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1 INSERT COMPANY LOGO HERE 2014 Frost & Sullivan 1 We Accelerate Growth

2 Product Line Strategy Leadership Award Hosted IP Telephony and UCC Services and Platforms North America, 2014 Frost & Sullivan s Global Research Platform Frost & Sullivan is in its 50th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company s research philosophy originates with the CEO s 360-Degree Perspective, which serves as the foundation of its TEAM Research methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2014 North American Product Line Strategy Leadership Award in Hosted IP Telephony and UCC Services and Platforms to Mitel. Significance of the Product Line Strategy Leadership Award Key Industry Challenges Addressed by Superior Product Portfolio Frost & Sullivan independent analysis reveals that the hosted Internet Protocol (IP) telephony and unified communications and collaboration (UCC) services market is growing rapidly at compound annual growth rates (CAGR) of 25 to 30 percent both in terms of installed users and service provider revenues. Demand for hosted services is increasing as customer organizations seek to improve business agility and gain faster and more economical access to advanced capabilities and a larger pool of technology skills. In response to customer demand, service providers report to Frost & Sullivan that they are looking to deploy scalable and feature-rich hosted IP telephony and UCC services platforms that will enable them to provide greater value to customers, generate new revenue streams and clearly differentiate from the competition. Until recently, service providers had few options with regard to platforms and technologies they could deploy to deliver hosted communications services. For around a decade, multitenant platforms, either home-grown or developed by a handful of vendors dominated the market, leaving service providers little room for differentiation. However, as demand for hosted services increases, private branch exchange (PBX)/UCC vendors are making an aggressive foray into the market with multi-instance, virtualized infrastructure solutions. Many of these modern cloud-based UCC platforms offer richer functionality and more easily integrate with premises-based infrastructure (platforms and devices) than their more rigid predecessors. Furthermore, Frost & Sullivan notes that these new platforms enable the architectural flexibility (i.e., public cloud, private cloud, hybrid cloud) that customers have long demanded. Frost & Sullivan points out that the influx of new vendors and new types of cloud communications solutions into the hosted IP telephony and UCC market is creating more options for both service providers and end-user organizations. Hosted communications 2014 Frost & Sullivan 2 We Accelerate Growth

3 platforms also enable premises-based solutions vendors to capture newer opportunities in the hosted communications space and to more effectively serve customers looking to migrate their communications to the cloud or deploy hybrid architectures with premisesbased solutions in larger sites and hosted services in branch locations. However, not all multi-instance UCC solutions provide the same capabilities or the same overall benefits. Type of architecture, feature set, scalability and price help determine each vendor s competitive position in this market. Furthermore, PBX and UCC platform developers have differing go-to-market strategies for the cloud communications market. Some choose to leverage their existing dealer channels to sell vendor-branded hosted solutions; others sell through a variety of telco and reseller partners which private-label their hosted services; and yet a third group of platform vendors choose to become service providers and rely entirely on direct sales. Customer perceptions of vendor brands and trust in different technologies also vary. Vendor track record has impacted vendor market share of the premises-based installed base, which in turn determines the size of each vendor s target market for migration to the cloud or tightly integrated hybrid environments. A product line strategy leadership position in the hosted IP telephony and UCC services platforms and services market demonstrates the leading vendor s ability to develop solutions that address different service provider and customer needs. The vendor with a more diverse product portfolio typically enables service providers to more successfully differentiate and more effectively target specific customer segments. Such a vendor is also able to attract a greater variety of service provider partners and enjoy faster market penetration. Overall, a product line strategy leader is best positioned for success in the dynamic and rapidly evolving hosted IP telephony and UCC platforms and services market. Key Benchmarking Criteria for Product Line Strategy Leadership Award For the Product Line Strategy Leadership Award, the following criteria were used to benchmark Mitel s performance against key competitors: Breadth of Product Line Size of Addressable Customer Base Impact on Customer Value Impact on Market Share Breadth of Applications/Markets Served 2014 Frost & Sullivan 3 We Accelerate Growth

4 Decision Support Matrix and Measurement Criteria To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is an analytical tool that compares companies performance relative to each other with an integration of quantitative and qualitative metrics. The DSM features criteria unique to each Award category and ranks importance by assigning weights to each criterion. The relative weighting reflects current market conditions and illustrates the associated importance of each criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for each market and Award category. The DSM allows our research and consulting teams to objectively analyze each company's performance on each criterion relative to its top competitors and assign performance ratings on that basis. The DSM follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are shown in Chart 1. Chart 1: Performance-Based Ratings for Decision Support Matrix This exercise encompasses all criteria, leading to a weighted average ranking of each company. Researchers can then easily identify the company with the highest ranking. As a final step, the research team confirms the veracity of the model by ensuring that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies. Chart 2: Frost & Sullivan s 10-Step Process for Identifying Award Recipients 2014 Frost & Sullivan 4 We Accelerate Growth

5 Breadth of Product Line Size of Addressable Customer Base Impact on Customer Value Impact on Market Share Breadth of Applications/Markets Served Weighted Rating BEST PRACTICES RESEARCH Best Practice Award Analysis for Mitel The Decision Support Matrix, shown in Chart 3, illustrates the relative importance of each criterion for the Product Line Strategy Leadership Award and the ratings for each company under evaluation. To remain unbiased while also protecting the interests of the other organizations reviewed, we have chosen to refer to the other key players as Competitor 1 and Competitor 2. Chart 3: Decision Support Matrix for Product Line Strategy Leadership Award Measurement of 1 10 (1 = lowest; 10 = highest) Award Criteria Relative Weight (%) 25% 20% 20% 15% 20% 100% Mitel Competitor Competitor Criterion 1: Breadth of Product Line As customer demand shifts from premises-based to cloud communications, market participants UCC application developers, carrier platform vendors, service providers and technology resellers are looking to position themselves more competitively in the rapidly growing hosted IP telephony and UCC market. Most have chosen more narrowly defined roles e.g., technology developers, service providers but some have developed product and services lines that span multiple industry segments. Mitel is well known for its compelling portfolio of premises-based enterprise communications technologies and solutions. The recent acquisition of former competitor Aastra boosted Mitel s market share as well as its overall capabilities including: its range of products and services, channel partners, geographic reach, installed base, sales and marketing resources, and more. While continuing to enhance its premises-based communications solutions, Mitel is also successfully carving a niche for itself in the cloud communications services space Frost & Sullivan 5 We Accelerate Growth

6 Frost & Sullivan appreciates the fact that Mitel was one of the first premises-based solution vendors to leverage its proven communications and collaboration technologies to develop solutions for the emerging cloud communications market. Much before most other PBX vendors targeted this space, Mitel launched its Multi-Instance Communications Director (MICD) now known as Mitel MiVoice Business. This solution is targeted at service providers looking to brand their own hosted IP communications services and provide all billing and management support. MiVoice Business is a high-density platform that competes directly with the more traditional carrier-grade hosted IP telephony platforms and appears best suited for small and medium-sized businesses (SMBs) looking for standard PBX functionality along with voic , twinning and basic conferencing. Its architecture makes MiVoice Business more flexible than most other hosted platforms, however, enabling service providers to deliver more distinct sets of capabilities to each customer, resembling singletenant hosted PBX implementations. Mitel has also been one of the first communications vendors to offer a virtualized solution Virtual Mitel Communications Director (vmcd), now known as MiVoice Business Virtual. It is available to service providers looking to target a slightly different customer base, mostly larger businesses with hybrid (hosted and premises-based) environments. Distributed organizations typically have different needs across their geographically dispersed sites. While larger locations favor premises-based implementations, smaller remote sites without local support staff are more suited for hosted services. MiVoice Business Virtual allows service providers to deliver highly customized communications solutions to businesses that require integration with premises-based platforms and databases. For service providers, the MiVoice Business Virtual architecture is comparable to MiVoice Business in terms of implementation and management costs. It requires a VMware framework for deployment, but delivers superior features and functionalities such as virtualized contact center, web conferencing and UC capabilities. Mitel s Virtualized Datacenter Accreditation program is targeted at datacenters, and Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) providers. The program helps certify partners infrastructure capabilities required to support Mitel voice and UCC applications. Mitel acknowledges that there are many partners that have the capabilities to interface directly with end users and design and market hosted communications to them, but are not well equipped to manage a datacenter or a sophisticated communications platform with the required billing and management infrastructure and processes. By enabling IaaS and PaaS providers to deliver the appropriate infrastructure to value-added resellers (VARs) and managed services providers (MSPs), Mitel effectively creates a new business model that leverages the specific skills and capabilities of different providers to extend the reach of advanced communications to a larger number of market participants. Compared to most other premises-based communications solutions vendors, Frost & Sullivan benchmarking shows that Mitel has a particular advantage as the market moves to 2014 Frost & Sullivan 6 We Accelerate Growth

7 hosted communications. Mitel owns a carrier organization operating as Mitel Cloud Services. Through its Mitel Cloud Services arm, Mitel was one of the first PBX vendors to launch a hosted communications service in 2011, which it marketed as Mitel AnyWare, now known as MiCloud Business. With its retail hosted communications service, Mitel recognizes that, while demand for hosted communications is growing, many service providers are not equipped to host advanced communications infrastructures. The Mitel MiCloud Business service originally targeted the SMB customer segment up to 500 users. In addition, Mitel offers its Powered by Mitel go-to-market strategies for service providers to assist them with rapidly deploying a Mitel-based cloud solution. Over the years, Mitel has enhanced and rebranded its solutions. Today, Mitel offers the MiCloud suite of products, which includes MiVoice, MiCollab and MiContact Center. Tied together for a seamless experience by the Mitel Freedom Architecture, these solutions offer a comprehensive set of PBX, UCC and contact center capabilities. The MiCloud solutions are available both as retail and wholesale offerings. The latter are branded as MiCloud-Powered by Mitel and allow several different delivery models including white-label, resale and partner-deployed solutions. MiCloud Business is a hosted IP PBX offering targeted at SMBs of up to 500 users. It provides feature-rich and reliable hosted PBX capabilities, as well as auto attendant, voice messaging, mobility, contact center and other UCC capabilities. MiCloud Enterprise, with MiVoice and MiCollab at the foundation, enables providers to target large enterprises of up to 50,000 users. Mitel MiCloud Infrastructure as a Service (IaaS) offers a pay-as-you-grow, VMware-based virtual data center infrastructure. It is optimized to deliver the highest possible performance for Mitel s UCC applications suite. It is available in public, private or hybrid cloud deployment models. It provides advanced diagnostic and management tools that enable customers to effectively maintain their UCC architecture throughout its lifecycle. Mitel s cloud communications portfolio received a boost with the Aastra acquisition. Aastra had seen growing success with its partner-hosted Clearspan platform. Based on BroadSoft technology and enhanced with Aastra-developed back-office capabilities, Clearspan is a turn-key multi-tenant IP telephony and UCC solution. It features a wrap of additional Mitel (former Aastra) infrastructure elements such as operations support system (OSS), session border controller (SBC), media gateways, and endpoints that creates an appealing option for service providers looking to reduce costs and risks associated with hosted communications infrastructure deployments. Clearspan was deployed on-premises by large organizations in North America as well as a number of dedicated hosted environments for many years, and is now being increasingly deployed by service providers for the delivery of shared hosted communications services. Clearpsan is based on standards-based session initiation protocol (SIP) technologies which enables flexible interoperability with other SIPbased platforms and devices Frost & Sullivan 7 We Accelerate Growth

8 As a multi-tenant platform developed specifically for service provider networks, Clearspan offers efficient and cost-effective scalability which enables providers to target the entire spectrum of business sizes. Mitel complements the Clearspan platform by offering a broad range of (former Aastra) phone terminals. In addition to multiple desktop phone models, customers using a service based on the Clearspan platform can use video on the BluStar 8000i desktop multimedia endpoint or access their communications capabilities (including call control, soft phone, directory/contacts, call logs, and federated services such as GoogleTalk integration) on their PCs, laptops, and mobile devices using the Clearspan Communicator UC client application. For indoor or outdoor campus mobility, customers also have a choice of SIP DECT phones. Mitel packages the Clearspan platform with its (former Aastra) OpEasy operations, administration, maintenance and provisioning (OAM&P) tool, which enables a single sign-on as well as flexible system and endpoints provisioning. It simplifies ongoing platform management for service providers and delivers extensive reporting. Furthermore, OpEasy is used by end customers to quickly and easily provision new users and to perform their own moves, adds and changes (MACs). Mitel additionally delivers professional services to further facilitate smooth implementation. Overall, Frost & Sullivan feels that Mitel clearly delivers the broadest set of platforms, endpoints and services capabilities for the hosted communications market today. This makes Mitel an attractive partner for service providers of varying backgrounds (VAR, telco, etc.) and a compelling one-stop shop for end-user organizations of various sizes and requirements for premises-based, hosted or hybrid communications solutions. Criterion 2: Size of Addressable Customer Base Frost & Sullivan estimates that there were approximately million business telephony users in North America in 2013, which represent the addressable market for hosted communications. With about 5 million installed hosted IP telephony users and the rest of the customer base using PBX, KTS or premises-based IP telephony/ucc solutions, there is a significant opportunity for service providers to capture unmet demand for flexible and costeffective cloud communications solutions. By 2020, Frost & Sullivan expects the penetration of hosted IP telephony services to reach more than 18 percent of the total addressable market. Multi-tenant hosted solutions, which have dominated the market over the years, have been most successful among SMBs, in particular among businesses of less than 50 users. Multitenant architectures enable providers to deliver cost-effective hosted communications services, which greatly appeal to cost-conscious SMBs. Also, SMBs typically lack the inhouse IT resources and skills required to properly deploy and manage on-premises communications infrastructure. Thus there is still a lot of untapped demand in this customer 2014 Frost & Sullivan 8 We Accelerate Growth

9 segment and Mitel is well positioned to capitalize on this opportunity. Mitel s MiVoice platform and services based on this platform provide the same cost-efficiencies delivered by multi-tenant platforms coupled with the additional flexibility of multi-instance solutions and are therefore ideal for smaller businesses looking for simple, cost-effective and reliable communications services. Mitel is also well positioned to also gain share among larger businesses. Multi-instance cloud UCC platforms, such as Mitel s MiCloud technologies, appeal to larger organizations due to the greater security associated with dedicated software instances and the platforms greater ability to support customized functionality, billing and integrations. Additionally, Mitel s architecture supports tightly integrated hybrid (cloud and premises-based) communications environments, which are likely to be quite common in large distributed organizations. Many of Mitel s service provider and cloud competitors are challenged to scale down their solutions to address cost constraints at the low customer end or to meet feature and customization requirements at the high end. Mitel is uniquely positioned to target the entire North American addressable market, both through its retail services and through its various partner models. Criterion 3: Impact on Customer Value Mitel s solutions are based on its communications and collaboration technologies with a strong performance track record and high customer satisfaction. Both Mitel s premisesbased and hosted solutions comprise of a broad set of advanced and highly competitive features and capabilities including telephony, voice and unified messaging, instant messaging and presence, mobility, conferencing and collaboration, and contact center, among others. Finally, its multi-instance approach addresses customer security and customization concerns. Its cloud communications solutions can, therefore, meet the requirements of even the most demanding customers. Mitel solutions offer superior value to businesses with significant investments in Mitel onpremises technologies looking to re-allocate existing user licenses and/or retain existing phone terminals when migrating to hosted communications. Mitel solutions also appeal to businesses looking to deploy hybrid infrastructure either as a temporary solution or as a permanent setup. Finally, Mitel s MiCloud platforms and services provide investment protection to existing Mitel customers as they enable such businesses to more economically and flexibly switch back and forth between premises-based and hosted solutions. Factors such as customer familiarity with the technology, existing relationships with the vendor or its reseller partners, as well as the ability to port licenses or retain existing terminals make Mitel s cloud solutions a great fit for its large installed base of premisesbased solutions customers. Service providers deploying its platforms will have a certain advantage compared to those using multi-tenant solutions as they can count on the vendor 2014 Frost & Sullivan 9 We Accelerate Growth

10 brand recognition and customer loyalty to grow their customer base more rapidly. The different delivery models supported by Mitel also enable a greater variety of partners to become Powered by Mitel service providers. Its wholesale and white-label models as well as partnerships with PaaS and IaaS providers enable telcos and other resellers with limited data center capabilities to tap into the considerable hosted communications growth opportunities. VARs and smaller local interconnects can use Mitel s solutions to generate additional revenues and differentiate, leveraging their existing customer relationships, knowledge of customer premises equipment (CPE) infrastructure and close familiarity with Mitel s portfolio. The Clearspan platform added to Mitel s portfolio through the Aastra acquisition offers unique advantages as well. It addresses one of the biggest challenges for service providers: the deployment of an OSS that eases the service provisioning and management burden. Mitel s turn-key solution based on the Clearspan platform accelerates time to market for service provider partners and reduces the cost of platform deployment and ongoing management. Furthermore, similar to the other Mitel cloud communications platforms, Clearspan provides a compelling and competitive feature set developed over more than a decade. It natively supports SIP trunking, and is based on open standards to enable flexible integrations with third-party platforms and solutions (such as Microsoft Outlook and Lync and GoogleTalk). Compared to most other cloud communications platform vendors and service providers, Mitel s solutions are broadly appealing both among service providers and end-user organizations. Also important, Mitel provides a one-stop shop for customers that are either undecided between hosted and premises-based solutions or looking to deploy hybrid architectures. Unlike most of its competitors, Mitel also sells hosted communications directly, which is appealing to customers that trust Mitel both for its technology and customer support and wish to eliminate the middleman. Criterion 4: Impact on Market Share Like many of its competitors Mitel is relatively new to the hosted communications market, but its installed base is growing rapidly. In its Q2, 2014 financial statements Mitel reported 754,045 total cloud seats and 195,673 recurring cloud seats. A large number of the recurring seats are deployed in North America, where Mitel Cloud Services is one the most successful hosted IP telephony and UCC services providers. As hosted communications adoption accelerates globally and in the North American region, Mitel is well positioned to capture demand both through retail and partner offerings and gradually grow its market share Frost & Sullivan 10 We Accelerate Growth

11 Criterion 5: Breadth of Applications/Markets Served Mitel s hosted communications services and solutions portfolio properly addresses the needs of both service providers and end-user organizations. Service providers of varying size, technology background, skill set, data center resources and other capabilities can use Mitel s technology or services to expand their portfolio and market reach. They can choose Mitel s platforms or services as their only solution for the hosted communication market or add it to an existing and/or evolving portfolio in order to target a specific customer audience. Furthermore, through different delivery models Mitel enables its partners to leverage their core strengths data center, application management and delivery, customer relationships, etc. while partnering for non-core capabilities to more effectively position themselves in the market. Mitel s hosted communications services can also serve the needs of businesses of varying size, industry, and technology requirements. Mitel solutions are modular and therefore allow businesses to deploy only the capabilities they need at present e.g., voice only or contact center only or adopt a comprehensive UCC set all at once. Its diverse portfolio of cloud applications can provide significant benefits to various vertical industries such as professional services organizations, retail, government or education, as well as different lines of business including marketing, sales, executives, assistants, etc. Unlike its other competitors, Mitel can support private (dedicated), public and hybrid external cloud environments as well as private internal clouds. A single software stream for all the different delivery models provides flexibility and investment protection for customers. By offering a one-stop shop for multiple different technology and deployment options through its best path to the cloud strategy, Mitel reduces communications solutions acquisition costs and risks. Conclusion With its broad portfolio of hosted communications platforms, services and devices, compelling set of features and capabilities, and multiple deployment options, Mitel is well positioned to address the needs of a diverse service provider and customer base, thus accelerating growth and gaining market share in the evolving hosted communications market. Frost & Sullivan is proud to present Mitel with the 2014 Product Line Strategy Leadership Award for its superior accomplishments in the market Frost & Sullivan 11 We Accelerate Growth

12 Critical Importance of TEAM Research Frost & Sullivan s TEAM Research methodology represents the analytical rigor of our research process. It offers a 360-degree view of industry challenges, trends, and issues by integrating all seven of Frost & Sullivan's research methodologies. Our experience has shown over the years that companies too often make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Frost & Sullivan contends that successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our core technical, economic, applied (financial and best practices) and market analyses. The integration of these research disciplines into the TEAM Research methodology provides an evaluation platform for benchmarking industry players and for creating high-potential growth strategies for our clients. Benchmarking Performance with TEAM Research About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit Frost & Sullivan 12 We Accelerate Growth