SPIFFs are back bigger than ever – 7x-10x for UCaaS sales. I predicted that things would slow down as at least 3 providers played with reducing commissions. There is more at play here than just that, but it was a factor.
- Return to Work.
- AI product enhancements without any concrete examples.
- Buyers maybe waiting for the next best thing to come out.
- Price compression.
- SPIFF decline.
- Macro Economics
- Longer sales cycles.
- UC+CC is harder to sell than PBX replacement. And AI just makes it all harder.
2Q was a disaster for 8×8. Revenue was down 2% year over year. RingCentral with all of its bluster, announcements, partnerships and international country count only had a 12% YoY ARR increase. Zoom had a bad quarter with just 3% growth (and it is laying off 15% of its workforce).
Net2Phone and Weave had good quarters, 22% and 17% respectively.
Partner sales make up 30-55% of sales for cloud comm providers. When you play with sales compensation for partners, they sell other stuff. There are 2000+ providers selling HPBX. If Zoom is hard to work with in the channel, and the customer must have Zoom – sell it from CallTower. Resellers are a partner’s friend.
The big news today was that Madison Dearborn is shopping Intermedia. They want 20X the EBIDTA of $50M ($1B). I don’t think they will get anything more than $650M due to the revenues containing a healthy component of email & hosting.
RingCentral launched a simpler CCaaS product, RingCX. Vlad is replaced as CEO by an HPE veteran as Vlad becomes Board Chair or something.
Cloud Comm Alliance started an audio get together today, see HERE.
Quite a few providers are beating the Microsoft Routing for Teams drum. Telecom is always circular. We are back to selling dial-tone and minutes.
Verizon acquired Bluejeans video in 2020 for between $400-450M. Bluejeans had raised $175M to get to the place that Zoom went – but never got close. After just 3 years, Verizon is shuttering Bluejeans. Verizon has annual revenue of $136 Billion. Any product that can’t hit $100 Million quickly loses head count and interest. $100M is a very successful business but not within the confines of a telecom giant that spends $15-18B in CAPEX mostly on upgrading and running its networks – 4G, 5G, FiOS, MPLS, Ethernet, etc. VZ also sells Webex. Cisco is a big partner of theirs. It also sells MS Teams especially on mobile. It has the video segment covered. This is part of a long list of acquisitions by Verizon that have failed: Yahoo and AOL come to mind.