George Harrison was known as “the quiet Beatle” – drawing a parallel to the UCaaS market, Mitel could be labeled “the quiet competitor”. While Mitel has maintained a presence with its MiCloud Connect platform, the company has generated much less traction than rivals and announcements have been few and far between. In both respects, Mitel’s recent partnership with RingCentral is especially noteworthy.
Basic terms of the arrangement are as follows. Mitel’s PBX customers will be provided RingCentral’s Message Video Phone (MVP) cloud communications platform and RingCentral becomes the exclusive UCaaS partner for Mitel. RingCentral will pay Mitel $650 million for certain intellectual property rights and patents as well as other assets while Mitel’s existing investor group will contribute $200 million in equity in RingCentral.
The Mitel path to success
There are multiple benefits for the company. Mitel has always been a bridesmaid in the UCaaS market. But now, by virtue of partnering with rising-star RingCentral, its attractiveness to customers increases almost immediately. In addition, equipped with the MVP platform, the company paves a path for its customers from on-premises PBX to the cloud.
Because cloud-based solutions are ideal for supporting employees in distributed locations, demand has mushroomed since the onset of Covid-19 and is expected to remain at elevated levels with the movement towards hybrid work. Finally, the $650 million investment Mitel is receiving from RingCentral will serve to significantly boost operations.
Partnership comes at a cost
While the partnership lends Mitel an air of legitimacy and quickly enhances its competitive position, it comes with heavy sacrifice attached. Its legacy as a second-tier player will limit how quickly and to what extent it becomes a contender. The company will also be dealing with the operational distraction of supporting customers on both its MiCloud Connect platform and RingCentral’s MVP.
Further, relinquishing rights to intellectual property and other assets as well as the ability to partner with additional vendors is a big price to pay. Lastly, the company is merely the latest in a long list of industry partners for RingCentral (which includes more prominent players such as AT&T, Verizon, and Avaya). Mitel may get lost in the shuffle.
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By GlobalDataIn the end, the positives should outweigh the negatives to Mitel and its more than 35 million users. Look for Mitel to make some noise in the market soon.
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