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December 17, 2007

Mitel Gathers Steam with Netherlands Deal

By Richard Grigonis, Executive Editor, IP Communications Group

Mitel (News - Alert) (, the PBX and VoIP equipment vendor, is a company that long ago mastered the art of hanging on during economic roller coaster rides, dealing adroitly with misfortune by turning it into yet another fortune. That ability can be found all the way back to its founding by two expatriate British engineers in 1973, on a budget of $4000.

Terry Matthews (News - Alert) (born 1943) had been working in the telecom industry since 1958. He left his native Wales, and headed to Canada in 1969 on a holiday. Liking what he saw, he soon moved to Ottawa and got a job in a semiconductor factory of Northern Telecom in Kanata, Ontario, Canada, where he met Michael Cowpland, who would later start up Corel Corp. (COwpland REsearch Labs).

Matthews and Cowpland originally planned to market an environmentally sound, battery-powered lawn mower that mulched while it cut. They decided to name their company Mitel, for MIke and TErry’s Lawnmowers. However, the container the mowers were shipped in from the U.K. was misrouted and temporarily vanished. The mowers finally turned up in September, too late in the season for them to sell well – or at all, for that matter.

While waiting for the lost container, however, Matthews and Cowpland turned their attention back to telecom, developing a $150 tone-to-pulse converter with the capabilities of units costing ten times as much. It was a hit. They developed more successful telecom-related devices.

Hearing about a government grant to develop the first software-controlled private branch exchange (PBX) for the industry, Mitel turned its attention to making advanced PBXs, which would mark its greatest success. It’s revolutionary SX-Super-Switch, unveiled in 1978, was a huge success. Mitel reached “critical mass” when it won a contract with AT&T. Within a few years, Mitel had 20 percent of the global market. Today, Mitel has sold more than 180,000 PBX systems in over 80 countries, more than any PBX maker.

In 1985 most of Mitel was sold to British Telecom, which ran into difficulties running it and later sold it to a venture capital company. Terry took $14 million of his own money and founded Newbridge Networks, an ATM network manufacturer, named after Matthews’ home town in Wales. Another tremendous success, Newbridge was sold to Paris-based Alcatel (now Alcatel-Lucent) in 2000. After founding various other companies (such as March Networks), Terry Matthews, in early 2001, bought back the trademark and the telecommunications division of Mitel.

Recently, Mitel was awarded with a significant, six-year contract by OverheidsTelecom, a Dutch government purchasing program in the Netherlands, to supply 96 institutions of the Dutch government with IP Communications solutions. The program, OT2006 (OverheidsTelecom 2006), is a Dutch government program whereby several telecom services are tendered in one master agreement by ministries and other government authorities and subdivided into clusters. The OT2006 cluster covered by Mitel’s contract will, amongst others, see eight ministries, seven provincial authorities, 30 municipalities and 51 administrative bodies and advisory boards totaling more than 52,000 lines move to a Mitel platform over the next four years. Mitel’s 3300 IP Communications Platform will be deployed, an extremely flexible, open platform designed to support networks of from 10 to 65,000 users. It provides standard IP-PBX capability plus a wide range of embedded unified communications applications including unified messaging, auto attendant, ACD and wireless connectivity. The Mitel Enterprise Manager suite is used to monitor and manage a single 3300 ICP or a whole network of them, along with the end-user phones. Mitel partner Triple P will install and maintain the equipment.

Not bad for Mitel, this started essentially from zero when it established an office in Holland five years ago.

Indeed, according the MZA’s report, “The Total European Corded PBX/IP PBX Market Q2 2007”, Mitel is threatening Cisco's overall market leadership with 22 percent of IP extensions shipped vs. 26 percent, is comfortably ahead in the less-than 100 extension phone system market with a market-leading 35 percent to the #2 vendor Avaya's (News - Alert) 22 percent. Moreover, MItel is within one percentage point of overtaking Avaya (16 percent vs. 17 percent) for the #2 position in the more-than-100 extensions shipped market (Cisco is currently #1 in that category with a 35 percent share of the market).

The news from the Netherlands overshadowed other interesting contracts attained by Mitel in the Middle East. For example, on December 12, 2007, Mitel announced that the Makkah Hilton & Towers in Makkah, Saudi Arabia, will is to deploy a Mitel communications solution including a Mitel 3300 IP Communications Platform (ICP) supporting 45 contact centre agents. The Mitel 3300 ICP will also act as a gateway to their legacy equipment that services 1400 end-users. The project will be implemented by Al Ofoq CCTS, a Mitel Gold Solution Provider located in Jeddah, Saudi Arabia.

And just a little over a week prior to the Makkah announcement, Mitel announced that Yemen's Ministry of Justice would buy a Mitel 3300 MXe as part of a convergence migration project to eliminate their existing base of analog telephones. The implementation will be by Asharq for Trade and Agencies, a registered Mitel solution provider in Sana'a.

In the middle of 2007, Mitel bolstered its position among Avaya, Cisco and Nortel by buying Inter-Tel, a very large and successful company known for both its communications systems and superb professional services and channel relationships. Mitel claims it is now the largest vendor of corporate IP Communications solutions in Britain, second-biggest in western Europe and the world leader in the small- to medium-size business (SMB) segment.

Richard Grigonis is an internationally-known technology editor and writer. Prior to joining TMC as Executive Editor of its IP Communications Group, he was the Editor-in-Chief of VON Magazine (News - Alert) from its founding in 2003 to August 2006. He also served as the Chief Technical Editor of CMP Media’s Computer Telephony magazine, later called Communications Convergence (News - Alert) (NewsAlert), from its first year of operation in 1994 until 2003. In addition, he has written five books on computers and telecom (including the Computer Telephony Encyclopedia and Dictionary of IP Communications). To see more of his articles, please visit his columnist page.


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