ShoreTel signs with Catalyst / Scansource and Westcon. What’s Avaya to think?

by Jeff Wiener on January 20, 2011

Earlier this month I wrote my yearly prediction piece, an article outlining where the telecommunications market had come in 2010 and where I thought it was going in 2011. We’re still early in the 2011 year and at least one of my predictions is dead on, which is exactly what has happened regarding the upstart IP telecom solutions company ShoreTel.

By looking at it’s total sales numbers, ShoreTel is more like a pest nipping at Avaya, Cisco, Mitel and NEC’s heels; they have never been quiet about their plans to fill Nortel’s old spot as one of the top three (3) companies in the IP telephony market.

In order to achieve this goal, however, I predicted that ShoreTel would need to seek out dedicated distributors both north and south of the border, companies that would dedicate themselves to selling ShoreTel product, and with the announcement earlier this week that ShoreTel has secured two key North American distributors, with the added news that those two distributors are key Avaya partners, things in the telecom world are about to get very interesting.

There’s little question in my mind that 2011 will be a huge year for ShoreTel. As Kevin Gavin, the company’s vice president of marketing,  said in an interview last year, the departure of Nortel has left a sizeable vacuum in the IP telephony market, a vacuum that ShoreTel is looking to fill.

“Markets crave three leaders in every technology, and in IP telephony it used to be Cisco, Avaya and Nortel,” Gavin said, “Now, with Avaya picking up Nortel, there are two seats at the table. We feel we are capturing that third seat.”

That being said, it still came as quite a shock to me to hear that ShoreTel secured a North American distribution deal with Catalyst, a sales division of the international specialty technology distributor ScanSource. While its no secret that ShoreTel had already been enjoying a prosperous European distribution agreement with ScanSource, its Catalyst sales division is the largest Avaya distributor in America, if not the world.

The surprising news didn’t stop there, however, as ShoreTel also announced an additional distribution agreement with Westcon Group, a company that is probably the second largest Avaya distributor in the world. According to Don Girskis, senior vice president of ShoreTel’s worldwide sales, ScanSource will focus on ShoreTel’s smaller, regional VAR partners, while Westcon will focus on ShoreTel’s service provider customers, notably its partnerships with Verizon, AT&T, Qwest among others.

So the question becomes, how does Avaya feel about ShoreTel establishing partnerships with two of its key worldwide distributors? In my prediction post I wrote briefly about the relationship between Avaya and ShoreTel, with the former seeing the latter as little more than an annoying gnat, a pest that could easily be ignored or swatted away. But now in one fell swoop ShoreTel has established itself as a key player in the North American IP telephony market and now it cannot simply be ignored, a fact that I’m sure Avaya isn’t too happy about.

While these agreements are clearly a boon for ShoreTel’s business, perhaps even enough to push the relatively small company into the top three companies in the IP telephony market, I would wager that Avaya was less than thrilled to hear the news, perhaps even feeling betrayed by the fact that two of its most successful distributors have essentially made ShoreTel into a credible market threat.

With that said, one has to question the logic on the part of both Catalyst (ScanSource) and Westcon Group, as there’s no question that both of these companies have become extremely wealthy on the back of Avaya’s strong product line. So I have to ask, is backing ShoreTel really worth the risk of angering Avaya, a company that one might say had become Catalyst and Westcon’s veritable “sugar daddy” in the IP telecom solutions market?

The fact of the matter is, to see that both ScanSource and Westcon would be willing to risk a long-term relationship with a key supplier like Avaya speaks absolute volumes about where these companies feel the upstart ShoreTel is heading.

The current reality is, however, that ShoreTel is still a small regional player in the IP game. While it boasts 600 dealers worldwide, it has almost no market presence in Canada and is a relatively small threat in the US, with only about $100 million in sales so far. Truth be told, with ShoreTel still doing less than $200 million in sales worldwide, its not surprising that neither Avaya nor Cisco really recognized it as a serious threat…until now of course.

While ShoreTel has been a relatively minor annoyance to Avaya, the burgeoning IP telecom company has made no secret about its intention to pursue the old Nortel and current Avaya dealer base, and aside from ScanSource and Westcon have signed other prominent dealers over the last few years as well. Now with ShoreTel securing two of Avaya’s top distributors, however, it has clearly elevated itself to a completely new threat level. No longer the annoying pest, ShoreTel has made a statement to Avaya, a statement that ShoreTel is here to stay, a statement that Avaya can no longer ignore.

If I were Avaya, one thing is for certain, I would not be happy with this news. Not only has Avaya seen one of its relatively minor competitors become a market frontrunner, but it did so on the backs of two of Avaya’s key distribution partners, a fact that I’m sure has Avaya not only feeling threatened, but angry and insulted as well.

The reality is, in one move ShoreTel has found a means to enter the Canadian market, expand its US market base by partnering with several impressive distributors while simultaneously finding a way to establish a relationship with some of Avaya’s best distribution partners.

So what would your next move be if you were Avaya? Westcon and Catalyst (ScanSource) have certainly established some excellent relationships with some of Avaya’s best dealers, potentially the very same dealers that they will be soon be selling ShoreTel product to as the upstart IP telecom company continues to mine Avaya’s dealer base. Not to mention that all this comes on the heels of some recent distribution realignments following Nortel’s departure.

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Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

{ 4 trackbacks }

Scansource on the 411 on Becoming a ShoreTel Partner — TheTelecomBlog.com
August 14, 2012 at 11:16 am
ShoreTel Delivers Message to Nortel Customers: You Have a Choice — TheTelecomBlog.com
August 14, 2012 at 11:21 am
ShoreTel Feels the Love from another Key Avaya Distributor — TheTelecomBlog.com
August 15, 2012 at 5:54 am
Avaya distributors | Swineflustoper
March 9, 2013 at 7:50 pm

{ 4 comments… read them below or add one }

Rich Tehrani January 20, 2011 at 9:20 am
Guest January 20, 2011 at 4:28 pm

Rich, you had misspelled Jeff’s name in your article – just a friendly FYI 🙂

Mary Ellen Grom January 25, 2011 at 12:02 pm

Jeff – once again, your channel perspectives here are enlightening. In this paragraph you stated:
“That being said, it still came as quite a shock to me to hear that ShoreTel secured a North American distribution deal with Catalyst, a sales division of the international specialty technology distributor ScanSource. While its no secret that ShoreTel had already been enjoying a prosperous European distribution agreement with ScanSource, its Catalyst sales division is the largest Avaya distributor in America, if not the world.”

Catalyst Telecom is our distribution company for Avaya – that is correct. However, ShoreTel was launched via another separate run ScanSource, Inc. business unit, ScanSource Communications. Yes, they are sister companies, however each of our value-added specialty technology business units maintain a separate presence, have unique operating unit Presidents and products are sold/serviced by distinct sales, business development and technical support teams.

Just wanted to make that clarification. Thanks again for extending our channel presence.

Jon Paul May 12, 2011 at 4:18 am

Numbers are numbers. Shoretel has a long way to go. You are getting a head of yourself. These distributers will only take more margin from shoretels already saturated market.

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