTel to be clear in how it wants partners to sell M5 and how it will integrate the assets.

"I want to hear more about it fits into their overall strategy," Hirsh said. "They've definitely made a big splash."

Acquisition integration can be distracting, said several partners, which could prove a problem for ShoreTel as it fights to take UC market share away from Cisco and Avaya and add to its standing as the No. 3 market player in the space.

"I do worry that they'll be distracted from their core story of simplicity," Perfect Video Conferencing's Marcotte said. "ShoreTel has a solid PBX that integrates outwards; you tap things on through software and add-on modules. Now there are more stakeholders internally that want to sell a specific thing, so I do worry about them limiting that ShoreTel simplicity."

Marcotte wasn't the only solution provider worried about a distraction from ShoreTel's "Brilliantly Simple" mantra.

"The issue is that it's not leveraging the ShoreTel architecture, which is a problem because, to a certain extent, many partners have already made moves to hosted partners and have those relationships already," said a top executive at a well-known ShoreTel partner, who declined to be named. "I understand the move, but I don't know enough yet that I'm ready to call this a positive for the channel. They've brought another architecture in. It's under the same brand, but it's still another architecture."

ShoreTel's Girskis said the company is committed to keeping M5 a separate business unit, and that a careful integration will allay those partner concerns. M5's Hoffman will continue to run the M5 piece and will report to Blackmore.

"I believe that keeping the hosted business as a separate business unit makes all the sense in the world," Girskis said. "There are obvious integration points where we can work together -- you can do things like look at government purchasing vehicles and work together but maintain separate business units."

Above all, partners and ShoreTel observers applauded ShoreTel's decisiveness -- especially with so much uncertainty about the cloud market and cloud's role in UC. Several sources pointed to Blackmore's assertion, made at the Chicago conference and repeated several times since then, that cloud was both an opportunity and a threat to ShoreTel's key businesses.

"To me, this signals he made a decision -- that it was more opportunity than threat," said longtime communications analyst Sheila McGee-Smith, president and principal of McGee Smith Analytics. "So they said, ‘Let's take some of the threat off the table by getting in the game.’ I love the choice of M5. It's suitably aggressive for ShoreTel, not overly aggressive, and it matches the mood of the market."

McGee-Smith said the M5 acquisition, combined with the mobility assets ShoreTel bought when it acquired Agito, gives ShoreTel a leg up in both the cloud and mobility trends dominating the UC discussion. M5's hosted services give ShoreTel an advantage against larger competitors like Avaya that don't have clearly defined hosted UC strategies.

"Let's be honest: Avaya has not found good way to play in hosted yet," McGee-Smith said. "From a strategic point of view, ShoreTel is in a better position to do something like this. They can make a nimble move and they did."

The M5 acquisition also positions ShoreTel well for different revenue streams and different partnering models, solution providers said. Several suggested that because M5 runs on its own service delivery platform and not a Broadsoft or other competitive platform, ShoreTel could look to offer services wholesale, in a white-label arrangement with managed services partners.

M5's integration with a number of different cloud-focused software vendors -- such as Salesforce and NetSuite -- also makes it attractive as a bundled play with applications and cloud platform infrastructure.

"People who want to buy a contact center that have already brought in cloud, who want the simplicity or scalability, that's something I could sell," Verteks' Gulling said. "That's an incentive to find a list of Salesforce people to talk to and get to discussing much higher-value sales. If it's just core dial tone and hosted, customers won't want to pay, but when you're talking application integration and things like distributed contact center and call quality assessment and recording, then we have a huge value."

NEXT: Lots Of Cloud Integration Opportunity

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