The old axiom states that no one ever got fired for buying IBM. But do you really want to buy from the biggest vendor in the market? Bigger doesn’t always mean better, and sometime being the biggest player means you stop innovating and serving your customers and focus more on protecting your image and your bottom line.
The same is true in the VoIP market, as demonstrated by ShoreTel.
ShoreTel has been working hard to present itself as the 500 pound gorilla of the VoIP and unified communications market, or perhaps the Donald Trump of VoIP. And like Trump, ShoreTel is using the illusion of greatness to bolster its brand rather than delivering with better innovation and customer service.
For a company of its size, ShoreTel seems to spend a lot on philanthropy, sponsorships, and very public spending to promote its brand. ShoreTel seems to be making a particularly public effort to promote its brand through sports teams. Let’s look at the recent record:
ShoreTel has been a very public sponsor of the San Francisco Giants for a number of years, and they recently leveraged that relationship into a telephone installation for AT&T Park. Not to be outdone, the Giants’ rival Los Angeles Dodgers followed suit by installing a ShoreTel unified communications telecom system at Dodger Stadium.
ShoreTel has been sponsoring motor racing for nearly a decade, and recently was able to turn that sponsorship into a public deal to support the Williams Formula 1 Racing Team with a new UC telephone installation.
ShoreTel is a company working hard to put on all the trappings of success, and perhaps look bigger and more successful than they really are. In their last annual report, ShoreTel indicated they are spending $120 million on sales and marketing to support sales of $313 million; that’s 38 percent of revenue spent on self-promotion. And ShoreTel has consistently lost money since its inception in 1996. The company even stated it has increased its marketing budget by 30 percent in fiscal 2013. However, for their first fiscal quarter which closed September 30, ShoreTel reported revenues in excess of $84 million but with a net loss of $399,000.And ShoreTel has other very public installations with other sports franchises such as the Golden State Warriors, the Boston Celtics, the Florida Marlins, and the Sale Sharks rugby club in Manchester. These are all great customer wins and have a lot of marketing value because of their affiliation to sports, but do they really say anything about the true performance of the company? These are the kinds of activities that are associated with wealthy companies trying to buy recognition and public approval.
So is ShoreTel really delivering the goods, or are they buying market share with hype? As Donald Trump himself says:
“The final key to the way I promote is bravado. I play to people’s fantasies. People may not always think big themselves, but they can still get very excited by those who do. That’s why a little hyperbole never hurts.”
But would you rather buy hyperbole or real customer service and innovation? When you are shopping for a UC or VoIP solution, you need to look beyond the surface trappings and the hype to see what’s behind the curtain. Is the company’s reputation based on solid technology and customer service, or just bravado?
So if no one ever got fired for buying from IBM, I wonder if the same can be said for ShoreTel.