Analysts and pundits seem to be happy about Mitel acquiring Polycom. I'm not giddy about the merger. Call me a cynic or jaded, but I feel there's a lot of going-through-the-motions than killer deal here. And part of it is there's no WebRTC story.
Mitel has been on a strategic "We need to get bigger" M&A kick for a while. It previously purchased Aastra and Mavenir Systems then made a try to get ShoreTel. Dialogic and GENBAND both went through these phases, building up a portfolio of products and consolidating businesses across the telecommunications field.
But mass doesn't necessarily equal success. Cisco tried to buy its way to better things with poor returns, snapping up Scientific Atlanta and Linksys in multi-billion dollar deals. BroadSoft has been on slow cruise control once it snapped up most of its competitors seven to eight years ago.
Consider that Polycom shareholders will hold 60 percent of the combined company once the deal closes, while current Mitel shareholders will have 40 percent. Polycom will run as an independent division, and keep its San Jose HQ along with its own brand, so talking about operational synergies to reduce costs might be a bit of a stretch.
Mitel borrowed a billion dollars to fund the merger but when the books balance the new company will have a lower amount of debt leverage, from Mitel's 3.8x to 2.1x in the merged company. The spin is this is a good thing, leaving room for more debt to be taken with future acquisitions.
While there's a lot of blah-blah about how wonderful this is for UC and potential SMB sales, I'm not buying the hype. UC is undergoing a rolling transformation via WebRTC, as the real time communications technology accelerates a shift from desktop hardware and dedicated IP PBX services to cloud-based services. Already, any number of SMB voice and call center services are using WebRTC as the primary means to bring customers onboard, bypassing the requirement to have an IP phone or a dedicated videoconferencing device. Bring your PC, tablet, or smartphone and you have a full UC endpoint without additional hardware or software expense.
Polycom has a WebRTC story, but you can't call the company a leader in the space when compared to standard-setters Google, Microsoft, or Mozilla. Even Apple, the biggest WebRTC holdout, has now joined the party, ensuring that WebRTC will evolve through releases into the standard for real-time communications that the UC has wanted for over a decade.
Mitel bought itself some WebRTC creds with the purchase of Mavenir last year and continues to talk up mobile as a bigger part of its corporate vision. Multi-platform (omni-platform?) service requires full-spectrum mobile – defined as Apple iOS and Google Android – and that means WebRTC as the real-time communications ring that binds mobile, desktop, and cloud services together.
Selling videoconferencing services has always been an uphill battle. Modern hardware and WebRTC are diluting the need for both dedicated videoconferencing hardware and desktop IP phones. You won't see dedicated hardware go away anytime soon (we still have fax and the PSTN, for crying out loud), but analysts and companies alike need to face up to the reality that nothing lasts forever but the earth and sky. I don't think we can declare a "tipping point," but people need to start looking more closely at the data and trends for both IP phones and video gear in the months and years to come.
WebRTC is going to play a bigger role in Mitel's future. Or its demise.
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