Mitel takes down Cisco, Avaya and Nortel in US SMB space

Mitel Corp. has taken top spot in the United States for IP Telephony (IPT) shipments to small business, according to data from InfoTech, a Parsippany, NJ-headquartered research firm. Mitel took top honours and has positioned itself for long-term growth by driving application adoption off of IP-based capabilities, often with a vertical market focus, says InfoTech."Mitel has been concentrating on the SMB space, as was Inter-Tel, which they acquired a year ago," Terry White, VP and senior program director at InfoTech, tells Network Letter. "It's paid significant dividends when compared to the bigger companies such as Avaya, Cisco, and Nortel. Those companies put a lot more marketing, sales, and channel effort into the enterprise space."The numbers tell the story. According to the report titled "InfoTrack for Unified Communications: 2008 SMB Market Analysis" (IUC), Mitel captured 17.2% of the US 2007 SMB IP telephony market (SMBs are defined as two to 100 employees). Following its merger with Inter-Tel in 2007, Mitel gained 8.5% of market share beating its closest competitor NEC by 3.4%.The Canadian story is slightly different."We are solidly number two in Canada," says Jeff Nolan, Mitel's VP of sales for Canada. "We're ahead of Cisco and a little behind Nortel." Referring specifically to those accounts with fewer than 1,000 seats, Mitel claims its Canadian market share is at around 20%.But that might be about to change.On the heels of Mitel's $729-million merger with Inter-Tel, which added the SMB-focused Inter-Tel 5000 to the company's arsenal, it launched an expanded Exclusive BusinessPartner (EBP) program. Initially aimed at the United States, the EBP program, in which channel partners focus exclusively on Mitel for net new opportunities, is gaining traction in Canada."Half a dozen Canadian partners have joined the program," says Nolan. "We expect to announce more soon."In Canada Mitel is moving aggressively into the sub 50 seat space, and that means going after the relatively static market held by the likes of NEC and Toshiba - perceived as underserved, and with less than 10% share each. It seems like a solid plan, specifically given that Cisco and Avaya are getting their SMB story together.The SMB merry-go-round"This next year will be interesting," says White. "A few years ago Avaya re-organized, so that organizationally SMB was parallel to enterprise, with its own VP and SVP. Then the SMB division was folded into enterprise, and as a result that market was de-emphasized, with most marketing put behind the larger opportunities. As a result, Avaya's share in the SMB market has declined. But in October of 2007 Avaya's acquisition by a private equity firm was completed, and the company re-organized again - they seem to be putting emphasis back on the SMB space."White says Cisco is in a similar situation. It didn't de-emphasize SMB, but the marketing efforts starting in 2007 were clearly enterprise focussed."However, Cisco has now moved senior people into specific areas of SMB," says White. "And when you have big players like Cisco and Avaya putting more money and marketing into SMB, you know it will be a competitive year."According to the InfoTech study, during 2007 IPT shipments to the US SMB market increased by 18%, compared to 2006. The research did not break out application attachment."One of the things that Mitel tracks, and that isn't well covered by research firms, is application attachment," says Nolan. "If we look at the 3300 , we exited 2005 at about a 14% application attachment rate in Canada, and this is now at 18%. A 4% swing in 18 months in Canada is significant. And application growth is increasing - in a couple of quarters we expect to be at 25%."This is a good business model, and fits in with Mitel's focus on business processes in vertical markets."Mitel helps customers in particular verticals to understand how they can use the applications that come with their systems to improve their business," says White. "There are application-specific opportunities in financial services, hospitality, retail, healthcare, and government. This is the best way that a company like Mitel can differentiate itself from its competitors - not just how a system adds features, but how it can help a business."

Mitel takes down Cisco, Avaya and Nortel in US SMB space

News | 09/10/2008 2:15 pm EDT

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