ShoreTel has seen a lot of change in the past few months. And as they say, change is good – at least it seems to be in this case.
Armed with a new cloud strategy, a spate of recent high-level hires and revved up marketing, sales and product release efforts, ShoreTel this week reminded its partners gathered in Orlando that it is working on something big.
The company aims to make itself into a communications powerhouse. And so far anyway, it seems to be doing a pretty decent job.
ShoreTel was highlighted in Synergy Research’s market share summary report for the first quarter of 2012 as the fastest-growing player in the U.S. enterprise IP telephony market and No. 3 in terms of market share. ShoreTel grew its U.S. enterprise IP telephony revenue market share from 6.5 percent in Q4’11 to 7.7 percent in Q1’12, resulting in market share growth of 19 percent.
In contrast, the Synergy report shows Avaya (News - Alert) and Mitel experienced declines in market share of 9 percent and 4 percent, respectively.
ShoreTel CEO Peter Blackmore said yesterday at the ShoreTel Champion Partner Conference that the company’s most recent financial year saw the company grow 15 percent in a market that was basically flat. In fiscal 2012, ShoreTel won 4,600 new customers, representing 46 percent of the business; nearly doubled the number of wins of over 1,000 seats; expanded vertical selling (winning five new state contracts); added sales presence in South Africa, India and the Philippines; implemented two-tier distribution in the U.S. and Canada; and increased overall partner satisfaction from 7.72 to 7.74.
In the fourth quarter, when the company made a lot of changes to help spur its growth, ShoreTel had the best quarter in its history. And ShoreTel’s NetPromoter Score, which is now at 63, is the highest in the industry, said Blackmore, adding that Cisco (News - Alert) is the next best in the industry at 40 and “it goes way down after that.”
David Petts, the company’s new senior vice president of worldwide sales, said ShoreTel is growing rapidly and set to take on some of the giants in the industry. The closing slide of his presentation featured a ShoreTel logo feasting Pac-Man-style on Cisco.
Expanding from a premises-based provider of “brilliantly simple” IP phone solutions with built-in unified communications and contact center functionality, into a company that also offers these capabilities via the cloud and to mobile devices, is a central tenet to the new strategy. Also key is increasing its name recognition.
In an effort to make that happen, ShoreTel is spending 30 percent more on marketing than it spent last financial year, Blackmore said.
Faced with a build-vs.-buy decision on the cloud front, ShoreTel opted for the latter, purchasing M5 Networks in February. As TMCnet columnist Peter Radizeski of RAD-INFO Inc. reported at the time: “M5 Networks migrated off the BroadSoft (News - Alert) M6 platform to its own softswitch in 2010. It is a good sign for the industry that a premise PBX maker sees the light and buys a hosted PBX provider.”
Blackmore explained that “to really stand out, we bought a cloud company. That’s the second company we bought in two years.” The other acquisition was of enterprise mobility platform outfit Agito Networks, an $11.4-million deal announced in October 2010. (Expect new offers from ShoreTel on the mobility front in the not-too-distant future.)
M5 was the best of the 25 cloud candidates ShoreTel looked at, he explained, because it had the lowest churn, the highest ARPU and the highest customer satisfaction rate of any company in its category. In an October Q&A with Network World (News - Alert), Blackmore said ShoreTel just had its first full quarter with M5 (the June quarter) “and their bookings gross was 43 percent higher than the previous year, which is excellent.”
The industry is changing, Blackmore said, and to be successful ShoreTel needed a premises business and a cloud business “and both of them live together.” (Blackmore during his ITEXPO Austin speech in October also emphasized the fact that ShoreTel sees cloud- and premises-based UC as two sides of the same coin, saying “there are two ways of providing a [UC] service to a customer, but they are one market, not two markets.”) During his speech yesterday at the ShoreTel Champion Partner Conference, Blackmore highlighted Gartner (News - Alert) data indicating the cloud will be 42 percent of the market by 2015.
“There will be more change in our industry in next 48 months than there has been in the last 10 years,” said Blackmore, who added that change will be driven by changes in technologies, business model changes, and external factors.
The quarter in which ShoreTel took on M5 and made other big moves – such as fundamentally changing the way it goes to market, its partner service structure and its approach to engineering so it can introduce more new products than ever before – was “amazing,” according to Blackmore.
But ShoreTel’s expansion into the cloud has not been without growing pains. Superstorm Sandy in the Northeast knocked out service for ShoreTel Sky customers in the New York area just months before ShoreTel was able to put a failover plan in place. Blackmore said ShoreTel Sky will have complete failover by the first quarter of 2013, adding “I think we’ve managed the customers very well despite that.”
In addition to the M5 acquisition and new cloud strategy, other recent changes at ShoreTel include the company’s move to simplify the role of the direct interface to all gold and silver partners, Blackmore explained yesterday. Members of the ShoreTel channel partner team used to work with 30 to 50 partners, but now can focus on around 10 companies, he said. ShoreTel also created an independent sales team to cater to service providers, he said, and strengthened its support organization.
To head up the channel partner effort, ShoreTel brought Joe Vitalone back into the fold. Vitalone did a stint at LifeSize between his first and current gigs at ShoreTel.
Vitalone is just one of several recent new hires ShoreTel has made in an effort to expand growth.
“We’re going to take this company, with your support, to brand new heights,” Blackmore told the crowd of channel partners yesterday in Orlando.
Edited by Braden Becker