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Rationalization in 2023

Seems weekly we have PE money buying either a partner (Agency or MSP) or a provider. PE money is deep in ILECs now that Lumen sold off half its assets to Apollo. Even before that several IOCs had been acquired by PE.

Where the M&A has not happened as much as expected: cloud comms! All the analysts say there are too many providers, but no one is buying them up. Probably because the UCaaS sector is less than hot — the stocks of these companies rationalized in my opinion. Growth during a pandemic was huge but unsustainable.

And we go right back to the problem from 2018: What real pain does UCaaS solve?

Because they can’t answer that, we have the Platform talking points. We have the CX slicks. We have the app marketplace that will make the UCaaS component the center of the apps. How? Why? Almost every app has some function for messaging and calling.

So Cloud Contact Center married up CPaaS for minutes, messaging and notifications – you know, omni-channel. UCaaS is marrying up cloud contact center. And there are a host of providers with the full stack: UC+CC+CP-aaSes. Will that be enough?

Microsoft is entrenched in business with 290 of the 400M desktops. The opportunity is to integrate with MS Teams or provide dial-tone like 1999.

The providers who are inching along have to decide what business they want to be in — if they want to grow. AI and machine learning are growing. I mean, Chat GPT. There are capabilities in the meeting apps to add notes and more like Vowel has. I know the UCaaS providers tout it, but I don’t see it. Missing an opportunity.

Plus as we add functions like CCaaS, Meetings, chatbots, etc. selling it gets harder because now the salespeople have to know the product well enough to ask a bunch of questions to find need – from phone to meetings to whatever else. This goes beyond PBX replacement – and this industry was built on selling replacement services for less money.

Finding actual salespeople or selling partners is very difficult.

Irwin says that: “By 2030, more than 75% of companies will use UCaaS for their calling, meeting, and messaging needs.” That’s 7 more years. Who knows what happens by then.

Irwain also wrote about trends HERE.  I agree that “UC leaders must think beyond UC.
UC apps are rapidly becoming platforms that not only provide a wide range of features but also feature open APIs to enable customization and embedding of components into other apps (and vice versa). Even beyond UC, work management apps such as Asana, Monday, Smartsheets, and Wrike, as well as asynchronous collaboration apps like Notion and TeamFlowHQ, are quickly becoming a part of the enterprise collaboration landscape. UC leaders must evolve to become collaboration leaders, looking at all the ways employees communicate and collaborate, internally and externally, with an eye toward enabling convergence wherever possible.”  Well, there is a whole world of business outside Enterprise. In fact, there are 25M other businesses.  Those businesses won’t be running numerous apps. In fact, SMB runs less than 50 apps. Large business runs over 100 apps.

For small business, think about the apps: Office365/Google workspace, Quickbooks/Freshbooks, ADP/payroll, Hosted PBX, social media, SugarSync/backup, anti-virus, anti-malware, PSA (software that runs the business), POS, credit card payment and the like. Weave is doing a good job of combining some of this into platform for vets, dentists and doctors. Will any other company come along and do that for other verticals? That’s where the money is.

We had a plumber come out on Christmas Eve to my parents house. He had a mobile app for pricing, invoicing, scheduling, and credit card payment. That’s the kind of platform most small businesses want, especially field services businesses like electricians, landscapers, roofers, handy man, dog walkers, etc.

We are slowly seeing a drift in cloud comms. Enterprise platform and everything else. It will be interesting to see, since most providers want enterprise, but they are butting up against Avaya, Microsoft and Cisco. The  SMB space is almost being ignored unless they want to buy the enterprise bundle. That’s a lot like a small biz using Salesforce Professional – it is overkill and over-priced for what a business with under 500 employees needs. We will see though.

 

Predictions for 2023

[I love GapingVoid!] The last 3 years (2019-2022) have involved a lot of turmoil: pandemic, M&A, economic headwinds, and global turmoil (Iran, Ukraine, China, Russia, UK and more). The Channel will change in 2023. It is shrinking. Each segment of … [Continue reading]

Turmoil in Telecoms

Cellcos are spending billions per year (the top 3 spend about $30B on CAPEX for their network). 5G has been hyped to the max. But when will it pay off for the top 3?  Article in FT talks about it. It seems IoT and anything connected will be the … [Continue reading]

UCaaS Update

I have been busy with a couple of new projects with Turnium and Peace Communications (plus the continuing work for NEC and Intermedia), so I haven’t been blogging.  But here are some updates. RIFs in the space from RingCentral, Avaya twice and … [Continue reading]

Five Years Ago

Someone messaged me to take a look at a post of mine from 2017.  M&A at the time was mainly on the vendor side – cable mergers, the Birch thing and more.  How did it turn out? Birch sold to Fusion who then went bankrupt, which is a very Birch … [Continue reading]