A Look Back at 2023

This was quite a year.

Avaya went bankrupt again! They think they came out smelling like a rose, but they are donating customers to other providers every day.

Mitel doubled down on the on-premise PBX by buying Unify from Atos.

UCaaS revenue growth has stalled out! The CAGR is single digits now (negative growth for 8×8 this year). This is partially due to Microsoft; partially because Zoom hit 7M phone subs by charging on average $6.61! So on renewal the customer pays less, like telco circuits. The industry is in a price compression phase.

Mitel didn’t double down on PBX because sales had diminished; in fact, PBX sales are still up overall – roughly 40% of UC sales. That doesn’t bode well for the thousands of providers offering HPBX/UCaaS.

Pure play UCaaS providers shifted to messaging around UC+CC and some CPaaS (SMS, omni-channel). Then they all  started talking about AI. EVERY ONE, every day! Lots of hype; lacking actually use cases with concrete benefits for AI.

More M&A in the partner world. The Super Agencies continued to buy up partner agencies. Upstack grabbed 30 now. Additionally, new PE-backed entities emerged to spur the M&A along.

Data center is growing because all that cloud and AI has to be housed somewhere!

5G! The Fixed Wireless 5G took off in 2023. T-Mo, AT&T and VZW sold millions of subscriptions.

Fiber broadband got a boost from BEAD to the tune of $42.5 Billion! Then private equity bought up some CenturyLink assets, mom-and-pop ILECs and even a couple of ISPs, poured millions in to build out FTTH. Some of this was no doubt fueled by the ACP (Affordability Connectivity Program) that sunk $14B into funds that allowed 21M households to get help paying for the world’s most expensive broadband. So not only does the federal government use tax dollars to fund building these private broadband networks, it then uses tax dollars to fund paying for the subscriptions too! That is kind of ridiculous. Great for the ISPs (and PE firms), lousy for the tax payer.

UCaaS Players didn’t do a lot of M&A, because, quite frankly, they couldn’t stop playing Musical Chairs. Heck, RingCentral’s new CEO didn’t last 4 months, but got to pocket almost $10M! Vonage was acquired by Ericsson, who wrote down $2B of that purchase. 8×8 had its own set of musical chairs. So did Nextiva and many more.

Truthfully, when you look at the UCaaS space in the US, no on has a clue what the hell they are doing. It is a mess. Squandered opportunity, money, brand, people. Hardly any provider owns a vertical. Weave being a noted public exception. And at this point being the generalist UCaaS provider means selling seats at $12 or less.

This was the year that MDF was going to go away. Parties, sporting events and other LinkedIn picture chances were supposed to slow down in favor of more customer focused, sales producing methods. Notsomuch in 2023. Maybe next year we will get MDF Reform.

TBI was the second to last big Master Agency to go. AppSmart picked it up. The employees got screwed. Then the inevitable started: Reduction in Forces. No better way to balance a P&L than to fire a bunch of people.

2023 was the year of “You’re Fired” or “I Quit”. It happened at vendors, at brokerages, at telcos, at Twilio, at Velo, at Nextiva, even at cybersec companies.

Between the Employee Musical Chairs and the macro-economics, nothing much could get done in 2023.  All that PE money that was supposed to build better mouse traps and provide so much assistance to partners didn’t quite make it. If it did and I missed it, please drop me a note.

My experiences in 2023 are of brokerages that can barely process an order and truthfully some vendors can’t process an order either. Too many steps with too many people who have no backstop. It creates a mess.

The telecom process requires swivel chairs. It always will. There are many legacy processes and systems that cannot be automated for efficiency. Those chairs require people in them. RIF all you want but it damages sales, customers, partners and brand.

Since we have 2 weeks left to the year, I am certain a new white-label UCaaS provider will emerge.

Last year, I predicted that in 12-15 months a TSB would fall. It didn’t happen yet, but all the signs are there.

Many companies acquired 3-4 years ago by private equity are now being sold. The IPO market isn’t great so they are being re-packaged and sold to a bigger PE firm. You can see it most clearly in the MSP space as the MSP software vendors are mostly PE owned.

The Cyber-Security space was supposed to heat up sales wise, but instead there was a lot of M&A in that space. And many layoffs. That kind of got in the way of success.

Lots more of the same coming in 2024. With the Presidential election looming in 11 months, it will cast a wide shadow over the economy and markets.

Want to hear some predictions for the Channel in 2024? Tune in this Thursday (12/21) at 3:15 PM Eastern time: https://lnkd.in/eAErktx 

One more thought: I know many telecom providers make money on robocalls and spam texts. Your greed has made voice useless. Thanks!

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