Infonetics report gives small IP PBX vendor higher marks than its giant competitors.
It's no secret that ShoreTel's success over the past few years has gone hand-in-hand with the growing interest of small businesses in VoIP. The Sunnyvale, Calif. based IP PBX vendor has done a good job of providing products that fulfilled that interest. But a new Infonetics report provides some surprising insights into the pre-IPO company's success. Hint: it's not just due to the fact that the PBX giants haven't reached the low end of the market yet.
It does start there though. ShoreTel offers VoIP gear it claims will scale from one to 10,000 users. While it's hard to picture a one-user PBX, it's a fact that manufacturers like Avaya, Cisco and Nortel are more focused, technologically and commercially, on large installations than on those smaller than a few hundred employees. So while it makes both high-end and low-end equipment, ShoreTel has had particular success in putting its products in spots where the giants were unable to fit. And its IPO plan shows how sweet those spots can be.
The Infonetics study shows, however, that there's more to ShoreTel's surge than keeping out of the giants' way. The survey comprised interviews with 240 companies of all sizes, all of which use VoIP now, or will do so by 2008. Among other things, the interviewers asked the companies why they are using, or will use, VoIP. It also asked them to rate the various vendors based on various criteria.
It turned out that several factors made ShoreTel a particularly good supplier for the small-business market. For one thing, its products scored well in the area of price and value. By coincidence, price was the third most important driver (out of 12) for VoIP deployment among small companies, while it was ninth among all companies surveyed.
ShoreTel products also ranked first in ease of use, another crucial concern at the bottom end of the market.
"Ease of use is important [to small companies] because they may not have the dedicated internal people that can handle a phone system," says Infonetics Directing Analyst Matthias Machowinski. "That's why they need their equipment to be as easy to use as possible, so they don't need to call a technician to make changes."
Even not being a giant is, if not an advantage, at least not a major disadvantage to ShoreTel in the small-business market. Large and medium-sized companies are particularly concerned about the staying power and financial stability of their PBX vendors, Machowinski notes.
"People are going to own this equipment for a number of years, so they're going to need to have ongoing support for a long time," he explains. "So financial stability is definitely an important buying criteria."
But the survey shows that's less of an issue for smaller companies, for whom factors such as price outweigh almost everything else.
"Financial stability is definitely not as important for smaller guys compared to larger ones," Machowinski says.
Perhaps most surprising was the vendor's overall ranking in the survey. Across all the categories, which included things like reliability, scalability, features, distributed architecture, security, initial and operational cost and open standards-based platforms, ShoreTel and Cisco came out on top of such established PBX vendors as Avaya and Nortel. This, despite the fact that ShoreTel, with some 230-plus employees, is a fraction the size of the others.
Machowinski thinks the main reason the two came out ahead is that both jumped directly into the PBX market with IP models. That meant they had no legacy technology or customers to deal with.
"The incumbents have to make sure to keep their existing customers happy," he explains. "The management has to be done in a certain way, so they can't just decide one day to make it all brand new."
That fact, along with the money it will presumably get from its planned IPO, could provide just the opportunity ShoreTel needs to move upmarket and become a serious competitor in the market for larger-scale enterprise IP telephony systems. At least now it shouldn't come as a surprise.
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