Peter Radizeski is Founder and President of RAD-INFO INC. He is an accomplished blogalyst, speaker, author and consultant. He has helped many service providers with sales training, marketing, channel development and business strategy. He is a trusted source of knowledge about the telecom sector. His honest and direct approach make him a refreshing speaker.

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Is Amazon Going to Buy Vonage?

Amazon rolled out Chime, a Webex and GoToMeeting knock-off with Vonage as its partner for consumers and small biz. It turns out that Level3 is the partner for enterprise.

At EC17, Amazon launched a self-serve cloud contact center. (Once again Amazon took software it created and used internally and made it a commercial product like S3 and AWS.) The partner for this was Twilio. This seems like a slight to Vonage, who owns Nexmo, a twilio competitor.

There is a rumor that Amazon is looking to buy Vonage. There was an offer from Oracle to buy 8×8, so there are folks outside of telecom looking to buy VoIP companies.

A couple of ITSPs, Skyswitch and RingByName, are offering integration with Alexa. Alexa makes a nice speakerphone. Again this is a nice marketing gimmick but it doesn’t solve any real business problems.

Vonage’s market cap this morning is $1.4B, the same as 8×8 whose stock price is more than twice Vonage’s. I wonder how much longer these two companies can keep the machine of growth going. Keeping up 24%+ growth every quarter is a grind. It begs the question what happens when that slips to 19 or 20 percent? They probably won’t be stand-alone companies at that point.

In some ways, Amazon is like Twilio; it doesn’t want to be a phone company, but it wants to capture as much value in that space that it can without being one. It would be smarter for Amazon to buy Twilio, but the market cap is twice that of Vonage. What does that say about VoIP stocks?

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    3 Reasons Agents Won’t Sell Hardware

    SYNNEX and ScanSource and a number of other companies would really like it if partners starting selling hardware, devices, tablets, etc.

    When VADs want you to sell hardware, it was always a possibility. It takes less than an hour to signup with SYNNEX, Tech Data or Ingram. Yet what Agent wants to sell hardware? There are at least 3 reasons why Agents (traditional telecom brokers) will not sell hardware.

    RMAs – returns. Dealing with hardware returns is a pain.

    Billing – Agents don’t have a billing system. Agents let the providers deal with install, billing and returns.

    Compensation – Hardware is a one-time sale and payment and it has really Small Margins! We prefer Hardware-as-a-service with recurring revenue and providers handling the implementation.

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    A Lesson from Pharma?

    This morning Pershing Square Holdings Ltd.’s head, “Bill Ackman “deeply and profoundly” apologized for his investment in Valeant Pharmaceuticals International Inc., a “huge mistake” that cost his firm $4 billion,” in a letter to investors.

    Valeant stock is off by 95% from its peak in August 2015.

    “Valeant acquired Salix for $11.1 billion and got what has become a key franchise of gastrointestinal drugs. Yet the products haven’t sold as well as expected, and Ackman said that it now looked like Valeant “substantially overpayed for Salix, and it has not yet achieved the results anticipated by prior management.”” Doesn’t that sound like every telecom acquisition since 1999?

    “In the letter, Ackman said he had learned lessons, including that “a management team with a superb long-term investment record is still capable of making significant mistakes”.” The leadership that got you to one point may not be able to get you to the next point. We see it all the time. CEOs are blind to their own shortcomings and when they should look for advice.

    “The highly acquisitive nature of Valeant’s business required flawless capital allocation and operational execution, and therefore, a larger than normal degree of reliance on management,” Ackman said in his letter. “In retrospect, we misjudged the prior management team and this contributed to our loss.”

    Frontier has bought territories from AT&T and Verizon in the last 3 years. Yet they are losing subscribers and morale is at an all time low. Bankers want Frontier to spend (millions) on network upgrades. Other RLECs have learned that without investment in network to compete with cable broadband, revenues steadily decline. Here’s what the LECs spent in CAPEX. Comcast and Charter together spent $16B on network Bell Canada is spending $637M. You have to still work the acquisition. You still have to compete and sell and market.

    INCOMPAS argues CenturyLink/Level 3 combo won’t promote competition. I think it will be a complete flop. C-Link’s HQ is in Monroe, LA. The telecom hub of talent is in Denver. Will the talent needed move to Monroe?

    <p.
    Let's not forget that C-Link purchased Qwest and Savvis in large deals that did NOT pay off. They just sold off their data centers! They haven’t expanded outside the ILEC borders.

    We have Fairpoint merging with another RLEC, too. It is NOT just about scale. It is about strategy and its execution.

    These mergers won’t stop, but they aren’t exactly wins. It’s more like: I’m tired; someone buy me. Or buy something to obscure our abysmal organic growth.

    SIDE NOTE:

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    Two out of 5 of these Ethernet providers are gone!

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    The EC17 Overview: Experience Matters

    Enterprise Connect seemed much bigger this year with 18 rows of booths, many of which were 20×20 or larger. There was much in the way of video conferencing and a couple of VR rooms.

    The real buzz came from Amazon that launched Amazon Connect – Customer Contact Center in the Cloud. GE Appliances is one of Amazon Connect’s initial customers (and shared the stage at EC17 with them). Last week, they launched contact center tools. Before that, they launched Chime, a web conferencing app.

    “Amazon Connect is a self-service, cloud-based contact center service that makes it easy for any business to deliver better customer service at lower cost,” according to the website. It got a lot of coverage (telecomp and techcrunch, to link but 2).

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    Chime was launched in conjunction with Vonage who will be handling the consumer and small business market. Level3 partnered with Amazon on Chime for Enterprise, which partners will get to sell soon.

    In both cases, Amazon is entering a crowded field with a self-service, low priced offering that hangs off of their massive computing infrastructure. It is mainly price disruptive, but that doesn’t mean it won’t shake up Wall Street which will re-adjust valuations for the likes of Cisco, Citrix, Genesys and Avaya.

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    GENBAND partnered with IBM Watson for AI chatbots in its Kandy wrappers. The Kandy wrappers are pre-packed programs like a customer service chatbot that can answer FAQs and detect when the caller is getting agitated. It then takes the call transcript and sends it to a live rep, who if all the back-end works would be able to take over the call in continuum. The demo was great. Implementation will be difficult, but I would like to see Florida Blue jump on board and give it a try because they have horrible customer service systems (maybe on purpose).

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    West showcased the new version of Spark with Hybrid Voice.

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    Sprint had a robot running around their booth but I don’t know why.

    Counterpath demonstrated its new capabilities for what was once just a softphone. Now there is a good amount of reporting and analytics on users and calls. One user experience across multiple platforms (phone, tablet, laptop, Mac, Android, PC). It layers on top of existing UC, so Broadsoft providers can get better reporting, analytics and user experience without having to upgrade their investment. Counterpath also added a Salesforce plug-in so that interactions inside the Bria app can be captured in a CRM record. And you get screen pops!

    BTW, “Voice is still a customer’s number one choice when dealing with a customer service issue.” [twitter]

    “Cloud computing: Are these the hurdles that trip you up? More companies are using cloud-powered services, but it’s not without pain. Here are some of the common complaints.” Interesting read on ZD.

    One thing that seemed to be a theme: User and Customer Experiences Matter.

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    Apex Technology Services
    Sponsored by Apex Technology Services, a leading IT Services company

    Why TelePacific is Re-Branding

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    In this podcast, I speak with TelePacific’s SVP Ken Bisnoff on why TelePacific is re-branding. The CLEC of old is gone. Telecom is shifting to be more than voice and Internet. TelePacific has transitioned to a Managed Services Carrier with its acquisition of DSCI. TelePacific is not the same company it was even 5 years ago. It is now a Tier 1 CSP for Microsoft. There is a SOC (security operations center) in St. Louis. The lines of business have changed. Now the name will too.

    One point made during the podcast to note: the providers are shifting, but Agents need to shift too.

    If you cannot see the flash player, you can download the mp3 or listen on Soundcloud.

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