Mitel repivots strategy back to core strengths in response to COVID impact on UCaaS market

Going forward, Mitel will focus on the PBX and collaboration offerings that built up their business, and rebuilt their UCaaS initiative around their new partnership with RingCentral, following an effort to break into the UCaaS market that was gutted by the pandemic’s impact.

Graham Bevington, Chief Sales Officer at Mitel

It has been a tumultuous couple of years for Canadian-headquartered global firm Mitel, which makes business phone systems and collaboration tools. Following their purchase by new private equity ownership, they made a plunge in 2019 into the UCaaS [Unified Communications as a Service] market which was short-circuited by the impact of COVID on its market dynamics. Now they have refocused on their core strengths around PBX and collaboration, handling the UCaaS market through a new partnership with RingCentral.

“When former CEO Rich McBee left in Oct 2019 after the private equity investor took over, the new ownership wanted us to maximize UCaaS as well,” said Graham Bevington, Chief Sales Officer at Mitel. “We would focus on building that out, as well as on PBX and collaboration, which had been our principal focus. UCaaS was not something that we had driven before.”

That is why Mary McDowell was brought into the company as President and CEO in October 2019. She had previously been CEO of UCaaS provider Polycom before its 2018 merger with Plantronics and rebranding a year later as Poly.

“She was brought in to drive the UCaaS business based on her background in the area,” Bevington said. “We changed our priorities to focus on building UCaaS out as well as collaboration.”

The problem with this strategy – and what ultimately turned out to be its death knell – was the arrival of COVID-19 in early 2020.

“COVID completely changed the dynamics of the industry, and changed the rules on us,” Bevington indicated. We knew that in UCaaS we were starting late, and we were initially somewhere between Number 6 and Number 9 in the market. We expected that we would be able to rise quickly. COVID’s change of the dynamic led, however, to a massive increase in the use of Zoom, and Microsoft Teams held its ground and remained second in the market.”

All the other players, including Mitel, took a beating to some degree.

“RingCentral was probably the best of the rest, and they were third, but we were faced with finishing sixth at best and ninth at worst,” Bevington noted. “With private equity ownership, those kinds of numbers don’t lead to a long conversation. We had tried our best in UCaaS, and to become a top three player, but COVID had created a new dynamic where we were not competitive.”

As a result, Mitel completely overhauled their UCaaS strategy, de-emphasizing it and placing the emphasis on a new partnership with RingCentral that was announced last November.

“The new strategy reflected the fact that we were behind the curve in UCaaS, so  we collaborated with RingCentral to be our partner in this area,” Bevington said. “That lets us focus on the PBX and application market, and to get back to the  fundamentals of what we do best.”

Bevington also emphasized that Mitel’s strategic relationship with RingCentral is different from the ones RingCentral has with their other strategic partners.

“Alcatel, Avaya and us are their three strategic partners,” he said.  “What we did not want to do is create a Mitel Cloud Office product that would be similar to Avaya Cloud Office. We sell our regular product, but RingCentral now supports Mitel devices.”

This de-emphasis of UCaaS within the strategic vision led to another CEO change last fall. In November Tarum Loomba, who had been Chief Product Officer, became President and CEO, while McDowell became the Chair of the Board of Directors.

“Now Mitel is now back focused on its core value, partner community and vertical market strengths,” Bevington stressed. “We are focusing very much on our customers. While Avaya is very good at contact centre, we are very strong in SLED, health care, government, and hospitality, and we will make sure that we build solutions with our partners that reflect that. The market will also be a blend of hybrid or private cloud, and we will give customers those deployment options.”

Pivoting back to their traditional phone systems and collaboration tools offers Mitel a much more realistic growth strategy, Bevington said.

“We are likely third or fourth today, depending how you count it, behind Cisco and Avaya and around NEC. Short-term, we think that we can certainly be a stronger third,” he stated. “We are concentrating on letting customers know that we can work with them in their environments, including Teams integrations and vertical market solutions.

Bevington noted that Mitel’s new strategy is different from what many partners had wanted, but Mitel thinks this one will be stronger in the long run, and have moved to change partner compensation accordingly.

“Many of our partners had already signed up with RingCentral, they told us that we weren’t as good as them,” he said. “They wanted us to copy what Avaya did with RingCentral. However, rather than fight changes in the market dynamic, we learned how to embrace it, including providing partners with new bonuses for selling RingCentral they didn’t get before because RingCentral was a competitor.”

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