The 4 Buckets of UCaaS

Since most UCaaS providers do not in fact differentiate themselves in any meaningful way in the marketplace, they end falling into one of 4 Buckets: Cheap, CX, Local or Everyone Else.

There is a sense that UCaaS has become a commodity – and as with all commodities it becomes about price. So as seat prices crater below $15 per seat (even as SPIFFs increase to 6X MRC!), the POTS replacement will continue. In RFPs, it usually comes down to price (unless there is a very specific feature set that is required).

CPaaS sales outgrew UCaaS sales in 2019. Is that due to a combination of simplicity and price? Perhaps.

CX is a bucket that includes service delivery, user design and customer experience (CX). These experiences have a big impact on word-of-mouth recommendations. If your company has a great app or a special functionality or integration that no one else has, then you can get in the CX bucket. If the service offering is HIPAA compliant or encrypted, this could be your bucket. This should turn this bucket into a drum.

Some say that Zoom’s CX is why it is taking most of the air out of the room. About 7 deals out of 10 are going to Zoom, over other video collab or conferencing platforms.

The Local bucket is what many providers fall in. Mom-and-Pop RLECs are in this bucket. Altus, PBX-Change, Stage2 and similar are in this bucket. Most of their business is regional. There is a segment of the SMB Market that wants to buy from other local SMBs. Capitalize on this as much as possible. Local and SMB are good banners to hang.

Then there is Everybody Else! These providers need to figure out how to Ladder or differentiate, because the market can’t sustain this many providers.

Some analysts are talking about how ecosystems will win the future. This is how UCaaS providers are becoming platform/ecosystem providers (think: Salesforce). I think going vertical is a better option than trying to integrate with 20 different CRM software. Being the only UC software integrated into AllState e-Insurance certainly gave 8×8 a leg up. And being vertically integrated means less competition.

The argument against going vertical is this dream that everyone will buy your stuff and you will grow to 1 million users. RingCentral was founded in 1997 and have outspent their competition to hit 1M endpoints. Mitel has been at it since 1973. A number of billion dollar telecom firms have hit a wall. It is more about profitability and satisfied customers.

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