Cbeyond Rides the Hosted Wave

The most obvious trend in the tech space is that of outsourced services since companies need to boost productivity by deploying the latest in technology but in general don’t have the budgets they used to for large capital expenditures.

Recently I spoke with hosted communications company Cbeyond’s VP/GM of channel sales, Brad Linden and VP Marketing Steve Zimba in separate meetings to discuss how the company is doing. They reported solid revenue growth of just under 25% which is impressive for Q4 of 2008 when most companies saw sales decrease.  The good news keeps coming as their channel sales closed on target for January and over target in February.

Linden and Zimba were optimistic in my meetings, seeing opportunities increasing in this economy. To take advantage of their momentum they are adding applications in ways traditional carriers are not. For example, in addition to their voice and data services, they have successfully rolled out wireless devices via an MVNO relationship. In addition they have a field force application which leverages software from Xora and integrates nicely with their mobile devices allowing companies to manage and visualize their sales/service force in real time. Moreover the service allows greater integration with payroll, invoicing and other business processes.

It is interesting to note that many of these new services are bundled in the same manner as a mobile phone plan. And the services in many cases are added to retain ARPU. For example, the company’s BeyondVoice 1 package costs $495/month – the same price as it was in 2003. The difference is today this package includes mobile services, web hosting, email, voicemail, fax-to-email, secure desktop, backups, managed firewall, conference calling and VPN.

The company has 42,000 customers today and this number is more impressive when you consider Cbeyond only serves 12 cities/metro areas at the moment.

I have shared with my readers that many people who have lost their jobs have started new businesses and now need phone service and Zimba confirms they are seeing this as well. As he explains it, many of these people came from a big company and want the same tools in their new business they got used to in their old company. Microsoft Exchange is one good example.

Expect Cbeyond to roll out service in new markets while adding core services – especially CEBP into vertical markets that make sense. Over the past ten years the CLEC market has helped create and destroy billions of dollars of wealth through excess investment, inflated stock market valuations and abrupt government telecom competition policy changes. It is nice to see a decade after the CLEC movement got going one of the companies in this space found a way to add value to traditional voice and data and in doing so became one of the most successful tech companies according to Forbes and is considered by some customers to be their outsourced CIO.

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