Routing to Microsoft

It seems every provider in the game has announced some version of Microsoft Teams Routing (or dial-tone for Teams). Currently, that is pricing at about $7 per user. The providers doing this are seeking short term revenues on a short runway.

UCaaS pre-pandemic was often sold as dial-tone replacement. In that scenario there wasn’t much value in it and the price compressed. Also, the provider sales teams started to get tunnel vision on dial-tone, neglecting all of the collaboration functionality that won Microsoft and Zoom so many users during the pandemic.

Here we are again with UCaaS providers really just selling DIAL-TONE. Might as well go back to saying VoIP or start using the CPaaS hashtag. There isn’t much value in being the dial-tone. Sure, you offer SMS and chat too, but that isn’t a differentiator.

This reminds me of when the providers were saying “integration” but it just meant click-to-call. That isn’t really integrated. That’s a button or widget.

UCaaS providers are now looking at the full stack – CPaaS, video conferencing (VCaaS), UCaaS and Contact Center – to sell as the Customer Experience suite. Both Vonage and 8×8 are now doing this under a new acronym – VBC and XCaaS, respectively. BTW, CustomerView rolled out CXaaS in 2019. A new acronym is NOT going to help.

If Microsoft really wanted the revenue, they could offer dial-tone and SMS to every user via Azure CPaaS. Bandwidth.com would love that since they are the underlying vendor for that. (Buy $BAND as a hedge I guess.)

When Microsoft puts Metaswitch in the Azure Cloud for Operators, every ILEC will be able to use it. They weren’t going to do SDN and NFV by themselves. They needed a cloud partner to do it. Now all these ILECs will have Azure Cloud, Metaswitch, vSBC, CPaaS and Teams as the user interface for it. Almost every ILEC in North America has a Metaswitch. Now they will be pushing MS Teams and their own dial-tone to that – all running on the Azure cloud. Look for this in 2022.

Where does that leave UC players?

I have written before about Cisco abandoning BroadWorks in favor of Webex, Spark, CJP. They never fixed UC-One to compete with MS. They think Webex will but Webex can’t even compete with Zoom! Webex, PGi and GoTo lost significant ground in the conferencing/meeting space that they were front runners of in 2020. They got lazy. They never improved User Design and got beat by an upstart.

All of this will effectively make Microsoft the de facto interface for business users. I don’t see Webex catching up. Comcast and Verizon made a choice to shift away from Cisco. Comcast bought Blueface and Verizon bought Bluejeans while turning to RingCentral and Aircall. Cisco wants the Enterprise. Verizon will still sell Cisco to the Enterprise, yet most of the business isn’t in the Enterprise. In the sub-175 employee space is where all the money is. That’s where UC providers can win.

Providers would need to either innovate a way to overlay on MS Teams – or they need to start selling as a Teams replacement. (They may need a migration tool to do that!)

There are providers who have the features – Intermedia, NEC, PanTerra – to offer a MS Teams replacement with a better package. Intermedia is a Microsoft partner and has Exchange services available to replace the whole package. A few offer a Dropbox-like product to replace Sharepoint/Off365. This would require real sales and marketing. Selling on Value and TCO, instead of the easy order for dial-tone. It would require an executive level decision to forsake short term revenue for owning the customer and providing a full suite.

Every single provider has the equivalent of Bronze, Gold and Silver bundles. Now though there are usually 5 or 6 (or X9 in 8×8’s case). That’s too many choices. And too many choices makes it difficult for the customer to decide. There should be 2 seats – UC and CX. The full unified seat and the customer experience seat that includes UC+CCC. No flavors. This makes sales easier. This simplifies the story.

Right now, most people offering UCaaS have no idea WHY a customer should buy from them instead of… That’s sad, but true. It reminds me of the days of Integrated T1’s. No differences, just price. I know this industry grew up on LD, but why can’t we get away from the price mentality for sales?

When Microsoft finishes its Metaswitch in Azure, Operator, CPaaS, virtual SBC and Teams interface, and the UC players are losing their $7 seats, it will be too late to innovate. It will be too late to pivot. The time is now when you have a 18 month runway.

The time is now because the pandemic forced businesses to move to UCaaS. Take advantage.

BTW, I don’t think providers can sell straight up against the UC market. Zoom and Microsoft have most of the air in the room. Th etop UC providers are platforms moving to ecosystems (think marketplaces like Salesforce has due to SF’s open API and years of courting ISVs to develop around that). That is what RingCentral is thinking. Zoom said 2 weeks ago that it was going to become a platform and launched SDKs.

You have to want to own the customer – and provide them with all the functionality. In the contact center space, that is exactly what the giants do. They partner or buy functionality in order to fulfill customer wishes. They don’t power Microsoft or Zendesk or ServiceNow. It is all their brand out front.

Need help with executing this or thinking about it? Call Peter @ RAD-INFO Inc at (813) 963-5884

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