Sangoma is paying $3M in cash plus about another million in stock and options for VoIP Supply. It borrowed the money. If VoIP Supply is adding C$15m ($11.3M US), then the $4M price tag is pretty decent.
SYNNEX is buying Westcon-Comstor's $2.18 billion North American and Latin America businesses for as much as $830M.
Ingram bought NETXUSA for $55M upfront and $10M in earn out for $125M in revenue, according to the 10Q filing in April 2016.
Slim margins in distribution. Slim margins in hardware. The slightly bigger margins are in services.
Sangoma also purchased FreePBX/Schmooze in 2015.
Maybe the parts business of VoIP isn't enough. Maybe they need to be selling bundles, services, maintenance, etc. Maybe VoIP Supply is a good next progression after FreePBX.
]]>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.
]]>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!
]]>This year's Data Center Industry Survey from Uptime Institute seems to indicate that "It is moving slower than I'd have thought." That persuasion isn't enough to make the transition happen faster.
The legacy premise PBX sales have slowed down but have not been surpassed by cloud PBX yet [source and HERE].
No one is crushing it despite more vendors entering the cloud space every day. Well, actually, Amazon is crushing it with S3 and AWS.
"Many people don't seem to be willing to throw out their legacy systems but are still investing in diesel generators and backup power," says Matt Stansberry, Uptime Institute's Senior Director. Or they just can't. I have seen way too many businesses - especially telcos and cablecos - relying on spreadsheets and faxes!!!
"One statistic thrown up by the 2017 survey has changed very little over the last four years:
"It is probably because it's not easy to re-architect their legacy applications for a cloud environment." That is true. And not all software can port off AS400s and other legacy server boxes. In fact, COBOL Programmers are STILL in demand!
The providers only hear about clients that want to migrate or are thinking about cloud. Partners see businesses every day that will not be changing anything.
It appears we will be dragging businesses to the cloud kicking and screaming, but slowly.
Heck look how many businesses are still on TDM (POTS) and use faxes.
]]>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!
]]>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 to five people in the VoIP space familiar with Fonality and none of them had much insight on why this move happened. Well, one answer: scale. Inorganic growth.
At one time, Fonality had a big dealer network with training on the expo hall floors. The HUD (heads up display) was a product spotlight. Voicemail in the cloud was ahead of its time. (I guess you were ahead of Star2Star with the hybrid/premise model.) Then POOF! Fonality wasn't at expos anymore and the noise/attention died down.
Last year Fonality made an exclusive master agent agreement with the Alliance. Hard for that to pay dividends with an industry ARPU of $400 in less than a year. Next thing I know, I get the embargo notice about the merger with Telekenex aka Netfortris.
I'm not a fan of embargo news because it always slips out (like this did). The merger news made Facebook just after I agreed to the embargo. After it hits the social networks, it isn't worth writing much about - unless it is big. I told the PR firm it was only going to be a line item and a tweet. And apparently that was upsetting to Fonality. So they replied via the PR firm.
Marty Williams, head of product marketing for Fonality, wrote via a PR firm: "While Fonality does provide premise PBX solutions for customers who want it, the bulk of our business is cloud telephony and UCaaS. Fonality's top-rated UCaaS platform and its telephony management network are internally developed. Owning this intellectual property and the opportunity to expand IP development for the future is critical to leading the evolution of state-of-the-art, secure cloud communication and network services that increases productivity for our valued customers."
Fonality was founded in 2004 and grabbed "$50.4M in 6 Rounds from 6 Investors". It looks like they were at $45M in revenue in 2015. Fonality has over 200 employees. The deal was probably worth right around $100M because hardware revenue is worth less than recurring service revenue. It also begs the question how did Netfortris finance it?
Yeah, I am a skeptic. If this IP was award winning and awesome, why didn't you knock it out of the park? You were ahead of the pack a couple of times. Did you get tired? Discouraged? It sounds like money men wanted to cash out. (Nothing wrong with that.)
Again, yeah, I am a skeptic. The VoIP industry is more than 15 years old and is still just a dial-tone replacement. Billions in investment in this industry and it takes non-VoIP companies to do interesting things with it (thanks to the technology of WebRTC).
Even Microsoft has done more in the UC space in a short time with Skype4B than most providers have done with their product bundle in ten years.
There are over two thousand me-too companies offering up pretty much the same Hosted PBX service. RingCentral wrote, "The promise of UCC needs to go beyond multi-modal communications in one place. Rather, it should be about what the cloud can do to transform the way people work. I've said before , that it's about unified experiences, not just unified communications. Our vision of this is coming to fruition by combining best-in-class UCaaS, team messaging and collaboration, video and web conferencing, cloud contact center--all served on an open platform, at global scale."
There is a distinct difference between selling basic voice service and selling UC. When selling UC, you are selling CHANGE. And selling Change is F***ing HARD. People hate Change.
But for a business to improve in productivity and efficiency, they have to do things differently; they have to Change some habits. They need to leverage the technology that our industry has made available to any business anywhere and any time. That is the Magic the cloud is offering. It isn't about the cheapest seat price to get the deal. That's dial-tone.
Look at that chart above. No one is crushing it. How many Cisco partners are there*? How many Microsoft partners? (They are doing better than shown here.) Metaswitch has over 700 customers. Broadsoft has over 400. Why hasn't the pie been eaten yet?
Despite the Avaya bankruptcy, premise PBX sales have only dropped roughly 3% per year. That isn't a whole lot of rip and replace with cloud comms!! It's kind of embarrassing.
In the Tidbits article, I mentioned that the most interesting move I saw was Atlassian buying task management provider, Trello. Now you have Project Management with collab and chat via Hipchat (like Slack). Voice and video calling can be done via WebRTC. Even screen sharing. All that is needed is a Dropbox. That kind of bundle is more interesting to me. Consolidating 2 of the 2000+ just isn't interesting to me. I understand that scale is important; and consolidation in this space is needed, but that doesn't make it interesting - to me.
SIDE NOTE:
In 2014 there were 70 Silver and 20 Gold and 2000 partners at the Cisco event that year. No clear total number. Microsoft's online directory lists over 30K partners.
]]>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?
]]>In UC&C (and most software) "CIOs will be buying into the customer experience and not the technology," writes RingCentral's Sahil Rekhi."In 2017, CIOs will be buying communication solutions with a focus on experiences rather than technology; removing distinctions between communication, collaboration and productivity. Workplace communication and collaboration tools in the cloud will be made to create a unified and consistent experience across multiple devices, moving businesses away from a siloed approach to communications." Most ITSPs are not set up for the complete mobile experience yet, let alone a full UC&C CX (customer experience).
There are providers still trying to add analytics to call logs. Because we are still stuck on replacement instead of impact, outcome or experience. (One reason that Slack took off: UX!)
GOOD READS:
Fred Wilson's frank look at what will happen in 2017.
Start the new year with better sales meetings HERE.
PR trends in 2017. Content versus Attention versus Influencers = Viewers running away to the "Dark Social", "the amount of communication which occurs behind closed doors and messaging apps and private groups."
Sales Hacker's Top 10 Trends & Predictions Heading Into 2017.
This is a twofer: 5 lessons from the book LinkedIn's head of recruiting recommends to all new managers is a summary of Ryan Holiday's book.
Are you hiring? Good read on what to look for. I always say Attitude first, but this CEO says have a meal with the candidate and look for Gratitude and excitement.
MEDIA PAIN
Medium has laid off one-third its staff. Medium is a blogging/media platform founded by the same guy who founded Blogger, Odeo and twitter. He is having an issue with business models as the world of the Internet is based on free. No idea why he didn't try charging $9.99 per year per reader or some other nominal amount. It isn't a volume shop like Huffington or Buzzfeed. It has a targeted audience. But that is the problem: everyone uses the model that they see, not one designed specifically for their product.
As Seth Godin pointed out, "Newspapers won Pulitzer prizes for telling us things we didn't want to hear. We've responded by not buying newspapers any more." That is why we have click-bait, fake news, struggling newspapers and uneducated voters. It is all about the pageview, even in this content marketing world. Go figure!
RETAIL SUFFERS!
Sears is closing 150 more stores. Macys is closing stores. Retail had a bad holiday season - and the stock market is unforgiving. American Apparel is BK (and Amazon is trying to buy it.) Retail has to change. Big time. Also, malls have to re-think what they are to consumers.
Fast food is hiring robots and self-serve kiosks; retail is tanking. What will teenagers do for employment? What will many others do for employment in place of managers, buyers, maintenance, etc.
Ford is staying. Carrier is staying but they got tax breaks and other bonuses to do so. And they are going to automate those jobs out of existence. AI is replacing some fund managers. If you can't fix or code a robot, what will you do for a job?
]]>The problem with Avaya is it is over-leveraged, which we will be saying about many telecom companies in the coming two years. The on-premise or hardware PBX business did not fold like everyone thought. However, it didn't grow either. It slowly declined at about 3% per year.
Before its user conference, Broadsoft announced that it had hit 15 million licenses. According to Elka Popova, "The BroadSoft installed base is hosted IP telephony seats, fully-loaded UCaaS seats and business VoIP lines." So that just means licenses - even for SIP Trunks. About 3 million of those belong to Windstream and XO (1 million and 2 million SIP trunks respectively.) Who knows how many actual hosted seats there are.
Cisco has one-third that. Office365 is at 70 million users. All of that eats into, not just Avaya, but everyone.
Avaya's transition to cloud was slow and clunky. Mitel wasn't smoother but it was faster. It looked like the hardware folks - Zultys, Mitel, Avaya, NEC, Siemens, ININ - were content to keep on trucking. They treated Hosted PBX much like MSO's treat cord-cutting - deny, deny, deny - until it bites you in the ass! Then you get the lawyers, bankers and start filing BK.
"Spun off from Lucent Technologies in 2000, Avaya was a publicly traded company until 2007, when it was taken private by Silver Lake Partners and TPG Capital for more than $8 billion." [source] $8 Billion about 9 years ago. In the meantime, they did acquire a few companies, including some Nortel assets.
Channele2e reports, "software and cloud revenues aren't growing quickly enough to offset falling hardware revenues. Total Q2 revenue was $904 million, down $54 million compared to the prior quarter, and down $91 million year-over-year, as demand for unified communications products continued to contract, Avaya said."
They have been talking about an IPO or spinning off Zang or selling off a division like Networking or Call Center. We'll see what happens.
]]>When asked if this wasn't just a wrapper around Broadsoft's UC-One or other packages, Nextiva replied, "NextOS was completely imagined and developed in-house."
This follows Broadsoft's own announcements about Hub, Team-One and CC-One. This is BSFT's response to Slack, a real-time messaging and collaboration app now at 4 million users.
"BroadSoft Business includes three core applications: UC-One, Team-One, CC-One, with BroadSoft Hub providing contextual intelligence across the entire platform so users can access the information and apps they need in one place," press release states. "Built into BroadSoft Business are bOpen, bMobile and bSecure capabilities that can enable service providers to deliver carrier-class security and reliability; the openness for businesses to be able to integrate their favorite business apps (CRM, email, calendars, Twitter, etc.); and full mobility to connect advanced unified communication and collaboration (UCC) capabilities to a user`s mobile devices." I'm not certain if this is BroadWorks add-ons or if you can only get this via BroadCloud. The difference being that BroadWorks is run by the VoIP Provider and BroadCloud is the white-label service that Broadsoft operates for the provider.
Frost & Sullivan analyst Elka Popova wrote, ""BroadSoft's share of the global hosted IP telephony and UCC services market is 41 percent, which confirms BroadSoft's market leadership." With 15 million cloud lines, "BroadSoft cloud PBX/UCaaS installed base 3x greater than closest competitor Cisco and 10x greater than RingCentral." The "cloud line" is defined by Popova as "The BroadSoft installed base is hosted IP telephony seats, fully-loaded UCaaS seats and business VoIP lines." Still don't know if they include SIP trunks in that number because 3 million of those would be WIND and XO trunks then. And that woould skew UCaaS/HPBX penetration. It does look impressive in a graph:
Microsoft previewed Teams, which is its answer to Slack. It is currently only available to subscribers of Office 365 Enterprise or Business plans.
Meanwhile Cisco introduced a "flex plan" for Spark that lets businesses choose cloud, on-premises or hybrid services in a single contract. That includes Spark Meetings, which is also a Slack competitor.
Slack is attracting its own ecosystem that allows companies to integrate other functions to Slack beyond comms. Slingr turns Slack into a task manager. Other scripts can turn Slack into a CRM with Slack's user interface. IDEA2 and other companies like the user interface and the open API on which they can add functionality to an app people already like and use on desks and on phones.
Interesting that these folks are rolling out more complex platforms at a time when Verizon is rolling out One Talk which simplifies the whole UCaaS thing for small business. It's my experience that most businesses don't want complicated (hence, Slack!) and most users want simple (think Facetime). Without user adoption, this is wasted expense.
Want another example? Salesforce CRM at $99 per user per month but only a couple of people on the sales team use it actively. There will be managers who don't utilize the dashboard or coach to the activity in the system. Despite how integrated the SF ecosystem can be, it isn't worthwhile unless the users -- your employees -- are using it and benefiting from it! Same goes for any software, especially UCaaS (which is morphing again from Hosted PBX to UCaaS to UC&C and WC&C).
]]>RingCentral Office annualized exit recurring software subscriptions (ARR) grew 39% year-over-year to $316.8 million. RC says they are growing margins and revenue, while also increasing their losses. Is buying market share working?
8x8 reports that Total revenue grew 24% year-over-year to $63.2 million; service revenue grew 23% year-over-year to $57.7 million.
8x8's New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams increased 30% year-over-year and accounted for 65% of total MRR booked in the quarter. Average monthly service revenue per business customer was $409, compared with $360 in the same year ago period.
Per the PR: Ending seats at Vonage Business were 616,000, up from 514,000 seats in the year ago quarter, a 20% increase. Vonage Business revenue churn was 1.4%, compared to 1.3% in the year ago quarter. (About double what 8x8 reports.)
This is such a spun statement: "Vonage Business revenue, which includes $24 million of Nexmo revenue, was $106 million, an 86% year-over-year increase on a GAAP basis."
Broadsoft buys VoIP Logic to increase its white-label business, which now pits them directly against wholesalers like CoreDial and Bluip - and other BSFT clients who wholesale like Comcast and Momentum. If UcaaS was growing for the 420+ providers that utilize a BroadWorks platform, would BSFT need to ramp up its white-label and direct to Enterprise sales?
Interesting to note that of the noisy 3 in UCaaS, only Vonage has a BSFT.
Windstream announced yet another UCaaS product This one is called "Windstream Hosted Communications (WHC) for Small Business, a cloud-based phone solution offering enterprise-level capabilities to small and medium-sized businesses. Powered by Broadsoft. WIND also offers Avaya, Mitel and Allworx. Quite the mixture. It might explain why they have 1 million SIP trunks on their Broadsoft.
A couple of bright spots are the cable clan are almost all running Broadsoft. XO is powered by BSFT. (Coming to a Verizon store near you in 2Q2017!)
Both Bells - Verizon and AT&T - run Broadsoft for SIP trunking and UCaaS. In fact, we will see how the Broadsoft powered One Talk drives sales for both VZW and BSFT soon.
Recall that went ANPI was sold to Onvoy, they had just 20K seats on Broadsoft, so not everyone is killing it in the UCaaS space. In fact, if you take a sample from the INC5000, most VoIP providers in the US are doing LESS than $5M in business ($2-$4 million seems to be the median.).
"For 2016, BroadSoft expects the acquisition [of VoIP Logic] to contribute approximately $800,000 in revenue," that means that VoIP Logic was doing about $3.2M in revenue. BSFT's 3Q 2016 earnings call was this morning.
There are certainly VoIP Providers with more than $50 Million in revenue. I would argue it is more a pyramid than a bell curve.
Companies are ramping up the SPIFF war to grab market share in the UCaaS space. It is likely easier and cheaper to buy deals from channel partners that acquire a whole provider - and the resulting synergy/culture mess that will ensue with integration after a buy.
Bullseye, Fusion, Star2Star, TelePacific, AireSpring and net2phone are just six of the companies posting SPIFFs for deals to Channel Vision magazine's email list and other places. And the SPIFFs are designed to skew for larger deals (more than 8x8's ARPU of $409). Some are specific to a preferred master agency.
At an agent event last week, I was talking to an Avaya partner who is still selling strong. Sure there has been some dip in on-premise PBX but not as much as you would think. Windstream is still selling mid-market deals of Mitel and Avaya boxes.
Do you know where the weak spot is? SERVICE DELIVERY, according to someone whose opinion I value greatly. Barely anyone has that figured out yet! And that is where the Customer Experience starts (and stops). Size doesn't matter. What matters is deployment, implementation, design, training and UX (user experience).
I keep hearing from folks who say the SAAS model is about OPEX over CAPEX. Well, that is the story but for most businesses, the spend over 4 years for a cloud comms solution is more than buying one. So there is a premium to be had for Hosted UC.
I have said it before: UCaaS is selling Change. You have to change the buyer's mind from "It is a phone system" to it is a new way to communicate and run your business with employees, contractors, customers and vendors. And then the buyer has to want that too.
I think much of the OTT VoIP is really about cheap dial-tone and one or two features (like conferencing or voicemail to email) as a bonus.
The other factor: CPaaS. Instead of using a desk phone or softphone, people are using Apps to talk to one another - like on Xbox, in Uber's app, Facebook Messenger, WhatsApp and Slack. This is taking away from some UCaaS sales as well.
The Skype4B noise has finally quieted down. But Greg Plum at PlumUC is running a Skype4B Bootcamp because users still can't figure out how to get the most out of S4B. All UCaaS providers should be training users constantly to teach/coach them how to improve collaboration and productivity, the two reasons the execs spent the money on UC&C to begin with!!!
FairPoint has entered the fray with Telax software. "Although FairPoint foresees the new service being applicable to all of its customer segments, the company expects the immediate sweet spot customer profile will be those that have 20-100 employees," per source. I guess in their territory that is mid-market!
Last piece of UC news comes from Broadvoice, who has been approved as a cloud services vendor for all states that participate in the public sector Cloud Service marketplace, created by NASPO ValuePoint in conjunction with the state of Utah.
Broadvoice CEO says that they are one of the only UCaaS providers in that marketplace. ]]>I have written about the massive amount of personnel shifting going on in the industry. I would like to think that all this change would mean, well, change. But it doesn't. It means a lot more of the same.
When chairs are being removed, who is going to take a risk? Not many. Most will hunker down, hire friends who will help cover their backside, and aim for the center of the road, playing follow the leader.
I see it with features, product lines, messaging, compensation (SPIFFs) and partner agreements. The sameness is like drowning in a pool of vanilla yogurt.
As we head to two back to back channel shows, I am packing with no visible enthusiasm because for the most part, there isn't anything to get excited about. The sameness is deafening.
There will be "newness" in the form of the re-branding of merged entities. And there will be a new term bantered about: SD-WAN.
There will be some new faces in familiar logos and familiar faces in new logos. There will be parties. (It looks like drinking is the main reason to hit DC this August - and I don't mean because of the presidential candidates).
This industry that is hoping and praying and dreaming of moving to cloud services is in major need of a colonic.
In the UCaaS space, premise based PBX has not disappeared. The handset / desk phone has not gone away either. Cisco and Intel are still shipping boxes and chips. Laptops are still being bought (more of them by Apple than the old PC guard). The laptops come with hard drives and O/S still, not dummy cloud terminals yet. Virtual Desktop or Desktop as a Service is not on fire in North America. All those analyst predictions were WRONG!
Most discounted one big thing: No one wants change AND selling Change is Hard! Cloud is change. And it isn't even assured change. If you have ever been involved in software deployment, you know that most of the time the desired outcome is far out of reach. In short, software deployment falls short. That doesn't bode well for a transition from a controlled environment (NOC, servers) to a rental model (SAAS).
Are people moving to cloud? Absolutely. If you want to include Salesforce, Office365, dial-tone replacement sold as Hosted VoIP and SIP trunking as cloud services.
Telecom spend is down from 2014 to 2015. A lot of that is due to price compression. Cable voice is about $10. Some Hosted VoIP providers are selling seats at $10. This happens for two really different reasons. Cable gets to raise bundle ARPU by $10 to give you voice. It is a win for cable. Triple play sales plus $10 extra. For the VoIP player, it is revenue, any revenue. Please someone buy my services!!!!
One Broadsoft provider dropped about $3M to get to 12,000 seats. The high end is Vonage and 8x8 with just over 500K seats each. Not even a million seats after 10 years! Meanwhile Windstream has 1 million SIP trunks on its Broadsoft platform - and XO has 2 million.
It used to be that voice went to the ILEC. Then IXCs came along to rob some LD minutes and then some toll-free minutes. Then CLECs got into the game. Even at its heyday, no CLEC had more than 60K customers, except maybe some UNE-P players before they crashed. Today, voice is replaced cellphones, cable voice, SIP trunks from OTT and CLECs, Hosted VoIP by ITSPs and apps of every variety. Everyone is fighting over a voice pie that is going to ZERO.
This is the main reason why when selling UCaaS, you have to look at the whole system and not that you are selling voice. Businesses have to be omni-channel now. That is why cloud contact center is hot. That is why CPaaS is hot (twilio IPO and Vonage-Nexmo deal and my podcast with Zilkr.)
While this shift is happening, it seems no one is noticing because the talk is the same. We push products at people who don't care because it is all the same. It is transactional. At least everyone knows the difference between a Big Mac and a Whopper.
If you think a new SPIFF for your HPBX offering is going to swing the tide, it better be larger than 7X MRC because that is the new table stakes now.
Well, two conferences of vanilla pudding coming up with a noise level that should have me drinking by noon. Let's meet for coffee. It's easy just get on my schedule.
If you want to be green jello in the midst of all that vanilla pudding or even better, a brownie or piece of cake, give me a shout. I have a bunch of thoughts on the subject.
PS
Next year at this time SD-WAN providers - meaning just about every LEC - will be in the same boat as the UCaaS folks unless something changes, besides the people keeping a chair warm.
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