Rob Arnold's Blog

ShoreTel Does Not Sell Vapor-ware

13 Nov 2012 | by Rob Arnold
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Last week, I headed to Orlando to attend ShoreTel’s annual partner conference. I have not missed a ShoreTel Champion Partner Conference since the company began inviting analysts several years ago. These meetings are a great chance to spend a couple of days fully immersed in everything ShoreTel, with excellent access to ShoreTel executives, employees as well as the company’s channel partners, technology partners, and customers. This year, ShoreTel welcomed the consultant community as well, adding yet another dimension of perspective I could draw upon.

ShoreTel has certainly grown up quickly since I first started tracking the company in 2002. ShoreTel Champion Partner Conference 2012 proved it, with a big venue, big stage, big attendance (a record 1,300+) and with all of the high-tech show biz elements common to today’s UC conferences.

In terms of general messaging, I was very pleased to see ShoreTel is sticking to its guns. “Brilliantly Simple” continues to anchor the company’s development, marketing, and delivery strategy. And it should—the focus on simplicity or masking the complexity underneath sophisticated UC solutions has served ShoreTel well. The company has landed on the radar of most industry participants, and reported record revenue of $246.6 million in its fiscal 2012 (ended June 30). ShoreTel is growing by taking share, reporting that 23 percent of its revenues came from net-new customers last year.

After speaking with channel and technology partners as well as the customers at the event, I gather they are most excited and challenged by cloud and mobility. Accordingly ShoreTelSky and ShoreTel Mobility were featured prominently throughout the event. There were a couple of other intriguing talking points that are under NDA and I that need to stay away from here.

One has to appreciate the honesty with which ShoreTel executives and spokespeople presented information and responded to questions –on the main stage, in break-outs, and in sidebar discussions. In presented roadmaps ShoreTel did a fair job of maintaining consistency in outlining what they would deliver, why, and when. The content was measured, assertive, and informative. In general, I liked what I heard.

ShoreTel’s cloud initiatives center upon its acquisition of M5 last March, which is now branded ShoreTelSky. Bringing M5 into the ShoreTel fold is seen as a winning combination for both companies. It diversifies ShoreTel’s markets and revenue streams, while also giving the company a highly competitive solution in the early days of the rapidly intensifying cloud UC space. The M5 organization gets the security and backing of ShoreTel’s greater assets (R&D, customer base, tech and channel partner ecosystem).

ShoreTelSky stands out in the increasingly crowded hosted/cloud UC services space for its capabilities and features that are designed not merely to provide outsourced IP telephony, but to provide a suite of applications that can enhance business by integrating communications into workflows. As a standalone company M5 focused on simplicity and customer satisfaction, and it continues these same areas focus as ShoreTelSky. In a high churn space, ShoreTelSky reports customer retention levels that prove it is doing many things right.

ShoreTel has already made strides to integrate M5 with its greater, CPE-centric portfolio. ShoreTel Mobility was among the first of such ShoreTel solutions to be integrated with ShoreTelSky, arming ShoreTelSky with a unique and robust cloud-based enterprise mobility and fixed-mobile convergence solution that should be attractive to partners and prospective customers alike.

All that said, unbiased evaluation raises a couple of points for criticism.

Among my concerns on the M5-ShoreTel integration front is the current lack of support for ShoreTel desktop IP phones with the ShoreTelSky service. As of now, ShoreTelSky is primarily offered with Cisco IP sets. ShoreTel conferencing is another likely near-term target for integration, however no clear timelines have been provided as to how (e.g., scaling, partitioning, virtualizing the conferencing software) and when the integration would be brought to market. Among the value propositions of cloud technologies is the speed of development and roll out of new capabilities. Although only a part of ShoreTel for approximately eight months, it can be perceived that the use of proprietary technology in the M5 infrastructure may be a contributing factor to integration issues.

In the overall content at the conference, ShoreTel spokespeople did an excellent job of clearly and honestly stating ShoreTel’s positioning in the market and its near-term initiatives. However, this is also where a dilemma comes in. The honest, yet incomplete responses to questions regarding the virtualization of ShoreTel call control, development of programs empowering and compensating traditional ShoreTel channels to resell ShoreTelSky services, and expanding ShoreTelSky to international markets show there is still a lot of work ahead and that the company does not yet have all of the answers.

Making promises on undelivered capabilities is often called vapor-ware. ShoreTel does not sell vapor-ware. This must be the explanation for why certain questions, while responded to honestly, were not responded to completely. ShoreTel does not want to break any promises it makes.

I firmly believe that ShoreTel will deliver the capabilities it promises and will do so by meeting any publicly announced target dates. The company has a strong history of fulfilling such commitments. We’ll have to wait while ShoreTel hones its developments, its messaging, and positioning in these areas. Keep an eye on ShoreTel over the next several quarters and next several system releases.