Quick Thoughts on Mitel Toshiba

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Today Mitel confirmed that it has reached an agreement with Toshiba to assume its enterprise PBX business. The press release states: Mitel  will “transfer certain assets and support obligations, including existing inventory, from Toshiba Corporation. . .Combined with the transfer of existing inventory, the MoU also contemplates a transition services agreement ensuring product and service continuity for Toshiba customers. Both companies are committed to supporting warranty and maintenance obligations.”

A few thoughts:

  • Everyone was surprised when Toshiba suddenly announced plans to shutter its UC business earlier this year. Toshiba has been at this for a long time, has good products, and a solid reputation.
  • Toshiba was late to VoIP , then late to UC, and very late to the cloud.
  • It wasn’t a shock that Toshiba intended to exit the business. The shock was the sudden exit. The American way is to do an asset sale and  1) salvage some value and 2) provide the customers (end-users and dealers) a path. This was more the way of the Samurai — sudden death.
  • Mitel pulled a Geisha out of its hat with what appears to be a great deal for both Toshiba and Mitel. Unfortunately, without financial details we don’t know if it was a great deal. But Rich McBee only buys undervalued assets, so I’m guessing it was the deal of the decade. Mitel calls this a “land grab” maneuver.
  • It appears that at least temporarily Mitel will will sell Toshiba products. The press release mentioned existing inventory  – what happens after that? My guess is MiSomething either as a service or appliance. Mitel picks up a large installed base and dealer network.
  • Toshiba is very strong in retail. I see their phones in lots of big box retailers.
  • Mitel and Toshiba are reasonably complementary. Many dealers sell both products. The deal does not help Mitel with larger enterprises other than the branch office play.
  • This really is out of the Mitel playbook. Mitel likes to make plays for distressed companies. It profited from Aastra, PrairieFyre, and Oaisys. It didn’t do so well with Mavenir, and although the Polycom deal failed, Mitel still came out ahead due to the runaway-bride penalty.
  • NEC was an obvious fit as the two companies could have negotiated the agreement in Japan. ShoreTel too is likely jealous. Actually, just about any premises-based dealer may have been able to benefit from such a deal from Avaya to Digium. Though I doubt very many tried.
  • Mitel’s reseller conference later this month just got a bit more jolly.
  • I do have concerns that Mitel is not prioritizing enough on new products or making more strategic acquisitions. Distressed assets can inflate share temporarily. But remember, the industry is transitioning and every Toshiba customer didn’t buy a Mitel product.

By the way, I called this on May 4, 2017!

Dave Michels