I attended the Cavell Summit yesterday at Harvard. It was held at the Treehouse, a beautiful building. Cavell used the event to highlight a lot of research they have done. Obviously, many of the sessions were about AI, especially the vendor spotlight sessions where Zoom and everyone else talked about AI.
I have a weird thought: Stop with all the AI!
Here’s where I see things going with UCaaS:
Broadsoft shops will be Webex resellers with an expensive class 4 switch for call control. But they won’t dump the Broadsoft due to sunk cost thinking and hold over from days of being a real voice provider.
Residential voice and simple business voice (SIP Trunks!) will be the business focus for years to come. Is a Broadsoft a cost effective way to deliver that?
For small business, Agentic AI, SMS, and voice are going to move to the PSA, the professional software that runs the business. Think ServiceTitan. I see it with HVAC, appliance repair, car repair and other service shops that have software handling quote to cash plus all of the comms in-between. When is the technician arriving? It even sends and email or text asking for a review or a survey or both.
Weave already does this for healthcare, veterinarians, and dentists. Bluip is doing this for hospitality. VERTICALS, people! VERTICALS. This was discussed at the summit twice, but I feel like it fell on deaf ears. INTEGRATIONS can make you sticky!
Consider this: 2000+ Voice AI providers have been funded in the last 3 years. Read that again. And BCStrategies counts 1300 CX providers in their research!
Thinking that getting Agentic AI from your switch provider is going to make you a contender is folly. Most UCaaS providers didn’t sell call analytics, but now they think they are going to be leading the charge? How many call recording clients do you have? Probably not many.
How many contact center clients do you have? If it isn’t a meaningful percentage of your seats (like 20K UCaaS seats and 2K CC seats), then how do you imagine your AI Agent sales will go? Or your CX sales? Unless you retool your sales and marketing departments, consider that you may be in the VOICE business and strategize accordingly.
RingCentral and Zoom are fighting to be the end all be all — up against Microsoft Teams. There isn’t room in that space for anyone else. They are fighting for Enterprise and Midmarket – anyone over 250 seats!
Dialpad is in that fight because they were talking AI for practical use before anyone, but they have a very concrete story and ICP.
The majority of the market is 10-250 employees. 700K businesses have 10-250 employees in the US.
This article from UX Today explains a lot. “Zoom told investors in May that its first quarter of fiscal 2027 was one of its best in years. Revenue grew 5.5%, beating the top of its own guidance range, and CEO Eric Yuan called it “among our best growth rates in recent years” on the call. In that same breath, Zoom guided Q2 lower: $1.265 billion to $1.270 billion, which at the midpoint is 4.1% year-on-year growth. A company doesn’t usually follow its best quarter in years with guidance for a weaker one unless it has a specific reason to expect the slowdown.
That reason matters more now than it would have three months ago. Cisco’s Collaboration segment just delivered its best quarter in seven years, up 12%. RingCentral grew 5.9% in its own most recent quarter. Zoom’s 5.5% in Q1 sat ahead of RingCentral’s pace. Its 4.1% guidance for Q2, if it holds, would sit behind both.
Online churn, from self-serve and non-enterprise customers at Zoom, rose from 2.8% to 3% in Q1.”
RingCentral and Zoom have a lot of AI adoption but not a lot of revenue from it. They are spending like drunken sailors on a shore pass on AI, but are only seeing it stave off revenue decline. Is that a game you want to be in?
Since most UCaaS providers launched (between 2003 and 2009), they were selling PBX replacement, but forgot about chat, video, meetings and other functions (like call recording). In fact, it took the 2020 pandemic for anyone to remember that they offered those functions. Some of it was due to how the sales operation was set up, some was about sales compensation, but it also has to do with a lack of product management. There wasn’t a product champion in place educating the company, the customers and the market on all the cool things that the platform was capable of.
From 2020 to 2022, Cisco added over 400 features to Webex. Most Broadsoft providers had no idea! No one was paying attention or keeping up with that.
We see how that worked out for UCaaS providers. How will that work when UCaaS providers try to become Agentic AI providers?
AI is even more complicated than CX in both sales and implementation. And every AI product is also a Data project. Who handles all of that professional services?
If churn is 2% and growth is 4%, um, barely outpacing churn, maybe spending all your dollars and sales cycles talking AI instead of Collab isn’t resonating with Buyers.
There needs to a strategy, a plan, and proper messaging for your CSP. There also needs to be serious thought into questions like: Why YOU and not MS Teams? Why not RingCentral or Zoom or Dialpad? Not enough CSPs have real answers to the questions: Why should we buy from you? It is about time they did.
SIDE NOTE:
On the Channel for UCaaS Providers. At most CCA events, the members are not very channel friendly. In fact, yesterday they were talking about how useless TSD’s are. I will get into this in another post or podcast. It really shows how little most vendors understand the channel that delivers 40-55% of sales to most UCaaS providers!
Here you go: Why Are You So Mad at the Channel?