Mitel^Ò SX-2000^Ò Light^Ò Competitive Brief Revision

Date: Novemeber 13th, 1998

NEC America, Inc.

Corporate Networks Group

1555 W. Walnut Hill Lane

Irving, Texas 75038

MITEL INTRODUCTION

Mitel is among the North American leaders in PBX system and line sales to the under 100 line PBX market segment. Typically, about one-half to three-quarters of Mitel’s annual PBX line shipments go to this segment. However, in 1997, Mitel shipped about 46% of its total PBX lines to this segment.

In 1998, Mitel had a 16.5% year over year gain over its 1997 line shipments. Mitel is the fifth leading PBX line shipment vendor.

Mitel designs, manufactures and services PBX products that are based on an open distributed architecture, which allows for the addition of applications and peripherals. Mitel currently is marketing the SX Series of Digital PBX’s.

Capacities for Mitel’s PBXs range from 80 to 5,376 ports, and from 80 to 1,600 stations. By clustering processors, Mitel sales has been able to configure this system to 10,000 ports. They have made it look seamless to the customer. Mitel will claim that the system does not require a “forklift” to upgrade.

Mitel’s Market strategy is to focus on the small to medium sized businesses. Mitel does not have a very large budget for R&D, nor do they have a seamless migration strategy. However, Mitel found enough money to purchase Centigram’s^Ò CPE business, which now enables them to compete in larger markets. They also bought an installed base along with acquiring additional product distribution business partners.

Mitel acquired the CPE equipment business unit of Centigram in Q1, 1998. This acquisition also enables Mitel access to Centigram’s OEM partners.

In a joint agreement between Mitel and Centigram, Mitel will also be adding Centigram’s voice messaging solutions to its portfolio. This arrangement could enable Mitel to address the increasing customer demand for voice mail and unified messaging. This could enable the delivery of Mitel messaging applications to a broader marketplace.

Mitel has also introduced a product called the NeVaDa^Ò which integrates both voice and data networks.

With products such as NeVaDa, Mitel is offering corporate communications networks an alternative to the traditionally distinct voice and data network infrastructures. These solutions enable companies to build a single network infrastructure for voice and data over a single set of wires. NeVaDa is targeted at larger customers and utilizes the SX-2000 as a call control server in the configuration.

The end users’ confidence in the reliability of the single network infrastructure is ultimately what will make or break this strategy.

NEC Sales Advantages

· Even though all of the SX Digital systems have similar architectures, components, and circuit boards, system differences make many direct upgrades impossible.

· Mitel has very little to spend on R&D while NEC spends about 10% of revenues into communications R&D.

· Mitel^Ò Direct, Mitel^Ò Elite and Mitel Authorized dealers all offer unique product offerings and application solutions. The Elite dealers do not possess the people power to install and maintain properly the more sophisticated applications.

· Mitel is a very small company and may be ripe for a hostile takeover.

Product Strategy

Mitel’s SX-2000 LIGHT

The majority of Mitel SX-2000 lines and systems are sold in the 101 to 400 line segment and accounted for about 37% of the number of total PBX lines sold by Mitel in 1997. The SX-2000 enjoyed some modest penetration into the larger 401 to 1,000 line PBX segment (about 10% of its total PBX line shipments) and 1,000+ line PBX segment (about 7% of its total PBX line shipments) in 1997.

Mitel’s offers two Mitel PBX platforms: the SX 200^Ò LIGHT and the SX-2000 LIGHT.

The term LIGHT in the Mitel SX-2000 LIGHT refers to the fiber optic cabling between the control node and the peripheral cabinets. There is no migration of hardware or software between these platforms exclusive of the telephones. The SX-2000 LIGHT is an integrated, narrowband, voice and data platform. Mitel offers medium density analog/digital line cards along with proprietary terminals.

Mitel has designed the 2000 LIGHT to be more component-oriented and less like the older PBX console systems. The SX-2000 LIGHT can have as many as eleven, 96-port peripheral cabinets.

The LIGHT products are based on distributed architecture and use fiber optic cable for cabinet interconnections. Mitel targets the SX-2000 LIGHT systems for small and mid-sized businesses requiring high-reliability networking solutions.

The networking of multiple locations of remote customer sites with SX-2000 LIGHT systems via fiber optic connections, particularly in university and campus environments, is viewed as an important market opportunity for Mitel.

The high-end SX-2000 models use a combination space/time switching architecture that allows greater system expansion than the other models. System expansion is accomplished in increments of six or eight lines, or six digital or four analog trunks. Users can control system moves, adds, and changes.

The SX-2000 LIGHT can support 2,112 single site extensions and unlimited expansion in network configuration. The system is composed of a control node linked to 11 peripheral nodes. It integrates into a LAN and delivery of ISDN services are made possible through public and private networks. This system is targeted towards organizations with sophisticated communication needs and network environments requiring multi-site or campus capabilities.

System Description

The SX-2000 LIGHT Master CPU manages overall system activities via distributed processors. Six different node types connected through fiber optics comprise the complete system. The Control Node as well as an optional Redundant Node, controls call processing and database functions. The Digital Service Unit (DSU) supports digital trunk interfaces for public or private networking. Two DSU's can be equipped in a non-redundant system, and five in a redundant system. Four T1 cards are supported per node with 2 T1s on each card. The ISDN Node provides access to ISDN services.

Peripheral Nodes, which can be located up to 3300 feet from the Control Node, supports up to 192 ports from 12 available card slots (Mitel can stretch this distance to 8.2 miles if the customer upgrades to enhanced Mitel Fiber Interface Module, FIM). Up to 4 Peripheral Nodes can be equipped in a non-redundant system, and 11 Nodes in a redundant system. Mitel will “force” redundancy in a non-redundant system by increasing the number of extensions and trunks on the core PBX, thus telling the customer they have built in redundancy. This could lead to a lower priced system configuration for the customer without “true” redundancy.

Circuit boards are installed on peripheral shelves and support SX Digital PBX station and trunk connections, as well as control and auxiliary circuits. The control and supervisory functions for each system are built into specific circuit boards that are unique to each product.

SX Digital PBX card slots are universal, supporting both station and trunk cards. Station cards are available in eight and 16 port versions, SUPERSET^Ò line cards provide 12 connections. Trunk cards support four or eight lines, while data line cards provide up to 16 low-speed data ports.

Current software release for the SX-2000 LIGHT is LIGHTWARE 29^Ò. The SX-2000 LIGHT supports up to 1,500 lines and is composed of eleven 192-port peripheral cabinets. Its distributed design is based on a modular architecture with system cabinets all interconnected by fiber optic cable. The SX-2000 LIGHT has a base configuration of 128 ports and can be expanded via added peripheral nodes to 768 ports supporting up to 500 lines.

Regarding the LIGHTWARE 29 software, this software can be manipulated and enhanced by upgrading or downgrading what is called MFRD/MTCL “levels” (can not explain as of this writing what the acronyms mean). By doing this, Mitel can manipulate the LIGHTWARE 29 software to conform to the customer RFP.

The SX-2000 LIGHT is available in two configurations, non-redundant and control redundant. The system architecture, a two-level hierarchy consisting of the main control and peripheral switch, varies depending on the system configuration. In non-redundant systems, the main control consists of the following:

· Main Controller III card – includes a 68020^Ò 33 MHz, 32-bit microprocessor, 16MB of DRAM and a SCSI

· Control Resource Card – installed in either a redundant or non-redundant control cabinet provides miscellaneous circuitry for control functions

· programming, database backup, SMDR, and loggings. Operating system software upgrades and an additional level of backup is supplied by a removable hard disk. The system HDD and cartridge tape unit interface to the system through a SCSI on the Main Controller III card.

Control redundant systems requires the following:

· 2 Main Controller III cards

· 2 circuit switch matrix cards which increase the circuit switch matrix size from the 24 x 24 circuit switch links of the base system to a 48 x 48, 2M bps-per-link non-blocking matrix

· 2 HDDs

NEC Selling Advantages

· Redundancy - Mitel claims that the SX-2000 LIGHT has a redundancy option. Yes, but "what" is redundant is the question. Actually, the main System Controller is NOT redundant, only the Peripheral Controller. Mitel does not have a true redundant system in their portfolio.

· Upgrading - When upgrading from one model to the next, the user must replace all of the system control circuits. Station and trunk cards are common to all SX Digital systems, however, and can be retained when upgrading.

· Pricing - This new system is priced at $950 to $1,350 per user!

Cabinet Types

The SX-2000 is available in 6 cabinet types: non-redundant control, redundant, peripheral, digital service unit, ISDN, and applications gateway cabinets.

Control cabinets hold the cards that govern the overall operation of the system. Peripheral cabinets hold the cards used to interface the system to various telephony devices. DSU cabinets hold special-purpose cards such as digital trunks (DPNSS and T1/D4) and those used to generate or receive and decode tones.

The main control communicates with the peripheral switch controller and digital service units via fiber optic serial communications message links and circuit switched links.

A peripheral switch controller card is installed in each peripheral cabinet. This card controls up to 12 peripheral interface cards. The SX-2000’s connects with the outside world supporting the DTMF receiver, E&M Trunk, DID/Loop Tie Trunk, and telephone set connections. The Peripheral Switch Controller contains several functional blocks, a 68000^Ò microprocessor, 512KB or DRAM and a power-up PROM.

Fiber Interface Modules^Ò (FIMS) FIMs are used to connect SX-2000 LIGHT control nodes with peripheral or DSU nodes, Network Gateway, Applications Gateway and SX-200 LIGHT control nodes with peripheral , SPINE, Network Gateway nodes and Applications Gateway. System cabinets are interconnected using fiber optic cable. The FIMs encode electrical signals into light signals for transmission over the cable and decode light signals into electrical signals at the receiving end. A common FIM is used in all nodes for both transmit and receive functions. Fiber optic cable is utilized because of its performance advantages. Fiber provides higher bandwidth capacity than any other medium available.

The maximum fiber optic cable length allowable between system cabinets in the LIGHT systems is 8.2 miles due to optical loss beyond that distance. Note that this is enhanced Mitel FIM. Basic FIM will only go 3,300 feet.

NEC Selling Advantage

Mitel requires different cabinets for specific functions. This will drive the cost of ownership UP!

Migration Story

Mitel claims that their products provide a migration path unmatched by any other manufacturer. Truth is, historically Mitel has a very poor migration story. The older SX-50^Ò, and SX-100^Ò/200 Analog systems have no migration capabilities to the current product line. The SX-200 Digital system can upgrade to the SX-200 LIGHT but not to the SX-2000 LIGHT.

To upgrade an SX-200 LIGHT to an SX-2000 LIGHT all common control equipment must be replaced. Making upgrades even more difficult is the restriction that specific terminals require specific line cards and software. Additionally, line cards are specific to the type of PE module (Peripheral Node or Spine Node), so upgrading from one PE node to the other requires changing line cards.

NEC Selling Advantage

The SX-2000 LIGHT is Mitel's largest PBX. Multiple systems will need to be networked to increase the overall footprint. Growth within the platform can be accomplished by adding additional Peripheral or Application Nodes.

Mitel Features

Mitel claims that their PBX is user friendly and feature rich. This may be true in some instances, but with this comes a lack of functionality and continuity with applications. Mitel relies on third parties for many of the applications they do not have the capability of supplying within the PBX. ACD reports are limited to "basic reporting". Any advanced ACD functionality must be provided by other ACD products. This point stands true for Mobility and Voice Mail functions well.

Mitel claims they provide advanced application. Even Mitels advanced ACD package (ACD II or ACD-2000) does not support remote agents. Additionally, agent capacity is limited to 100 to 350 agents. All ACD call processing and reporting is done via in-board processing. What this means is increased stress on call capacity (BHCC). All application development is performed off-board from call processing to minimize down time and time-to-market for new features.

Mitel ISDN

Mitel’s ISDN Node is an optional network interface module for the SX-2000 LIGHT. The ISDN Node provides a gateway to the ISDN PRI services of all major Long Distance Carriers and supports CO switches for Nortel^Ò and Lucent^Ò (this ISDN gateway product is a very expensive option).

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Each ISDN node configuration supports two 23B + D PRI interfaces with each interface supporting 23 x 64K bps channels for voice and data (B Channels) and one 64K bps signaling channel (D-channel). Features supported through the ISDN Node link include:

· Enhanced Multmedia capabilities-voice, video quality and transmission of high bandwidth data

· Expanded Calling Line ID (CLID) services for calling and called line ID (ANI/DNIS)

· 64K Clear Channel support.

NEC Selling Advantage, Mitel ISDN BRI Support

SX-2000 BRI capability is not available in North America but is in the process of beta testing and perhaps sending this product to choice customers.

Mitel SUPERSWITCH Digital Network^Ò (MSDN)

The Mitel SUPERSWITCH Digital Network is a private networking application for the SX-2000 product line. Public network ISDN services can be introduced to an MSDN through the Mitel ISDN node. The availability of public network ISDN services enhances MSDN functionality even further by passing key ISDN services across the network.

MSDN also supports public and OCC network services, including WATS lines; Direct Distance Dialing and International Direct Distance Dialing; T1, satellite, fiber-optic, Telex, and TWX services.

The MSDN network can be managed from a single point with a proprietary Optimal Performance System Manager, which comprises an Intel^Ò 80486^Ò based PC, operating under UNIX^Ò. The OPS Manager provides a centralized telephone directory that stores up to 20,000 records and enables interactive remote log on and updates. The OPS Manager allows scheduled or automatic updates of centralized and remote directories and provides error reports and user location reports.

NEC Selling Advantage

The Mitel MDSN networking uses a proprietary protocol and operates in a UNIX environment as opposed to an open, Windows^Ò NT^Ò type environment.

Mitel OAI Interface

Dubbed the Mitel Host Command Interface, Mitel’s host computer interface falls short of NEC’s OAI offering.

NEC OAI Selling Advantage

· The OAI interface allows the features and options of an already existing NEAX to be greatly enhanced without the need for expensive customized reconfigurations. NEC offers customers the flexibility to purchase standard OAI versions with NEC developed features or to develop tailored OAI software applications. Different levels of support can be purchased from NEC for business needs. While NEC offers these benefits at a fraction of the cost of a conventional PBX upgrade, Mitel’s HCI link would require a reconfiguration of the systems software and hardware plus additional hardware/software purchases.

· While NEC develops its own OAI applications, Mitel uses its HCI link to connect other vendors’ applications to the SX-2000 LIGHT system. This means that service, performance and support issues are not directly supported by Mitel which requires another step by a customer to overcome any system “bugs”.

· NEC offers customers applications in three main areas: NEAX^Ò 2400^Ò real-time database extensions, interactive telephone terminals, and application processor-directed call processing. Mitel’s offerings are limited to database interaction. For real-time database applications, the NEC OAI offers solutions such as: free location numbering, expanded authorization codes, caller and called name display, and restriction and feature time management. Mitel does not provide these applications.

SX-2000 for Windows NT

At the end of Q1, 1998, Mitel announced the SX-2000 for Windows NT. Mitel claims this to be the first single box solution to provide full featured, integrated telecommunications functionality on a MS NT Server. This box was designed for 40 to 120 users. The SX-2000 for Window NT provides call control, digital trunking, voice mail, auto attendant, call costing and call center routing, management and intelligent messaging functionality, pre-packaged and delivered on one Intel server.

The new Mitel system claims to offer:

· Fiber Optic connected peripheral interface chassis to support multiple, standard telephony interfaces and a full range of digital handsets.

· Integrated GUI based management for moves, adds, changes, maintenance functions, and integration with directory services via LADP (lightweight directory access protocol). The LDAP enables an enterprise to include the voice domain in its directory services strategy, and this initiative facilitates the creation of a single, logical directory service to simplify user administration and ensure synchronization of multiple voice and data domains, including databases, electronic mail and telephone extensions.

· Mitel will deliver directory services integration to the voice domain via OPS Manager for Windows NT. Using LDAP as the middleman, OPS Manager brings order to the directory. OPS Manager’s tight coupling with corporate directory servers, including out of the box integration with Microsoft^Ò Exchange^Ò, allows organizations to extend user administration to the voice domain. Mitel OPS Manager for Windows NT, is a management solution for the Mitel SX-2000 Light system.

Mitel OPS Manager for Window NT features include:

· GUI based moves, adds, changes and deletes

· Centralized alarm notification and clearance

· Remote database back-ups and system upgrades

· Ethernet LAN connectivity

· LDAP based directory services integration

· PBX directory management

· Scalability for single system and network management applications

· Integration with open and industry standard NT servers

Mitel will sell OPS Manager for Windows NT via their Elite Dealer network. Mitel will price at $6,000 for a single site and $30,000 for a network version. This product should be out soon.

Mitel CTI

TALK TO CT-Connect^Ò

Mitel utilizes Talk to CT-Connect CTI software that runs on Mitel’s Applications Gateway between the SX-2000 LIGHT platform and CT-Connect, Dialogic’s^Ò open CTI server. Dialogic’s CT-Connect provides an extensive library of application software and development tools that support the Microsoft Dynamic Data Exchange interface. TALK TO CT-Connect adds functionality to the SX-2000 system. It communicates using the standard CSTA (Computer Supported Telecommunications Applications) protocol over a TCP/IP network interface. Also enabled are applications utilizing both TAPI and TSAPI.

TALK TO IBM^Ò CallPath^Ò

Mitel also offers TALK TO IBM CallPath. This software provides a seamless connection between CSTA and an SX-2000 LIGHT system. Through this connection, IBM CallPath developers can access the features and functions of the SX-2000, allowing them to integrate telephony processing capabilities with applications running on client workstations, such as simple desktop dialing products or more sophisticated PBX CTI programs.

TALK TO TAPI

TAPI Provides tools for development of call control for desktop PC applications connected to PBXs. Mitel’s software drivers for TAPI work with the digital network interface (DNI) on Mitel PBXs where application developers can create or port Window’s telephony desktop call control software to Mitel systems via DNI lines.

The product includes a DNIC card which fits into an AT-compatible expansion slot, software – consisting of a device driver and telephony service provider interface and a handset which plugs into the PC card. The toolkit gives the ability to incorporate WAVE functionality.

MiTAI^Ò

This is Mitel’s telephony application interface for the Windows NT platform which enables the integration of voice and data by adding telephony features such as automatic dialing, call transfer call conferencing, and ANI to business applications.

Computer Telephony Integration environment with application programming interfaces including TSAPI, TAPI, Call path, CT Connect and MiTAI.

Voice Messaging

Mitel has been a Centigram voice mail partner for several years. Mitel distributes an entry level Centigram voice processing system under the brand name Mitel Mail. This system is available throughout North America via Mitel Elite Dealers, Dealer Network, and Mitel Direct Sales.

Mitel Mail is designed for small to mid-sized organizations and multisite enterprises requiring a seamless voice networking solution. The system offers 24 ports and 55 hours of storage.

`ACD/Call Centers

Mitel uses ACD 2000^Ò for departmental call centers using the SX-2000 system. This system utilizes skills based routing for up to 256 customized paths per PBX and can support up to 350 agents at a single site. The SUPERSET400 telephone was designed to work with PBX based ACD and supports agent mobility by allowing logon to any ACD set in the call center.

Networked ACD is an option that can extend ACD 2000 functionality across private networks of two or more SX-2000 systems allowing incoming calls to be simultaneously queued against local and remote agent groups.

Mitel markets Rockwell’s^Ò SX-2000 compatible Spectrum^Ò systems for high end call centers ( up to 1,200 agents). In a symbiotic relationship, Rockwell also resells Mitel systems to their low-end customers.

Mitel also offers TASKE^Ò Call Center Monitoring and Analysis. This NT based software application runs on top of SX-2000 Systems. The software has three different components: Call Center Monitoring and Analysis, Workforce Management, and Voice ToolBox.

NEC Selling Advantage

With their weak call center product, Mitel must rely on Rockwell for significant call center prospects.

Terminals

The SX Digital PBX series uses digital proprietary station equipment, which include the SUPERSETs 401+, 410, 420, and 430. Proprietary attendant consoles for the SX Digital series include the SUPERCONSOLE^Ò 1000, SUPERCONSOLE^Ò 7000 and the SUPERCONSOLE^Ò 700. The SX Digital systems also support industry-standard rotary dial and DTMF telephones.

Superset 400 Series

The Superset 400 series of digital business telephones connect to a Mitel PBX system through a digital interface providing voice and data transmission through a single port in a proprietary 2B+D format. Some of the features include transfer, conference, labeled feature keys, message key indicator, and support for a broad range of voice and data features. SUPERSET 400 sets can be further enhanced with add-on interfaces. Data communications may be added to the 400 through a plug-in MILINK Data module. Central office based services can be accessed via Mitel’s RADICAL interface:

· 401+ - a single line telephone geared toward business users

· 410 – a multiline phone based on the 400+ but with features

· 420 – a multiline telephone featuring 12 personal keys with status indicators, 3 soft function keys, and 10 fixed function keys

· 430 – a multiline executive telephone, based on the 420 set with 6 soft function keys and a 4 line by 40 character LCD display

NEC Selling Advantage Versus Mitel’s Terminals

· Mitel does NOT have Dial Intercom available.

· Mitel does NOT support CNAM (Calling Name ID), only CLID (Calling Line ID).

· Mitel will only deliver the prime listed number, not the callers personal number for CLID.

Attendant Consoles

Mitel offers three attendant consoles, the 1000, 7000, and 700:

1. 1000 – The 1000 is a small, low-priced console designed for use with the SX-2000. The console has 10 softkeys and a 4 line by 80 character LCD for telephone status messages. The 1000 is used for hotel front desks and shared tenant service applications. The 1000 console supports auto-wake-up, call blocking, call restriction, check-in/check-out, guest room window, room search, and room status.

2. 7000 – The 7000 keyboard includes 10 softkeys, 3 programmable firmkeys, volume and scrolling keys, cursor control, and a hold key. Communications from the PC to the host telephone sets is supported by a TALKTO^Ò line card. The display provides status information, applications information, command information, and softkey label information.

3. 700 – The 700 is Mitel’s flagship attendant solution. The 700 provides on-screen, detailed information about call and system status. General call processing features are available as well as some advanced features such as Message Waiting and Call By Name.

Wireless Communications

Mitel offers a third party cordless, as opposed to a wireless, communications solution. Mitel partners with SpectraLink^Ò Corp’s models PCS 150^Ò and PCS 2000^Ò to provide an extension of their desktop phones.