“Dear Collaboration Industry: We need more clarity, not more players!” Love, your valued customers
One gal’s summary on the Cloud Collaboration Industry
These days, you can’t open a web browser without being bombarded with news on the never ending list of Collaboration companies and their recent launches, acquisitions or end user metrics. Team collaboration software is a market with a growth rate of 9.0% CAGR between 2018 and 2025 and will reach an overall end user spend of about $45B by 2021. This technology has quickly emerged as the hottest industry to invest in, and the FOMO is real. Everyone and their son has launched a Collaboration product. Personally, I’m thrilled as office tools have painfully lagged behind personal communication tools for no good reason. A revolution was near and was desperately needed.
Today, only about 15% of UC solutions are in the Cloud & Gartner predicts that “by 2021, 90% of IT leaders will not purchase any new premises-based UC infrastructure.” We all know the change is inevitable, so I’ll skip the “why you need digital transformation” speak that usually annoys our customers to the point of migraine. We know we need digital transformation. More importantly, customers (including me!) need clarity on what exactly is the difference between the laundry list of providers? It all sounds the same, in different marketing speak, terms & examples.
In this article, I aim to give some background on the major players in this industry and their overarching strategy on Team Collaboration. This isn’t a review of features and specs as that is ever changing. I’ll review how they entered the industry and their strategies so far in market. I will review: Microsoft, Cisco, RingCentral, 8x8, Slack, Amazon & Zoom Video Communications.
Microsoft
Microsoft has been a strong enterprise player for a number of years. Microsoft started in the meeting space with Lync, which eventually became “Skype for Business.” Although Skype is being phased out and replaced by Teams, there are still A LOT companies using it today (time to migrate my friends). The creation of Teams helps Microsoft to enter the world of UCaaS by combining user experience with customer experience solutions (contact center), business experience (management and administration), and team experience (collaboration).
It’s not just a conferencing & messaging tool; Microsoft Teams is fully immersive into the Microsoft Office ecosystem — a mission critical app for most. There are approximately 1.2 billion users globally using some manner of Office products. Enough said. Ok fine, I’ll say it one more time: It’s SUPER relevant to our customers that Teams was built to integrate with Office, a product that has 95% of the desktop application market.
It is important to make the distinction between UCaaS vs. UC for those who are unaware. Let’s use Gartner’s definitions to avoid controversy.
- Unified Communications = On-premise solutions that require hardware and onboarding
- Unified Communications as a Service = Cloud delivered solutions with light weight clients
The most important thing you need to know: UCaaS = continuous innovation with ongoing releases of software upgrades, new features and enhancements, for one monthly subscription price per seat. UC = a one-time buy of a specific set of technology at a specific moment in time. See the problem?
Microsoft has emerged as an enterprise leader in team collaboration specifically because of its acceptance of UCaaS. This is something Microsoft did very right very early on. Microsoft doesn’t just offer collaboration as an add-on to your existing environment. Instead, Teams is a natural component of your existing Microsoft ecosystem. Not surprisingly, Teams is Microsoft fastest growing app, EVER.
Microsoft’s advantage is that it’s building Teams to integrate so intimately with Office in a way that no one else can. They also have created their products to service the Enterprise segment, which they sell to directly and have strong relationships with. Watching a company as big as Microsoft try to pivot is often a painful and humorous experience. But Satya Nadella brilliantly navigated The End of Windows internally, freeing Microsoft employees to build products that customers actually wanted, not that Microsoft needed. Well done Satya (the best tech sector leader alive today, in my humble opinion). Another advantage is that they have very talented product dev team that have proved they are thinking from a user first mindset. Hello background blur, I need you in my life!
Microsoft’s disadvantages are in the small business and mid market segment. Microsoft sells through partners in this segment and is still developing their “Coopetition” relationships. The product wasn’t built for small business per se and their competitors don’t hesitate to point this out. Further without direct routing integrated, Teams voice has been dubbed by some as lower quality then their Enterprise grade competitors. Microsoft does claim that Teams voice has the same voice quality as Skype for Business.
Cisco
Cisco Systems has been in the heart of the communication industry since it was founded in 1984 (co-founded by a female, might I add). In 2007 (long before Microsoft were even thinking about this industry) Cisco acquired WebEx for a mere $3.2B. In 2009, Cisco purchased Tandberg — the video conferencing company. Acquiring a global leader in video conferencing put Cisco on the cutting edge of the collaboration marketplace at the time. Cisco was ahead of the game in terms of endpoints and innovative solutions for a number of years. More recently, Cisco took its UC strategy further with its purchase of the UCaaS platform vendor, BroadSoft.
Currently, around 130 million users are on WebEx each month. When Cisco WebEx Teams launched, it was initially called “Cisco Spark.” In 2018, Cisco revealed that their Spark tool would become a component of the WebEx ecosystem, as Cisco WebEx Teams (hmmmm…. sound familiar?). Cisco Teams included guest access, content sharing, whiteboarding and more…. kind of like Microsoft Teams. Just saying.
Today, Cisco owns ~50% of the UC and Meetings market. Cisco’s major advantage is that they have a history of doing meetings well and have focused on hardware & software integrations. Further, Cisco has strong partner ecosystem that delivers more customizable solutions for customers. The recent acquisition of Broadsoft (which includes a UCaaS offering in it) means that the company can expand its total addressable market — mainly downstream. Webex Calling (formerly BroadCloud), is now available on the Cisco Collaboration Flex plan. This strategy gives companies with 100+ employees a practical approach for taking their business into the cloud at their own pace. Cisco has a bring-your-own carrier solution available, so businesses have complete control over their UC strategy and makes migration much less of a big bang approach.
Cisco’s disadvantage (which they are actively addressing) is that their products have also not been built with the SMB business in mind or UCaaS in mind. Bringing their solutions to the 5–50 employee business has not been economical for the customer until recently, with the acquisition of Broadsoft. Secondly, Cisco has a major stake in legacy communication systems as well as the new UCaaS market, that generally is cutting the profit margins of UC systems in half. From a business strategy & profitability perspective Cisco may have some stake in keeping legacy technologies in the hands of their customers for as long as possible, as it helps their bottom line. Essentially, what’s best for the customer may not always be what’s best for Cisco and it may affect their strategies — just my hunch and not anything more than that, so take this with a grain of salt.
Last thing I notice about Cisco is that most of their innovations are coming from acquisitions vs. organic internal product development. I’m not really sure if this is a disadvantage or not, but it’s worth noting.
RingCentral
RingCentral is a globally recognized, publicly traded UCaaS provider who are giving Microsoft and Cisco a run for their money. Vlad Shmunis founded RingCentral in 1999. Under Shmunis, RingCentral has grown up from a startup funded in 2006 with a $12 million series A round to a publicly traded NYSE listed company with ~$500 million revenue run rate in 2017. In 2017, Forbes profiled Shmunis as a leader in disrupting the UC market.
In June 2015, RingCentral acquired Glip, and app that rivals Slack. This was a good move to enhance the platform and very forward thinking for the time.
Yes RingCentral is a truly robust UCaaS offering, but that doesn’t really tell the full story. Beyond advanced calling capabilities, RingCentral’s platform includes a fairly impressive feature set that is an all in one solution that works superbly well with other Cloud apps. Gartner also noted RingCentral’s strong database of existing integrations — which was just recently supported by the fact that they were awarded the 2018 API Award for best in communication APIs, given by API World. Lastly, Gartner surveyed RingCentral customers (for their report) and they had reported “solid customer service for at least 3 consecutive years.”
RingCentral has been named a leader in the Gartner Magic Quadrant UCaaS Worldwide 2015, 2016, 2017 and 2018, UCaaS Company of the Year by Frost & Sullivan in 2017, and a leader in the IHS UCaaS Scorecard 2017 and 2018. Wow, talk about an underdog taking the world by storm!
Although a young player compared to their competitive heavyweights, RingCentral is a strong cloud provider that is forward thinking. RingCentral’s key advantages is that they are a born in the cloud platform built FOR the mobile experience. They have strong integrations with other Cloud leaders & the scalability of their solution from a 5 employee business to a 45,000 employees in the matter of minutes is very appealing. They are a constantly evolving platform adding new languages, features, integrations & technology every quarter to their product set, truly embracing the nature of UCaaS.
RingCentral’s major disadvantage is being the new kid on the block and getting CIOs to trust their brand as much as they trust Microsoft and Cisco. Another disadvantage in some markets is having local data residency. They certainly have this in major markets but not all markets yet. This is make them a non-contender for many enterprise companies and public sector clients. Lastly, there have been complaints that the quality of service changes drastically when the connection is unstable. I think this alludes more to network connection than the product itself however.
8x8
8×8 was ranked as one of the leaders in the 2018 Gartner Magic Quadrant UCaaS rankings and held their position, just below RingCentral. 8x8 was founded in 1987 by Dr. Chi-Shin Wang and Dr. Y.W. Sing as Integrated Information Technology, Inc., or IIT. They began IIT as a vendor of semiconductor products for the math coprocessor and graphics chipset markets. In the early 1990s IIT began producing chips, software and other technologies for the videoconferencing market. The company changed its name to 8x8 and began marketing its own set-top videoconferencing systems. 8x8 went public on the NASDAQ market in 1997.
The Cloud platform is the center core of it’s offering, but 8×8 also focuses on opening flexibility with new APIs. Simply put, 8×8 offers a closely integrated Cloud Communications Platform, similar to RingCentral. This solution brings everything from VoIP communications, team collaboration, contact center functions and the deep contact center analytics, together into one seamless package. The contact center integration story has been a compelling one for them and a big leg up on their competitors, as unifying the customer & employee communication streams is the next inevitable evolution of Cloud Communications.
Another unique offering by 8x8 is their internal scripting language. They provide a “dynamic communications tool” that allows users to design their own workflows and routing procedures. Pretty much, this offers users the flexibility to improve their own workflows, leverage existing data, or introduce new communications functions. Script, Build and Expand On Your Own. Pretty cool.
Arguably their most forward thinking move, 8×8 acquired Sameroom. Sameroom offers a solution that links together the massive list of existing team collaboration and messaging apps. So if one team in New York is on Slack, but another team in California is on HipChat, Sameroom extends a bridge between the two solutions so no one team has to switch over.
This can be seen as a Band-Aid to the problem. There are so many options out there, it can be difficult to understand what’s best for your team. However, on the flip side you can view it as 8x8 deeply listening to end users. Instead of building a new solution and adding to the mega mess that is the current UC&C market, 8×8 went at the problem from a different angle. They know what people are using and people use what they like. So let customers keep using their favorite solutions, but to help bridge everything together.
8x8 advantages are similar to that of RingCentral: Born in the cloud platform with strong integrations. Where they have as a leg up is their ability to allow users to design their own workflows and routing procedures & use the chat apps they already have adopted and love. Their contact center integration is also a compelling advantage. 8x8 disadvantages can be noted as having infrequent software releases and outages in comparison to other UCaaS providers. They have also been noted to limited call queuing options and limited customer service options (no 24/7 chat or phone service available). 8x8 claims 99.99% platform uptime but does not provide platform guarantees in SLAs. Lastly, 8x8 is generally viewed as an SMB product and does not serve upmarket as well as some of the industry heavyweights.
Slack
Slack launched in August 2013 in my current beautiful city, Vancouver BC! They later moved their HQ to San Francisco, but it’s cool to note when a unicorn is started in Canada, so I will! In October 2014, the company raised $120 million in venture capital with a $1.2 billion valuation led by Kleiner Perkins Caufield & Byers and Google Ventures. In January 2015, Slack announced the acquisition of Screenhero, a specialist in voice, video, and screen sharing.
They consider themselves a freemium product, whose main paid features are the ability to search more than 10,000 archived messages and add unlimited apps and integrations. They claim to be able to provide support for an unlimited number of users — not sure whose tested this claim and what the largest slack group/organization looks like so can’t quite comment here.
What’s interesting about Slack is what this company did to the communications industry. The company argues that they transformed internal communications:
The most helpful explanation of Slack is often that it replaces the use of email inside the organization. Like email (or the Internet or electricity), Slack has very general and broad applicability. It is not aimed at any one specific purpose, but nearly anything that people do together at work.
Unlike email, however, most of this activity happens in team-based channels, rather than in individual inboxes. Channels offer a persistent record of the conversations, data, documents, and application workflows relevant to a project or a topic. Membership of a channel can change over time as people join or leave a project or organization, and users benefit from the accumulated historical information in a way an employee never could when starting with an empty email inbox. Depending on the size of the organization, this might provide tens, hundreds or even thousands of times more access to information than is available to individuals working in environments where email is the primary means of communication.
Secondly, Slack argues that it changes what it means to integrate software:
Also unlike email, Slack was designed from the ground up to integrate with external software systems. Slack provides an easy way for users to share and aggregate information from other software, take action on notifications, and advance workflows in a multitude of third-party applications, over 1,500 of which are listed in the Slack App Directory. Further, Slack’s platform capabilities extend beyond integrations with third-party applications and allow for easy integrations with an organization’s internally-developed software. During the three months ended January 31, 2019, our more than 10 million daily active users included more than 500,000 registered developers. Developers have collectively created more than 450,000 third-party applications or custom integrations that were used in a typical week during the three months ended January 31, 2019. Additionally, we are currently developing low-code solutions to create integrations and workflows entirely in Slack, suitable for all users and based on a simple, non-technical user interface.
This is what is worth noting about Slack: Zoom and Microsoft Office in some respects are more impressive businesses, but their use-cases were pre-existing. Slack, on the other hand, introduced an entirely new way to work and a new business model to go after.
Slack has added a new realm to the Unified Communications ecosystem and their product use case was so strong that all the UC players (Microsoft Teams, RingCentral Glip, Cisco Teams) have acquired or launched their own version of persistent chat.
What will happen with Slack is yet to be determined. Slack has focused on persistent chat as their product, while dabbling in other UC functionality but not perfecting them. On its own, I don’t think it is strong enough to be considered as a UCaaS contender. But if they get acquired by a big player with this missing piece in their UC equation (Amazon / Zoom… are you listening?), the tables will turn and Slack can be a real threat in this industry.
Amazon
We knew Amazon was planning something when in 2016 they acquired patents and staff from San Francisco-based Biba Systems, a startup behind video messaging apps aimed at business users. When they launched Chime back in early 2017 the general consensus among reviewers was “meh.” Expectations were that Amazon would turn the video conferencing world on its ear with new innovations that would change how we communicate. While that didn’t happen, Amazon did deliver a very serviceable and stable system that is great for small business owners. It’s pretty standard in its offering and nothing unique to note as compared to the providers reviewed above.
Chime is secure and there’s nothing to deploy or manage, which means you don’t have to spend time trying to figure out how to make sure Steve in Cleveland can access your video conference after lunch. Simple is likely it’s biggest value proposition.
New users can also get a free 30-day trial by creating an Amazon Chime account, and there’s no credit card required. After 30 days, if you opt not to use the Pro services, you can continue to use the Amazon Chime Basic features for free. Standard Amazon customer acquisition tactics.
Chime’s biggest disadvantage is it’s lack of chat features (which could be resolved with a quick acquisition of the competitor reviewed above). The near-instant popularity of Slack has caught the attention of all the competitors…except Amazon. I am sure they are cooking up something on this matter however. Further, I don’t see a clear differentiator for the Chime offering in the marketplace right now (Amazon Alexa integration could very easily solve this issue however). Lastly, industry giants like Cisco and Microsoft have established go-to-market strategies, which makes them better positioned to target customers. While Amazon employs GTM strategies in other industries, in the UC arena it currently feels like a solution targeted at small businesses. To compete with the likes of Skype for Business and WebEx, Amazon Chime will need to strengthen its go-to-market approach.
As Amazon looks to compete in today’s very crowded UC market, leveraging the channel will be essential for Amazon to break through the noise. Because UC competitors have historically focused on telecom rather than selling computer/data centre services, Amazon will have to make a significant effort with the channel and resellers to be successful in the space. When it comes to breaking through existing noise in the UCaaS market, Amazon needs to keep in mind that it will need more than a collaboration platform and calling capabilities. Replacing an enterprise voice platform is tricky because providers have to consider a variety of core private branch (PBX) type features and functionalities, integrations, PSTN — all while complying with existing global regulations. In summary, Chime seems like it’s targeting the low-end of the UC market and is not yet a serious challenger to large UCaaS providers.
Zoom Video Communications
Probably the vendor getting the most buzz these days is Zoom. Zoom was founded in 2011 by Eric Yuan, a former VP of engineering from Cisco WebEx. David Berman, from WebEx and RingCentral, became President in 2015. During the first year of its release, Zoom established key partnerships with B2B software providers which has been the name of their game to growth. Its partnership with Redbooth played a role in adding a video component to their service. Shortly after this partnership, Zoom created a program named “Works with Zoom”, which established partnerships with multiple vendors such as InterviewStream, a company that provides remote video interviewing capacity to employers. By 2014, Zoom added the capability for participants to join meetings by dialing into a toll-free public switched telephone network number via its partnership with Voxbone. In 2015 they received $30 million in series C funding and formed a partnership with Salesforce to integrate video conferencing into their CRM, allowing salespeople to initiate conferences with their leads without leaving the application.
In 2017, Zoom got published achieving several key milestones. Highlights included hosting over 20 billion annualized meeting minutes, opening offices abroad in Sydney and the UK, growing revenue 150% YoY and customer base by 100%, partnering and optimizing integrations with Polycom, Crestron, and Cisco, and introducing new enhancements to its platform including Zoom Rooms Scheduling Display and Zoom for Telehealth. In addition, Zoom was ranked 18th on Forbes Cloud 100 List and scored a 4.8 / 5 on Gartner Peer Insights.
Zoom has decided to enter the very crowded UCaaS market in early 2019, launching their cloud PBX service as a beta product calling into 16 countries — at least for now. Customers can explore a range of options through Zoom Phone, upgraded Zoom Rooms, and even expanded Zoom Meetings. They will only sell Zoom Voice to paid customers of its flagship web conferencing platform. This appeals to customers who want to consolidate their UC vendors and it may also be cheaper to buy Zoom’s bundle than to subscribe to Zoom for video and obtain telephony services separately. Zoom Phone has only been on the market for a short time, yet it’s already making huge waves in the industry.
With its video-first and simple user experience strategy, Zoom launched Zoom Phone under the same principals. The advantages of Zoom Phone is the ease of use for everyone and it’s APIs into other critical apps. Zoom also has a “bring your own carrier” program which allows customers complete flexibility to choose their tech stack and avoid the rip and replace model that doesn’t work for most large companies. Zoom Phone is an excellent solution for any company that already loves the Zoom experience and wants the freedom to be able to use voice calls, as well as video meetings. What’s also interesting is their partnership with Slack. While most of the UC providers have taken their own strategy on persistent chat, Zoom has decided to deepen its partnership with Slack. Today, Slack and Zoom customers love the connection between the two brands, with over 10,000 teams using the integration each month. They’ve also launched some unique features. For example, smart calendar integrations: Slack’s access to Google and Outlook Calendar offers a feature that allows users to join a Zoom meeting at the click of a button. Manage Zoom Meetings in Slack: You can launch a Zoom meeting from Slack easily by typing /zoom. These moves UC-enables Slack’s workflow platform and makes it easy for teams to hold effective meetings with an easy-join experience through the client. The Slack Zoom integration helps fill a gap in both portfolios, and allows these two partners with viral solutions to join forces against the all in one solutions offered by the traditional UCaaS providers.
Zoom’s disadvantages are that they are late to the game in the UCaaS market and are missing critical factors to success; in house persistent chat, data residency in the countries they support, scalability to the enterprise segment, QoS analytics, contact center integrations to name a few. It’ll be interesting to see how Zoom performs in this highly competitive market and if they have a differentiated value proposition to stand on, as their technology backs the RingCentral solution and many others.
Who am I? I’m Ashima, a Strategic Alliances/Partnerships Manager with a background in sales & marketing. I’ve built partnership strategies for a $2B business, driven 30% yoy growth in “underdog” partnerships and worked for born in the cloud start ups, launching 10 countries in 1 year once! I started my career in finance and ended up in tech. I’m passionate about cloud storytelling and making sales folks lives easier. I love my work and if I could pick one word to describe how I’d like to live my life it would be “Bold”
