Following months of speculation, Mitel finally announced its intention to acquire collaboration and communication technology provider Polycom on April 15. The deal (which has been talked about in the telecommunications space since October 2015) is valued at approximately $1.96 billion in cash and stock transaction.
The merger is expected to close in on Q3. According to the agreement, Polycom will continue to operate as an independent unit under the Mitel name and will retain its brand. Mitel’s CEO Rich Mcbee will also head the combined company which will be based in Ottawa, Canada.
Exploring the Quick Wins
The combined companies could enjoy a host of benefits that are typical of mergers and acquisitions, such as cost savings via elimination of redundant areas and employee functions. In terms of technology and products, the immediate benefit for Mitel is gaining access to Polycom’s conferencing products (video and audio), technical and engineering know-how, and its vast network of global channel partners. Through Polycom’s technology, Mitel also now has the opportunity to enhance its cloud service’s video capabilities.
Polycom, meanwhile, is to benefit from Mitel’s SMB connection. This could also help Polycom find its way to the cloud services area (given that it lags in the area of cloud and mobile) with Mitel’s UC/telephony cloud service solutions. Needless to say, the combination of the two providers will enable them to cater to almost all business telephony requirements (from enterprise, cloud, to mobile environments) under one roof. Mitel’s Unified Communication services will perfectly coincide with Polycom’s extensive hardware offerings (such as video conference systems and IP desk phones).
Identifying New Challenges
While there are clear and compelling benefits of this consolidation, it also presents several interesting challenges especially on the part of Polycom.
A tried and tested brand, Polycom has earned its success in the industry by offering high quality and cost effective products. This has led the majority of independent VoIP providers (such as Vonage, 8x8 and RingCentral) to include Polycom devices in their cloud deployment. But while Polycom will still retain its brand, it is uncertain whether these VoIP providers would still want to recommend phone equipment from Polycom given that it is technically now one of their competitors.
Another possible challenge is Polycom’s partnership with Microsoft. Although Polycom has been an important partner of Microsoft for Lync/Skype for Business, Microsoft is typically known for not working well with companies that have competitive platforms. However, it is also possible that Microsoft might see the value of what Mitel/Polycom can bring to the table (specifically Mitel’s mobile integration capabilities).
Despite coming with some challenges, the Mitel-Polycom merger has a great potential to change the business communications space. By combining leading video and audio solutions, significant presence in North America, and effective integration skills, the new Mitel can be a formidable entity (not just in the VoIP market) but in the business communications industry as a whole.