RAD: The Telecommunications/UC space is changing. It is a lot different than when we both got in during the heyday of the 90s. How will these changes affect channel partners?
CEO: The evolution of Cloud offerings in the UC space is changing the fundamental structure of the type of partners that are required for a successful channel. The classic VAR's face the challenge of a major change in becoming solution focused, not product focused. This also entails a change in the type of technical talent required within the VAR's to execute on their new solution offerings. A market that for more than a decade had only 5 to 10 top providers, now as the shift to cloud continues, has 30 or more providers with UCaaS offerings. With this, VAR's that navigate the change will have to focus on providing solutions that incorporate integrations to other work flows, CRM's and related solutions. On the positive side, it does allow VAR's to truly become solution providers by having the ability to easily offer multiple Cloud solutions, finding the best fit for each prospect."
Tracey continues, "As a result of these changes, many of the providers turned to alternative channels like Master Agents and Value Added Distributors (like CDW and Jenne). This opened a larger market reach than the classic VAR channel, but has compounded the problem of finding resources to deploy and support these solutions as they grow in numbers and scope."
"As we sit today there is a lot of uncertainty in the channel and lots of scrambling for solutions. Channel partners that can adapt and overcome will have plenty of opportunity and the re-occurring revenue streams should provide many opportunities for growth beyond that of the traditional VAR."
"What is really needed to succeed is the technical talent and execution of a top VAR, with the exponential sales growth opportunity of a channel like the Master Agents built for carrier services."
RAD: What have you seen that is a positive indicator?
CEO: "We see growing demand from the providers for an answer to their execution and support issues. The demand for organizations that specialize in UCaaS/CCaaS and have the required skilled engineers to successfully design, deploy and support these solutions will see tremendous opportunity. We also see growing demand for technology in the business space that can improve companies' ability to compete in their markets. We see increase value put on UCaaS and CCaaS solutions as a key for organizations to succeed. It opens lots of opportunities for those organizations that are ready to take on the challenge of these changes."
RAD: How do you see the Contact-Center-as-a-Service space evolving?
CEO: "I see the CCaaS space evolving ahead of the UCaaS space. Contact Centers are often the heartbeat of an organization and its key factors - revenue and service. The more organizations realize that Contact Center productivity is a driver for their business, the more demand we see for the business applications/features to be built in to the Contact Center solution. The line between CRM and CCaaS is blurring as more companies demand integrated access to multiple communication channels and data sources. And today it's true not only for bigger business players but also for SMBs."
"There's a very limited number of competitive premise-based Contact Center offerings in the small-to-medium market. Cloud solutions are stepping forward bringing top-level Contact Center functionality to this market along with the reliability, scalability, continuous software advancement and next to zero hardware requirements. Smaller contact centers now can afford to operate on the same level as business monsters with less risk and more opportunities to grow."
Tracey adds, "We see some big SaaS CRM platforms presenting themselves as Contact Centers to play as CCaaS solutions but they are still lacking lots of expected Contact Center functions and they lack the ability to route interactions from multiple channels effectively. They face a step climb to catch up to the rapidly expanding feature/application sets of specific CCaaS solutions. At this point in time with some many of the CCaaS players offering integrations into these big SaaS platforms and having open API's for continued advanced integrations. It just makes more sense for CCaaS to be integrated into complete CRM than the opposite."
Tracey remarks, "When it comes to the channel, CCaaS business is a great source of MRR revenue. The average CCaaS deal will have a Top Line of 4x to 5x in comparison with UCaaS, and it is still a field with fewer players. MSPs, VARs and Agents who see the writing on the wall about declining top line revenue in their carrier business should really start considering CCaaS as an alternative."
]]>Then the announcement came that GTT had picked off Giglinx Global, a wholesale reseller of IP and network. Details were not disclosed, but revenue was assessed at $16M.
This morning, GTT announced that they were buying Global Capacity from Pivotal Group. [Pivotal Group acquired GC from Bankruptcy in 2011.] "Under the terms of the agreement, GTT will pay $100 million in cash and issue 1.85 million shares of GTT common stock, to the sellers at closing. GTT said it expects that Global Capacity's annualized revenue will be about $200 million at close," according to the press release.
GTT is a stew consisting of WBS Connect, PacketExchange, N-layer, Tinet, UNSi, MegaPath, One Source Networks, Hibernia, and these 3. It has a Tier 1 network according to Dyn. And it is looking more and more like GTT is the new Level3, as L3 goes quietly into the closet of CenturyLink.
Rick Calder, GTT president and CEO has repeatedly expressed that he expects GTT to achieve the "financial objectives of $1 billion in revenue and $250 million in Adjusted EBITDA."
No idea what the magic is with $1B in revenue for the sake of it. Intermedia Communications hit the Billion dollar mark in 2000 - and collapsed in 2001 selling to Verizon. PAETEC hit $1B in revenue before being scooped up by Windstream. No clear idea who would buy GTT if they hit $1B in revenue.
GTT's revenue last quarter were $182.4 million, which is $700 million annuallized. Add in GC at $200M and GTT will almost hit a billion in revenue (with a billion in matching debt by the way.)
Another company striving to reach a Billion first is RingCentral. (I think Vonage will hit it first, since they have Consolidated Revenues of $243 Million in the last quarter. Vonage Business revenues are expected to be $486M in 2017.) RC's quarterly report says Total revenue grew 29% year-over-year to $111.8 million. This makes RC revenue about $450M, a little behind VB.
RC's CEO Vlad Shmunis says, "As we look ahead, we are excited about the market opportunity for cloud communications as enterprise customers empower their global and distributed workforce to work anywhere, any time, and on any device. This market transition will fuel our growth to $1bn by 2020."
RC is riding high after Synergy Research marked them as a Leader in the 3 spaces of UCaaS: Retail, Wholesale and Cloud Comms.
"With a 19% market share by revenue, RingCentral is growing twice as fast as the overall UCaaS market, according to Synergy Research." So where does that put VB? It isn't even listed. RC is followed by 8x8, Mitel and ShoreTel in the report. That's why I just love analyst reports. P2P Baby! P2P!
I wish instead of spotlighting the revenue, they could spotlight customer care, trouble free deployment, retention, and ease of doing business. Instead it is a race for revenue, gobbling up companies, and a mess to deal with. Integration is a Myth in Telecom. It is smoke and mirrors with duct tape, foil and pink slips.
]]>I know we are facing TDM sunset but from the looks of advertising from the likes of Birch and Bullseye, POTS is still alive and well - and profitable! POTS is still the reliable choice when it comes to voice lines for alarms, elevators and faxes.
For many scenarios, an on-premise PBX makes more sense than a haphazardly deployed Hosted VoIP scenario. Many a small business replaces POTS with SIP trunks to get mileage out of their aged key system. Switching to a new cloud PBX is not a viable option for some small offices because they don't want to change behavior. Hosted VoIP does a poor job on key system emulation despite years of partners selling it and providers trying to deliver it. It is one big face palm.
If PBX were indeed dead, wouldn't one of the leading UC companies have 1 million seats by now? Instead they are struggling to get to 700K seats.
The problem with UC is that it is mass market and it would be better off verticalized.
It would be better for all if Broadsoft wasn't competing directly with its own customers by selling direct to users at $15 per seat. That smells of desperation.
Someone asked me what I meant by that. Broadsoft selling direct cuts out their 400+ clients - like Vonage, TPX & Nextiva. Now these providers have to face price compression from their vendor. It's like ISPs and CLEcs who buy wholesale from ILECs and cablecos only to see retail rates are cheaper than their wholesale rates. Isn't that a crock?
BSFT can't add any more clients because every carrier on the planet has already picked a softswitch - BSFT, Meta, Netsapiens, or home brew. The only way to maintain revenue is to sell direct. BSFT isn't exactly raising the ocean or expanding the pie. They are just taking a big bite from the pie that their clients have been baking for 10+ years. Sure, everyone says that cloud comms is starting to take off; that it is hitting high adoption, but is it the UC we have seen or a bunch of variety?
Office 365, Cisco Spark, Dialpad, One Talk, Fuze, Shoretel, 8x8, RingCentral, Grasshopper, Mitel, Avaya, Jive, Intelepeer <- that is a lot of variety under the UC umbrella. With 2000+ providers of some form of UC in the US, even with an accelerated pace of adoption by users, will there be a clear winner soon? Probably not.
In fact, all these choices without a clear winner probably helps Microsoft more than anyone. When in doubt buy from the established.
There are factors: it isn't a replacement system so much as a change. Extra gear is required (POE switches, QoS Router). It isn't as reliable as POTS - and can't be used in all places POTS was. The call quality is often not clear (unless you put it up against cell phones). (It's why they are touting SD-WAN for UC). It isn't cheaper than POTS in many cases. The deployments are often messy. (Providers can barely turn up Internet Access without issues let alone something complicated like Hosted PBX.)
And finally it doesn't pay much in commissions. At $15 per seat and even a 20 seat deal, the MRR is $300. That is a big headache for $300 in billing revenue. Easier, faster and better to sell network still. Or POTS. Or on-premise PBX with higher compensation. 3CX has been doing everything to make a partner's business model sing.
This isn't me being a Pessimist. This is me being a Realist. This is just how it is in the street in many places.
I don't hear anyone hawking white glove service or money back guarantee or no headache install. I hear the talk of zero touch deployment. That's the wrong way to go except for the CFO who wants to maximize profit per contract. Customer experience is someone else's domain.
I don't hear anyone talking about their call quality, their customer experience, their hand holding on deployment, their world class PMO. These are better things to talk about than price and features.
]]>The products that have been launched recently sit in big buckets titled IOT, Cyber-Security, Managed Services, SD-WAN and of course UC (UCaaS, UCC, WCC).
Rich Tehrani has a nice read about AI and analytics transforming companies like Vodafone.
COLOTRAQ has a new IT Risk/Cyber-security Assessment and Planning Service. They even brought in some talent to delivery it in Victor Zamora.
MetTel launched a single SIM for IOT. One VAR I spoke with said that they are going to run with this to the end-user because it is a niche that is almost without competition.
Level3 consistently emails me about selling cyber-security, especially their DDoS Mitigation service.
EarthLink is still around? They launched a secure public Wi-Fi connections with Norton WiFi Privacy (basically VPN). Considering how often businesses use Starbucks, hotel, airport and other public wi-fi, this should be a no-brainer sale.
Panterra rolled out Streams, an ode to Slack, but integrated into a secure, encrypted full unified comms platform.
VZW has One Talk, one of the few mobile UC plays out there.
When TelePacific re-branded as TPx, the highlighted products were managed IT, security, UCaaS and SD-WAN.
Aryaka just rolled out a clientless SD-WAN: "SmartACCESS - the first-to-market SD-WAN for remote access, with built-in dynamic CDN." In the US, Content Delivery Networks are how a majority of users get their Netflix chill on.
Verizon announced that they are selling more MPLS due to SD-WAN. CenturyLink has said that SD-WAN is not a quick fix. So there is a lot of room for expertise and advising in these projects still.
AT&T says that enterprise clients want a hybrid solution to managed services. (Nothing new here). Some of the services will be outsourced to the likes of AT&T and some will remain in-house. That is the way it is for cloud as well - HYBRID, according to an Evolve IP survey. Private for mission-critical, Public (AWS, Azure, SaaS) for mass market stuff and VPS for DevOps. Pulling that together requires some expert help. Is that you?
All of these vendors are just waiting for Channel Partners to pickup the ball and run with it.
It will take more than the Twitter approach to launch. Twitter put there platform out there and waited to see what people would do with it. Years later, Twitter still has no idea what the business case or financial model is. Don't be Twitter!
It isn't about just throwing your toy into the yard so someone will stumble along to play with it.
We want to be spoon fed who IS buying it; why are they buying it; etc. (As I have written about ad nauseum.) It is all about the Stories! Ignoring this means that we will leave that toy alone on the ground over there.
I understand that channel partners have to innovate, change, transition, etc.
With network revenues steadily declining and telecom being a broken mess, partners spend all day selling bandwidth at lower rates - and lower commissions - and then having to navigate the many layers of Dante's Hell that is a carrier today to get it installed (and then fixed - yes I am talking to you ACC Business and GTT!)
In the midst of this mess, on-going consolidation and the accompanying musical chairs is making a partner's job harder, not easier.
Much of these products require new knowledge and some training. That is not time that is always available to partners. I know, Go Make Some Time before you become Extinct. You see, we'll have time when we are extinct.
Besides compelling stories, buyer profiles and the WHY, we will also need new sales skills. Selling dial-tone or network is replacement. Selling Cyber-Security or AI requires a different sales approach.
MSPs understand how to sell managed IT but some VARs do not. (Hence why they are still VARs!)
While many of these products allow a Partner to enter a green field with little competition, maybe the business model for the partner has to be demonstrated as well.
And maybe instead of launching more services, you figure out how to deliver on the ones you have. If you can't deliver the easy stuff (Network), I will never give you a shot at the complex!
Just some food for thought while you wait on the Channel.
]]>Private equity firm, TPG, last year acquired RCN and Grande. Now they are grabbing Wave Broadband in the Northwest for $2.36B. They will combine all 3 - Wave, Grande and RCN - to make a larger MSO. The PR says that they will be the 6th largest MSO, leap-frogging Altice. Altice owns Suddenlink and Cablevision. Comcast and AT&T have 22M and 25M respectively. The Top 4 all have more than 10M pay TV subs. After that it is splitting hairs with VZ at 4.6M to Altice with 3.6M at number 7. TPG's exit strategy will likely be Altice buying them.
WISP Redzone claims it has developed a "fixed wireless spectrum aggregation technology that can support broadband speeds of up to 400 Mbps per customer", according to press. Google Fiber must be excited.
Mitel has been making noise since early last year when it tried to buy Polycom. Now it is scooping up the assets that Toshiba is leaving behind as Toshiba exits the phone business.
Mitel also announced that it had broken 3 million users. According to investor presentations, Mitel has 3.2 million cloud users but only 588,000 recurring seats. To put that into perspective, Microsoft found 25 million subscribers for Office 365 (although the take rate is slowing to 900K per quarter). Broadsoft claims 15M cloud lines but that includes SIP trunks. Vonage is over 600K seats and 8x8 is close to that.
The details can be found in the 2017 Hosted VoIP/UC Market Report for the US, which was just released. See here.
Jive Software was acquired for $462M. That is a social collaboration software company based in Portland; not the UCaaS provider out of Utah called Jive Communications.
Amazon released Chime (a Webex clone) and cloud contact center. Now with Alexa devices it is taking over the speakerphone market. A few VoIP companies have integrated into Alexa for voice enabled dialing (something we need in cars!). Only a matter of time before Amazon gets into the dial-tone replacement game in conjunction with Twilio.
Panterra Networks doesn't do marketing. It's a shame really. They have a better than average UC application that is secure (encrypted), HIPAA compliant and 24/7 hack monitored. It produces one contact management file without duplicates. Added Teams with the release of Streams, which integrates UC, team messaging, file sharing and analytics into a single customizable platform. Worth a look.
]]>RC did have some wins last quarter: RC "closed six deals with TCV north of $1 million dollars up from five in Q4. One of these wins was at Hyatt Hotels Corporation. Hyatt will be replacing legacy Avaya system at their headquarters with RingCentral Office."
Some factors that are shaking things up: Avaya bankruptcy; 8x8 and Shoretel hiring bankers for strategy; and Toshiba leaving the North American market.
RC states: "For each dollar invested in sales and marketing, we continue to see $9 of revenue and $7 of gross profit over the projected life of an Office customer. " A number of UC providers should take note of that stat.
In the last 15 years, 52% of the S&P 500 have disappeared.
According to the CDC, "more than half of Americans have cut their traditional phone line and now only get wireless phone service." The other half is paying more and more for POTS service.
Verizon sold its data centers. It also sold its cloud services unit to IBM .
CenturyLink sold its data centers to a coalition of PE firms that also bought a collection of cyber-security firms. The new company will go by the name Cyxtera Technologies and it will be run by the former CEO of Terremark.
Gary Testa left Polycom last March to become President of Star2Star. That lasted 11 months, then he quietly exited telecom. Michelle Accardi has his position now. I am guessing the IPO is on hold.
John Oliver took on the new FCC Chair (former VZ lawyer btw) and net neutrality again. Want to comment on the FCC proceeding ironically named Restoring Internet Freedom (Docket 17-108) head over to the domain www.gofccyourself.com
I tried to explain this to several security people. Thankfully now there is a study. "More than 70 percent of SMB IT managers say budget considerations have forced them to compromise on security features when purchasing endpoint security," according to a survey by VIPRE.
All these Rapid Expansion press releases are funny. Yeah, you are following the Long Channel Strategy of signing up everyone you can. No idea how that pans out for most since it is a million dollar cash deal. Each of those master agencies will need co-marketing dollars just like the multitude of vendors that signed up with the likes of Jenne, Tech Data and other VADs. At some point, the cost to get a sale may be too high.
VZW has a co-sale model for One Talk. AT&T has co-selling. But RingCentral is taking this further. There is the partner, a channel manager and a SME from RC involved in each sale - from 1 seat to a million according to the release. All three getting 100% of commission. That will get expensive quick.
I would like to stop seeing ridiculous numbers in the press releases: "over 2,200 sales partners are now offering our services" and "we have more than 4,000 partners" and "300 Master Agents signed up" and the best: "8 Master Agents, providing 200,000 sub-agents". STOP!
]]>Was it just October that Windstream let its small business customers go? At that time didn't they tell the partner community that they only wanted deals $1250 and above? Didn't they cut commissions on Paetec customers?
This is a company that owns Allworx but pushes Mitel and Avaya on alternating months. They run both Metaswitch (and took on more seats on Meta with EarthLink) and a Broadsoft. So now they buy a 6th platform: Broadview's proprietary one. (I hope they kept the chief developer or someone will be searching through code for notes for months.).
Do you know how expensive it is to run 6 platforms? Or even 4? Ask Vonage how much that costs (they run 4).
WIND wants to compete head to head with RC, 8x8 and Vonage in the OTT market. Interesting because data demonstrates that the average OTT deal is $400, well, below the $1250 floor. Even Broadview admits to an ARPU of almost $1000.
I will get emails and calls that I am negative. Chris will ask why I can't write something nice. I'm not being mean. I am observing a schizoid strategy. Partners cannot turn their business model quarter to quarter to suit the whims of a vendor. It doesn't work that way.
A $5.4 Billion annual revenue up against $5B in debt. No more equity in CS&L, the REIT they spun off which renamed as UNITI Fiber. "Operating income was $515 million. The company reported a net loss of $384 million." This is a company that pays out healthy dividends to keep its stock afloat. It has debt payments as well, while acquiring EarthLink and Broadview (and before that data centers it then sold off.)
I hope they can at least take a note from EarthLink: Point yourself at a vertical or two and get good at it. EarthLink had captured the retail vertical with a focus and product fit unseen in the CLEC world. Windstream needs to do more of THAT.
Keep the ELNK Retail division rolling along. Leverage the Broadsoft Hospitality product to find a way to take Hospitality back from the cablecos. The REIT (CS&L) is on a tear buying up fiber and chasing E-Rate. That is a sound strategy.
I wonder if, like CenturyLink, being borne from a RLEC just makes sound strategy tough. So many fat years with USF monies pouring in and no competition that when the spigot went dry, competing just isn't in the DNA. Hint: hire Dabble Lab. Get Creative. Try stuff. Take real input.
SD-WAN is not the panacea that everyone is hoping for. If SDN is implemented the way LNP and TTU is now, oh boy! A few agents were on FB discussing ZTP (zero touch provisioning) as the end all. I remember Microsoft Plug and Play. It took years to get right. It will all depend on the CPE and the SDN implementation. And I am not counting on it. [And that is just CPE ZTP, not the handsets and UCaaS or Office365 or other software deployment. Just the WAN and CPE.]
Broadview has 20K customers, of which 7300 are cloud users. That isn't scale. That is less than one-third the of customers 8x8 has. Vonage has 650K seats; Broadview has 182K active users. Scale costs money. Scale requires talent. Scale demands process and procedure. We'll see. They didn't even finish the EarthLink integration so this should be fun.
**CRN - click through 10 slides just to read a half page story on this site! What a mess!
]]>The surprise was that Broadview only had 20K business customers, of which 7,300 utilize their cloud based services! The ARPU was about $1000. There is about $239M in revenue but not profitable revenue.
You can tell that most people have no idea about the channel at all. The investor deck says Broadview has 300+ master agents. RC had a slide that its 8 master agents provided access to 200K sub-agents. At best, this is naivete; at worst, it is lying to investors.
]]>At EC17, Amazon launched a self-serve cloud contact center. (Once again Amazon took software it created and used internally and made it a commercial product like S3 and AWS.) The partner for this was Twilio. This seems like a slight to Vonage, who owns Nexmo, a twilio competitor.
There is a rumor that Amazon is looking to buy Vonage. There was an offer from Oracle to buy 8x8, so there are folks outside of telecom looking to buy VoIP companies.
A couple of ITSPs, Skyswitch and RingByName, are offering integration with Alexa. Alexa makes a nice speakerphone. Again this is a nice marketing gimmick but it doesn't solve any real business problems.
Vonage's market cap this morning is $1.4B, the same as 8x8 whose stock price is more than twice Vonage's. I wonder how much longer these two companies can keep the machine of growth going. Keeping up 24%+ growth every quarter is a grind. It begs the question what happens when that slips to 19 or 20 percent? They probably won't be stand-alone companies at that point.
In some ways, Amazon is like Twilio; it doesn't want to be a phone company, but it wants to capture as much value in that space that it can without being one. It would be smarter for Amazon to buy Twilio, but the market cap is twice that of Vonage. What does that say about VoIP stocks?
]]>The real buzz came from Amazon that launched Amazon Connect - Customer Contact Center in the Cloud. GE Appliances is one of Amazon Connect's initial customers (and shared the stage at EC17 with them). Last week, they launched contact center tools. Before that, they launched Chime, a web conferencing app.
"Amazon Connect is a self-service, cloud-based contact center service that makes it easy for any business to deliver better customer service at lower cost," according to the website. It got a lot of coverage (telecomp and techcrunch, to link but 2).
Chime was launched in conjunction with Vonage who will be handling the consumer and small business market. Level3 partnered with Amazon on Chime for Enterprise, which partners will get to sell soon.
In both cases, Amazon is entering a crowded field with a self-service, low priced offering that hangs off of their massive computing infrastructure. It is mainly price disruptive, but that doesn't mean it won't shake up Wall Street which will re-adjust valuations for the likes of Cisco, Citrix, Genesys and Avaya.
GENBAND partnered with IBM Watson for AI chatbots in its Kandy wrappers. The Kandy wrappers are pre-packed programs like a customer service chatbot that can answer FAQs and detect when the caller is getting agitated. It then takes the call transcript and sends it to a live rep, who if all the back-end works would be able to take over the call in continuum. The demo was great. Implementation will be difficult, but I would like to see Florida Blue jump on board and give it a try because they have horrible customer service systems (maybe on purpose).
West showcased the new version of Spark with Hybrid Voice.
Sprint had a robot running around their booth but I don't know why.
Counterpath demonstrated its new capabilities for what was once just a softphone. Now there is a good amount of reporting and analytics on users and calls. One user experience across multiple platforms (phone, tablet, laptop, Mac, Android, PC). It layers on top of existing UC, so Broadsoft providers can get better reporting, analytics and user experience without having to upgrade their investment. Counterpath also added a Salesforce plug-in so that interactions inside the Bria app can be captured in a CRM record. And you get screen pops!
BTW, "Voice is still a customer's number one choice when dealing with a customer service issue." [twitter]
"Cloud computing: Are these the hurdles that trip you up? More companies are using cloud-powered services, but it's not without pain. Here are some of the common complaints." Interesting read on ZD.
One thing that seemed to be a theme: User and Customer Experiences Matter.
]]>Avaya sold its networking business to Extreme Networks for a paltry $100M (It is about $200M in revenue). That $100M does not make a dent in the billions in debt that Avaya is trying to scrape off in bankruptcy.
HPE is acquiring Nimble Storage for $1B.
LUMOS is being taken private by EQT Investment Startegy for almost a billion dollars. This comes following LUMOS buying three data center from DC74 and Clarity Communications, a fiber operator in NC.
FirstLight Fiber's main PE owner, Oak Hill Capital Partners, has acquired Finger Lakes Technology Group in upstate NY to fill in its fiber route. The data centers, Cisco business and fiber network all go with FLTG to FLF. FirstLight recently announced similar transactions with Oxford Networks and Sovernet Communications.
Another RLEC was picked off by private money: "Hargray Communications has agreed to be sold to an investment group led by the Tom Pritzker Family Business Interests. Redwood Capital Investments and Stephens Capital Partners are also investors.
In other news, Amazon AWS launched some new Cloud-Based tools to help enterprises manage their call centers. They already built the tools for internal management of their own call centers, so now they are just leveraging more internal IT/tech for revenue.
8x8 is funny. They hire a banker and put up the for sale sign; then buy something. 8x8 acquired Sameroom, an inter-connection platform for various chat apps including Slack and Skype. ComputerWorld has a good article on the pivot of Sameroom and the 30 year history of 8x8.
Worth noting: "Today 8x8 introduced the world's first Communications Cloud, which combines unified communications, team collaboration inter-operability, contact center, and analytics in a single, open and real-time platform. The company also announced a number of new business application integrations, aimed at enhancing business workflows by making real-time communications, collaboration capabilities and intelligence available for third-party cloud applications, all customizable via an Open Cloud approach to fit individual enterprise needs." Note the words inter-op, analytics and integration. These will be the key to real UCaaS or UC&C or WCC (or whatever we call it next). These are the factors the separate the sale of UCaaS from Hosted VoIP. One is valuable, bringing productivity and business change. Hosted VoIP is just dial-tone replacement.
Today is International Women's Day! I am recognizing it by re-posting my Women in Tech prezo from ITEXPO and an article on gender diversity from Fred Wilson.
]]>ITEXPO Keynotes in February were from iconectiv; Jeff Pulver; vmware; IBM; Onvoy and RingCentral.
Enterprise Connect keynotes this month will be from MS Office365, Google G Suite, AWS, twilio and Cisco. Not Verizon, AT&T, CenturyLink, or even Windstream or Comcast.
I'd like to hear a Slack keynote.
]]>After 15 years, 2000+ providers can only take a 28% handhold in the market?
The growth rate of Hosted PBX (HPBX/UC/UCaaS) has always been a hopeful bad guess. And it will continue to do so because too many people, companies and dollars have been invested thus far for any analyst to turn on the sector.
There are 4 major problems with the UC Market.
One, PBX sales have declined about 3% per year. Even Avaya going bankrupt isn't going to speed that up. Not only do people trust boxes; they are cheaper in the long run. Single location businesses, which is most of them, don't have a PBX problem that UC solves. There is a current Product/Market MisMatch that needs to be examined.
Mobile UC may get more traction. Or a simple PBX like Dialpad or Fone.do. Gary Kim writes that the market may be too small. At ARPU of $400, it takes a bunch of sales to move a needle for a company like CenturyLink, Verizon, AT&T, Comcast or Charter.
Two, I wrote this last week. Any 15 year old product needs a re-fresh or re-think. We are overdue for a Re-Think. Slack was a re-think, but that strays to the edges of what UC is. So does Cloud Contact Center. And these companies want to be everything for 1-1000 employees. This isn't Pasta or Rice. This is technology.
UC is Change. People hate change. The Channel doesn't sell Change; we take orders on replacement services. Harsh but mainly true. There are exceptions of course, but the general rule is that agents are transactional. Even Inter-Connects aren't excited to go sell a cloud service. MSPs will if it is white-label and can be bundled into their package, but that falls into POTS Replacement more than a full-blown UC deployment.
Three, HPBX has 2 camps of buyers: POTS replacement sold as cheap as possible and actual UCaaS. Where do you think most of the market is? Right, cheap VoIP.
Now if I am buying cheap VoIP, am I also going to pay for a backup circuit or SD-WAN or any other service enhancement or assurance? Unlikely -- or I wouldn't be buying cheap cable broadband and the cheapest OTT voice!!!
If the buyer spends more on bandwidth, has a backup circuit, they are likely going to buy UC as BC/DR and that isn't cheap VoIP.
The fourth Big Problem: There are far too many providers! Telarus represents at least 37 HPBX vendors. Other masters have at least 25. How does anyone differentiate/ stand out/ position in a marketplace where the cloud broker has a choice of 2000+ providers?
This becomes a problem for the providers who enter into a Price War (seats cratering to below $15 each) and a SPIFF War, where providers are literally buying sales.
One of the most successful HPBX providers, 8x8, is up for sale. This move comes after a recent re-branding as a Global UCaaS provider.
Are the owners (the 8x8 founders still own most of the voting stock) looking to exit? Or is it that the machine to keep bringing in 20% growth quarter after quarter is grinding down? I just don't know who would pay $1.5 Billion for 8x8. VZ payed $1.8 for XO which owned fiber assets. WIND payed $1.1B in an all stock deal for EarthLink, who also had a bunch of fiber. Fiber gets a bigger multiple than VoIP.
The other thought is that what if $300M is about all the B2B annual revenue you can get?
From a recent discussion about Amazon Chime: there are approximately 100 million phone/conferencing lines in North America. If Amazon Chime with Vonage can hit a 5% share of this market, that equates to 5 million subs. At $5/seat/month, that is $300M incremental revenue opportunity for Vonage. That would be a needle mover for most UC Provider, considering 8x8 is at $225M in annual revenue now.
The emphasis has always been on multi-location and mid-market. That's why "41% of larger enterprises are using cloud UC services." Now everyone is focused there (upmarket). However, the bulk of the businesses are single location small business (20 million of them). That means a new product bundle is needed to attract this crowd. Many thing that this sector will be mobile only with an auto-attendant in the cloud.
When you look at the large number of messaging apps, at some point, one of them - Slack, Messenger, WeChat, HipChat - will hit the right bundle of functions to steal mass appeal. Not yet, but maybe soon.
]]>I spoke with a few VoIP executives including CoreDial at ITEXPO. There are two separate layers: cheap voice or POTS replacement and people who want a comms platform.
Most aren't using the full suite since they have Slack, Messenger, WhatsApp, etc. They have Office365 or Google for Work. It is a siloed approach to a comms suite.
Price points are decreasing. But then they had to since UCaaS is costing more than a SIP trunk and a small business PBX (think 3CX, FreePBX, Asterisk).
There aren't that many multi-location businesses. (And everyone is chasing them!)
There are more businesses with remote workers. There are also more workers with consultants, contractors and freelancers who are outside the federation of the enterprise system. How do they fit into the organizations' communications?
Coredial turns all features on when they sell off the Broadsoft platform. This way users know about features that they may not have been aware of, like voicemail to email or text to email.
There is training for users - and later due to employee turnover, more training for users. This is but one way to ensure that the customer's organization is getting the full benefit of UCaaS. Otherwise they could have bought the cheaper version!
Everyone is talking about softphones (especially Broadsoft and Counterpath!) Yet there were many new phone/handset vendors at the show. [There also were a couple of VoIP endpoint vendors who had devices very similar to Doorbot! ]
Are you using a softphone on your laptop/desktop/tablet? I'd be curious who is - other than folks who actually work at the VoIP provider!
8x8 is pivoting to Global! I guess they think they have taken all the share they can in the US. Or it is getting too expensive to acquire a customer in the US!
Maybe I am jaded because I have been staring at the VoIP World since 2002.I have waiting for the tidal wave of adoption but small business after small business are pretty happy with a key system, which despite the argument to the contrary is not the value of a Hosted VoIP solution (to see Key System Emulation is UGH!!!!)
I saw quite a few new logos that offer VoIP/UC. Consolidation news has quieted down. Current UC providers have to get - not only better at selling seats - but more efficient at selling them. Velocity has to happen. Yet to have that happen, the provider has to take more friction out of the sales process. The provider has to narrow its focus on who it can best serve and why - and target better for faster conversion.
During my discussion with Coredial. we talked about the market - actually we talked about the fact that the market of 1-500 employees is more like 7 markets with 7 different buying personas. UC is still triggered by an event more often than not, says Coredial. Moving, expanding, shrinking, acquiring -- these business events for the organization warrant a look at shifting from premise to Cloud Comm.
The market segments need to be addressed. The messaging, the targeting, etc. Considering many service providers barely have marketing in place for one persona, how will they market to 5 or 7 segments while addressing even half that many buyer personas?
I often talk verticals, but I also know that channel partners HAVE segmented the providers. "We use this one for 1-5 seats and this one for up to 20, etc."
It is unlikely that a partner will use the same provider for 10 seats as for 150 seats. It would be a white whale.
Just some food for thought.
One more thought: with Net Neutrality going away fast, what do OTT VoIP players do?
]]>