Mitel, Polycom Deal Is Latest Move in a Dynamic, Crowded UC Space

Mitel’s purchase of Polycom is the latest move in a rapidly changing collaboration space as vendors look to gain ground in a market dominated by Cisco and Microsoft.

The acquisition had been pushed by activist investor Elliott Management as a way of strengthening the positions of both companies. It combines Mitel’s UC capabilities with Polycom’s broad video conferencing portfolio, and will create a $2.5 billion company with about 7,700 employees.

Since taking over as Mitel CEO in 2011, Rich McBee (pictured) has been pushing the company’s migration toward the cloud and mobile spaces. In 2013, Mitel bought UC vendor Aastra Technologies for $392 million and last year grabbed Mavenir Systems—which sold cellular network software to telecommunications companies—for $560 million. In 2014, Mitel failed in a $574 million bid for ShoreTel when the rival UC company refused to negotiate.

Polycom has a long-term relationship with Microsoft, with more than 40 products that support such Microsoft products as Skype for Business and Office 365. However, Microsoft might now see a stronger Mitel as a competitor, a probable reason Mitel is keeping the Polycom name. IP telephony companies like RingCentral, 8×8, Sprint and Vonage also might see the new company as more of a competitor in the cloud communications space.

A key reason Mitel wanted to buy ShoreTel two years ago was that ShoreTel was in the process of building a common platform that offers a common code for its on-premises and cloud-based UC offerings. ShoreTel has since released Connect OnSite, Connect Cloud and Connect Hybrid, enabling customers to mix and match the UC services and applications across multiple sites.

Nokia earlier this year completed its $16.6 billion acquisition of Alcatel-Lucent, a deal that created a significantly larger networking and communications vendor that can challenge the likes of Cisco, Ericsson and Huawei Technologies.

In 2013, Siemens Enterprise Communications changed its name to Unify and a year later rolled out Circuit, its new UC platform that at one time had been known as “Project Ansible.” Earlier this year, IT vendor Atos bought Unify from the Gores Group and Siemens for $371 million and in February named Jon Pritchard the new CEO.

Logitech, which bought video conferencing vendor Lifesize in 2009, spun out the company earlier this year. The move came after Lifesize CEO Craig Malloy led an aggressive push by the company into the cloud, including the launch of Lifesize Cloud, a software-as-a-service (SaaS) offering designed to deliver business-class video collaboration to organizations that is scalable, easy to use and affordable.

The spin-out of Lifesize didn’t dampen Logitech’s collaboration ambitions. The company already had been building out its lineup of video conferencing systems, and a month after letting go of Lifesize, it rolled out Logitech Group, a system that combines a high-definition video camera with a full duplex speakerphone. It’s aimed at groups of up to 20 people with additional expansion microphones and can run software from other vendors, such as Microsoft and Cisco.

The company has been rapidly building out its communications capabilities in such areas as the cloud and services. Avaya in 2015 bought Ensa Technologies, which built real-time collaboration and communications software and helped bolster the vendor’s ambition in mobile- and cloud-based solutions. This year, Avaya unveiled a new cloud-based platform called Zang for enabling customers to more easily collaborate and a development platform called Breeze.

Cisco in 2015 launched its Spark communications platform and earlier this year expanded Spark’s capabilities by enabling it to deliver UC services via the cloud. Cisco also created a developer community around the platform—Spark Spark for Developers—and a $150 million fund to help developers build apps for the platform. At the same time, Cisco continues to build out its communications capabilities through such acquisitions as Tropo and Acano.

The software giant a year ago launched Skype for Business, which blends Lync’s enterprise-grade capabilities and Skype’s ease of use.

ThinkingPhones, a UC-as-a-service (UCaaS) vendor, last year bought Fuze, a cloud-based video conferencing company. It was the third acquisition by ThinkingPhones in two years, and came the same year Fuze bought LiveMinutes and its cloud-based collaboration offerings. Earlier this year, ThinkingPhones closed a $112 million round of funding and changed its name to Fuze.

The company last year spent $92 million to buy iCore in an effort to build out its cloud communications portfolio and enable Vonage—best known for its SMB and consumer offerings—to expand its UCaaS offerings to the higher end of the market.

Genband has been bolstering its communications platform since buying Nortel’s carrier voice-over-IP (VoIP) business in 2009. The company in 2014 bought uReach and its UC solutions, and later that year unveiled Kandy, a real-time communications software development platform.