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Polycom acquisition raises questions over vendor partnerships

Following Mitel's announcement that it was acquiring Polycom, analysts speculated on what will become of the vendors' endpoint and channel partnerships.

While Mitel's $1.96 billion Polycom acquisition boosts both companies' product portfolios, UC analysts question what the deal means for the two companies' partnerships with other vendors.

Mitel announced last week its intention to acquire Polycom Inc. -- a deal that's expected to close in the third quarter. Talks for the Polycom acquisition began in October 2015 through Elliott Management, a private equity firm that has investments in both vendors.

One of the biggest questions: What will become of Polycom's partnership with Microsoft? Polycom's video conferencing portfolio has been aligned with Microsoft Skype for Business and Office 365, which compete with Mitel services, such as MiVoice MX-ONE and MiCollab, in the UC market.

"One has to wonder how motivated Microsoft will be to recommend products from a competing UC products and services vendor," wrote Andrew Davis and Ira Weinstein, analysts at Wainhouse Research LLC in Duxbury, Mass., in a blog post. They noted that Polycom pre-briefed Microsoft on the acquisition announcement.

Microsoft has alternative partnerships that could replace Polycom, such as Yealink's Office 365 and Skype for Business-certified phones, and Pexip's video collaboration interoperability, Davis and Weinstein wrote.

Microsoft and Polycom had recently announced an Azure cloud interoperability service for Office 365 users that was set to launch in the fourth quarter. "It's reasonable to say that's even more unlikely now," analyst Dave Michels wrote in a blog.

But Irwin Lazar, an analyst at Nemertes Research in Mokena, Ill., said despite the Polycom acquisition, he doesn't expect much of the Microsoft partnership to change, especially during the acquisition-approval process. The partnership is important to both Polycom and Microsoft, he wrote in a blog post.

Mitel's Vidyo partnership called into question

Amid the Polycom acquisition, Mitel's partnership with Vidyo has also come into question. Lazar wrote that the future of Vidyo's partnership with Mitel is more questionable than Polycom's partnership with Microsoft.

Michels wrote that Mitel's partnership with Vidyo gave the UC service provider better video technology than what Polycom can offer. Vidyo provides Mitel with features such as cloud interoperability, APIs and scalable video coding -- areas in which Polycom isn't as strong, he said.

"When Mitel needed a video partner, it could have chosen Polycom, but it freely chose Vidyo and deeply integrated Vidyo's technology into Mitel's products and services," Michels wrote.

How the Polycom acquisition could change channel partnerships

Analysts are also questioning how Mitel's and Polycom's endpoint and channel partnerships will evolve with the merger.

Lazar wrote that Polycom's endpoints, such as its VVX VoIP phones and HDX conferencing equipment, are typically resold by Internet telephony service providers and UC as a service providers, like RingCentral and Avaya, who compete with Mitel's offerings.

"That Mitel is saying publicly they will retain the Polycom brand implies that they will allow Polycom to maintain these relationships," Lazar wrote.

That Mitel is saying publicly they will retain the Polycom brand implies that they will allow Polycom to maintain these relationships.
Irwin Lazaranalyst at Nemertes Research

Davis and Weinstein questioned whether Polycom's endpoint and channel partners would recommend products and services from a competing vendor. Polycom also has strong partnerships more focused on AV, rather than IT. The analysts questioned whether partners in that area would embrace becoming Mitel UC and telephony resellers.

Michels wrote that the Polycom acquisition changes the market, because the vendor worked with so many partners as a noncompetitive partner. He speculated Polycom's endpoint business could shutter following the merger, or Mitel could standardize on Polycom endpoints for its UC platforms.

"Current and prospective Polycom and Mitel customers should expect business as usual for at least the next three months, as the acquisition process runs its course," Lazar wrote.

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