Partners: Possible Polycom-Mitel Merger Has 'Huge Potential'

As unified communications vendors Polycom and Mitel reportedly pursue a merger, channel partners say combining the two companies would turn up the heat on competitors and lead to much needed innovation in voice and video technologies.

"If they're not just merging, but re-engineering themselves as a developing technology company, they have huge potential with their [channel] partners and distribution capabilities to create a developed mind share of emerging technologies," said Gary Berzack, chief technology officer and chief operating officer of New York-based eTribeca, a Polycom partner.

Berzack said both Polycom and Mitel can maintain their legacy products, but also have an opportunity to co-develop products in the voice market, which is ripe for innovation.

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"We don't have a solid selection of Voice over IP solutions that will run over Wi-Fi. It's never quite blended well how to address the mobile market," said Berzack. "Reliable Voice over Wi-Fi is an example of what [a Polycom-Mitel could create], with both soft clients that run on Android and Apple IOS and dedicated hardware mobile devices."

According to a Reuters report Wednesday, the two companies are in talks to merge. Polycom declined to comment on the matter. Mitel did not respond to a request for comment by publication time.

In October, Elliott Management -- which owns stakes in both Mitel and Polycom -- filed a statement with the federal Securities and Exchange Commission that said the market is ripe for consolidation and that it is encouraging Mitel and Polycom to combine their telecommunications and videoconferencing expertise.

Rhonda Wingate, vice president of collaboration for Carousel Industries, a Polycom partner based in Exeter, R.I., said merging would benefit both companies' channel partners.

"With both [companies'] current financial positions and declining shares, coming together could make each stronger," said Wingate in an email. "With Polycom's fastest growing product segment being audio, expanding to incorporate Mitel solutions is a natural progression to become more of a collaboration partner."

Wingate said consolidation appears to be the fastest way for collaboration companies to grow in today's market.

Mitel CEO Richard McBee didn't shy away from embracing the idea of a potential merger in a recent interview with CRN.

"If a Polycom and a Mitel came together, the [Software-as-a-Service] business would be really large between the two companies," McBee said. "Everywhere we sell in enterprise telephony equipment, there's always video in those big accounts. Wherever we're selling video equipment, there's always telephony."

Investor Elliott owns a 6.6 percent stake in San Jose, Calif.-based Polycom and a 9.6 stake in Ottawa, Ontario-based Mitel, with about $100 million invested in each company, according to the letter filed to Polycom's board of directors from Elliott in October.

In the letter, Elliott said the merger was needed in part because of heavy competition from large vendors such as Avaya, Huawei and, specifically, Cisco.

"Cisco is a formidable competitor with a strong collaboration portfolio and the ability to drive large, bundled sales through strategic customer relationships," wrote Elliot in the filing. "These relationships provide opportunities for Cisco to successfully win sole-source deals with customers and displace competitive vendors."

ETribeca's Berzack said there's potential in the market for Mitel and Polycom to co-develop new solutions around unified communication and collaboration.

"We could see some new emerging technologies that blend Polycom, with a good software stack, and Mitel, with a good distribution channel, that can penetrate into legacy markets with new technologies," said Berzack.