The UCaaS 2-year Outlook (2019)

[ August 2019] On a call today with other partners about UCaaS, the question was who will win or lose in the Unified Communications space in two years. It is hard to say since anything can happen. Zoom came out of nowhere (meaning not in any analyst’s guess).

It could be Twilio or Dialpad to leapfrog 8×8 or RingCentral. It could be that RC or 8×8 or Vonage make a misstep – like outsourcing customer service. With all of the musical chairs, losing one or two quality project managers or a top sales executive could change someone’s future.

I think one of the factors is “What is the corporate goal?” Nextiva may want to be 8×8 but is that what Evolve IP’s founders want? Fuze has been nearing an IPO for two years. Rumor had Nextiva for sale. These considerations do affect execution and focus.

Another factor is where in the market are you focusing? Enterprise and Fortune 5000 are great deals but the margin, pressure and deployment suck the air out of the room. There is an awful lot of space in the 25-99 employees space — and even more in the under 25 employee space. I think 8×8’s Express offering is aimed at self-serve to very small business. I think Vonage/Nexmo is also – just not as focused. At one time the VSB (very small business) market was the aim of OnSip, Dialpad, Phone.com and many other providers; then everyone starting pushing upmarket. Why? As is often quoted: It takes just as much effort to sell 10 phones as to sell 100.

Microsoft partners are holding their breath waiting for Microsoft to catch up to the market so that Teams is a UC and Collab platform that can replace the phones from Avaya or RC.

Cisco partners are re-examining Webex Teams in light of the Broadsoft integration.

LogMein bundled Jive in with a new product launch with lower pricing as well as a marketing push that includes getting on an analyst list or two.

Can 8×8 keep growing at 18%? Everyone says that this is a $50B market. But is it really? Avaya has not gone out of business. Mitel neither. CPaaS will start accelerating, which is why 8×8 bought a CPaaS company and Vonage has repositioned Nexmo. Others such as Intelepeer and VoIP Innovations have jumped into the CPaaS+AI space that kandy.io is finally starting to get traction in. All are playing catch up to Twilio, who continues to innovate.

Can RingCentral keep growing at 25-34%? And never ever have a profit? Probably. You can buy sales all day. Cut corners other places. That increases churn, so you have to add more fuel to sales – and the wheel goes round and round.

One reason it may not be 8×8, VON, RC or Nextiva that win in 2 years is because they have been in the space for 10+ years and have not really figured out what the customer wants. Think about how similar all 4 are as platforms that include chat, voice, CRM, contact center, analytics and UC. People are buying it but not in droves and only as ARPU stalls.

Zoom demonstrated what could be done by an upstart (founded in 2011). Today disruption comes out of nowhere – iPod, iPhone, Uber. Lyft, AirBnb, Alexa.

How do we disrupt the UCaaS space?

FreedomVoice had a nifty iPhone app called Newber back in 2008 that Apple tanked after $500K in development. It would have been the start of mobile UC being connected to the desktop. Nothing like it has come out since.

I have tried to get a few providers to ditch the Poly/Yealink addiction and offer tablets with bluetooth instead — but nope! It is THAT thinking/mindset that is holding back the industry.

Counterpath and ADTRAN have had some outside the box thinking. ADTRAN has a collaboration suite (probably powered by Broadsoft like the Pro UC offering they also have). That is outside the hardware company’s main focus. Yet reselling a white label service after paying for some dev work is not going to be that profitable. But points for effort.

Counterpath Stetto adds collaboration and more to the standard UC product by layering on top.

All 3 (Adtran, Freedom & Counterpath) were thinking mobile extension of the product set.

UCaaS companies have to figure how to Re-Think what they are offering. Maybe package the service offerings differently to appeal to other/different buyers. Or launch a new set of functions to draw in new customers to land and expand in. the first step would be to examine what your customers are really using in your stack and re-imagine that (with a bow to Tom Peters).

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