The latest financials came out in the last week. Let’s examine if UCaaS is growing.

RingCentral Office annualized exit recurring software subscriptions (ARR) grew 39% year-over-year to $316.8 million. RC says they are growing margins and revenue, while also increasing their losses. Is buying market share working?

8×8 reports that Total revenue grew 24% year-over-year to $63.2 million; service revenue grew 23% year-over-year to $57.7 million.

8×8’s New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams increased 30% year-over-year and accounted for 65% of total MRR booked in the quarter. Average monthly service revenue per business customer was $409, compared with $360 in the same year ago period.

Per the PR: Ending seats at Vonage Business were 616,000, up from 514,000 seats in the year ago quarter, a 20% increase. Vonage Business revenue churn was 1.4%, compared to 1.3% in the year ago quarter. (About double what 8×8 reports.)

This is such a spun statement: “Vonage Business revenue, which includes $24 million of Nexmo revenue, was $106 million, an 86% year-over-year increase on a GAAP basis.”

Broadsoft buys VoIP Logic to increase its white-label business, which now pits them directly against wholesalers like CoreDial and Bluip – and other BSFT clients who wholesale like Comcast and Momentum. If UcaaS was growing for the 420+ providers that utilize a BroadWorks platform, would BSFT need to ramp up its white-label and direct to Enterprise sales?

Interesting to note that of the noisy 3 in UCaaS, only Vonage has a BSFT.

Windstream announced yet another UCaaS product This one is called “Windstream Hosted Communications (WHC) for Small Business, a cloud-based phone solution offering enterprise-level capabilities to small and medium-sized businesses. Powered by Broadsoft. WIND also offers Avaya, Mitel and Allworx. Quite the mixture. It might explain why they have 1 million SIP trunks on their Broadsoft.

A couple of bright spots are the cable clan are almost all running Broadsoft. XO is powered by BSFT. (Coming to a Verizon store near you in 2Q2017!)

Both Bells – Verizon and AT&T – run Broadsoft for SIP trunking and UCaaS. In fact, we will see how the Broadsoft powered One Talk drives sales for both VZW and BSFT soon.

Recall that went ANPI was sold to Onvoy, they had just 20K seats on Broadsoft, so not everyone is killing it in the UCaaS space. In fact, if you take a sample from the INC5000, most VoIP providers in the US are doing LESS than $5M in business ($2-$4 million seems to be the median.).

“For 2016, BroadSoft expects the acquisition [of VoIP Logic] to contribute approximately $800,000 in revenue,” that means that VoIP Logic was doing about $3.2M in revenue. BSFT’s 3Q 2016 earnings call was this morning.

There are certainly VoIP Providers with more than $50 Million in revenue. I would argue it is more a pyramid than a bell curve.

Companies are ramping up the SPIFF war to grab market share in the UCaaS space. It is likely easier and cheaper to buy deals from channel partners that acquire a whole provider – and the resulting synergy/culture mess that will ensue with integration after a buy.

Bullseye, Fusion, Star2Star, TelePacific, AireSpring and net2phone are just six of the companies posting SPIFFs for deals to Channel Vision magazine’s email list and other places. And the SPIFFs are designed to skew for larger deals (more than 8×8’s ARPU of $409). Some are specific to a preferred master agency.

At an agent event last week, I was talking to an Avaya partner who is still selling strong. Sure there has been some dip in on-premise PBX but not as much as you would think. Windstream is still selling mid-market deals of Mitel and Avaya boxes.

Do you know where the weak spot is? SERVICE DELIVERY, according to someone whose opinion I value greatly. Barely anyone has that figured out yet! And that is where the Customer Experience starts (and stops). Size doesn’t matter. What matters is deployment, implementation, design, training and UX (user experience).

I keep hearing from folks who say the SAAS model is about OPEX over CAPEX. Well, that is the story but for most businesses, the spend over 4 years for a cloud comms solution is more than buying one. So there is a premium to be had for Hosted UC.

I have said it before: UCaaS is selling Change. You have to change the buyer’s mind from “It is a phone system” to it is a new way to communicate and run your business with employees, contractors, customers and vendors. And then the buyer has to want that too.

I think much of the OTT VoIP is really about cheap dial-tone and one or two features (like conferencing or voicemail to email) as a bonus.

The other factor: CPaaS. Instead of using a desk phone or softphone, people are using Apps to talk to one another – like on Xbox, in Uber’s app, Facebook Messenger, WhatsApp and Slack. This is taking away from some UCaaS sales as well.

The Skype4B noise has finally quieted down. But Greg Plum at PlumUC is running a Skype4B Bootcamp because users still can’t figure out how to get the most out of S4B. All UCaaS providers should be training users constantly to teach/coach them how to improve collaboration and productivity, the two reasons the execs spent the money on UC&C to begin with!!!

FairPoint has entered the fray with Telax software. “Although FairPoint foresees the new service being applicable to all of its customer segments, the company expects the immediate sweet spot customer profile will be those that have 20-100 employees,” per source. I guess in their territory that is mid-market!

Last piece of UC news comes from Broadvoice, who has been approved as a cloud services vendor for all states that participate in the public sector Cloud Service marketplace, created by NASPO ValuePoint in conjunction with the state of Utah.

Broadvoice CEO says that they are one of the only UCaaS providers in that marketplace.

Tags: broadsoft, commissions, customer service, financials, hosted pbx, UC, UX, voip, windstream
Related tags: vonage business, ucaas growing, still selling, market share, deals channel, ucaas

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UC Tidbits #2441 – Jul 05, 2016

The State of UC&C – Part 3 – Sep 14, 2016

What Pain Does UCaaS Solve? – Aug 22, 2016

Why Do You Look at an iPhone That Way? – Apr 07, 2016

The Gist of ITEXPO – Jan 29, 2016

Uh Oh, Microsoft is Closing the Gaps – Jan 15, 2016

Is There Anything Impressive About VoIP? – Jan 11, 2016

End of Year Summary (Tidbits part 2426) – Dec 31, 2015

Unified Hope for UCaaS – Dec 16, 2015

Vonage Picks Up Another One – Aug 20, 2015

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The latest financials came out in the last week. Let’s examine if UCaaS is growing.

RingCentral Office annualized exit recurring software subscriptions (ARR) grew 39% year-over-year to $316.8 million. RC says they are growing margins and revenue, while also increasing their losses. Is buying market share working?

8×8 reports that Total revenue grew 24% year-over-year to $63.2 million; service revenue grew 23% year-over-year to $57.7 million.

8×8’s New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams increased 30% year-over-year and accounted for 65% of total MRR booked in the quarter. Average monthly service revenue per business customer was $409, compared with $360 in the same year ago period.

Per the PR: Ending seats at Vonage Business were 616,000, up from 514,000 seats in the year ago quarter, a 20% increase. Vonage Business revenue churn was 1.4%, compared to 1.3% in the year ago quarter. (About double what 8×8 reports.)

This is such a spun statement: “Vonage Business revenue, which includes $24 million of Nexmo revenue, was $106 million, an 86% year-over-year increase on a GAAP basis.”

Broadsoft buys VoIP Logic to increase its white-label business, which now pits them directly against wholesalers like CoreDial and Bluip – and other BSFT clients who wholesale like Comcast and Momentum. If UcaaS was growing for the 420+ providers that utilize a BroadWorks platform, would BSFT need to ramp up its white-label and direct to Enterprise sales?

Interesting to note that of the noisy 3 in UCaaS, only Vonage has a BSFT.

Windstream announced yet another UCaaS product This one is called “Windstream Hosted Communications (WHC) for Small Business, a cloud-based phone solution offering enterprise-level capabilities to small and medium-sized businesses. Powered by Broadsoft. WIND also offers Avaya, Mitel and Allworx. Quite the mixture. It might explain why they have 1 million SIP trunks on their Broadsoft.

A couple of bright spots are the cable clan are almost all running Broadsoft. XO is powered by BSFT. (Coming to a Verizon store near you in 2Q2017!)

Both Bells – Verizon and AT&T – run Broadsoft for SIP trunking and UCaaS. In fact, we will see how the Broadsoft powered One Talk drives sales for both VZW and BSFT soon.

Recall that went ANPI was sold to Onvoy, they had just 20K seats on Broadsoft, so not everyone is killing it in the UCaaS space. In fact, if you take a sample from the INC5000, most VoIP providers in the US are doing LESS than $5M in business ($2-$4 million seems to be the median.).

“For 2016, BroadSoft expects the acquisition [of VoIP Logic] to contribute approximately $800,000 in revenue,” that means that VoIP Logic was doing about $3.2M in revenue. BSFT’s 3Q 2016 earnings call was this morning.

There are certainly VoIP Providers with more than $50 Million in revenue. I would argue it is more a pyramid than a bell curve.

Companies are ramping up the SPIFF war to grab market share in the UCaaS space. It is likely easier and cheaper to buy deals from channel partners that acquire a whole provider – and the resulting synergy/culture mess that will ensue with integration after a buy.

Bullseye, Fusion, Star2Star, TelePacific, AireSpring and net2phone are just six of the companies posting SPIFFs for deals to Channel Vision magazine’s email list and other places. And the SPIFFs are designed to skew for larger deals (more than 8×8’s ARPU of $409). Some are specific to a preferred master agency.

At an agent event last week, I was talking to an Avaya partner who is still selling strong. Sure there has been some dip in on-premise PBX but not as much as you would think. Windstream is still selling mid-market deals of Mitel and Avaya boxes.

Do you know where the weak spot is? SERVICE DELIVERY, according to someone whose opinion I value greatly. Barely anyone has that figured out yet! And that is where the Customer Experience starts (and stops). Size doesn’t matter. What matters is deployment, implementation, design, training and UX (user experience).

I keep hearing from folks who say the SAAS model is about OPEX over CAPEX. Well, that is the story but for most businesses, the spend over 4 years for a cloud comms solution is more than buying one. So there is a premium to be had for Hosted UC.

I have said it before: UCaaS is selling Change. You have to change the buyer’s mind from “It is a phone system” to it is a new way to communicate and run your business with employees, contractors, customers and vendors. And then the buyer has to want that too.

I think much of the OTT VoIP is really about cheap dial-tone and one or two features (like conferencing or voicemail to email) as a bonus.

The other factor: CPaaS. Instead of using a desk phone or softphone, people are using Apps to talk to one another – like on Xbox, in Uber’s app, Facebook Messenger, WhatsApp and Slack. This is taking away from some UCaaS sales as well.

The Skype4B noise has finally quieted down. But Greg Plum at PlumUC is running a Skype4B Bootcamp because users still can’t figure out how to get the most out of S4B. All UCaaS providers should be training users constantly to teach/coach them how to improve collaboration and productivity, the two reasons the execs spent the money on UC&C to begin with!!!

FairPoint has entered the fray with Telax software. “Although FairPoint foresees the new service being applicable to all of its customer segments, the company expects the immediate sweet spot customer profile will be those that have 20-100 employees,” per source. I guess in their territory that is mid-market!

Last piece of UC news comes from Broadvoice, who has been approved as a cloud services vendor for all states that participate in the public sector Cloud Service marketplace, created by NASPO ValuePoint in conjunction with the state of Utah.

Broadvoice CEO says that they are one of the only UCaaS providers in that marketplace.

Tags: broadsoft, commissions, customer service, financials, hosted pbx, UC, UX, voip, windstream
Related tags: vonage business, ucaas growing, still selling, market share, deals channel, ucaas

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Related Entries

UC Tidbits #2441 – Jul 05, 2016

The State of UC&C – Part 3 – Sep 14, 2016

What Pain Does UCaaS Solve? – Aug 22, 2016

Why Do You Look at an iPhone That Way? – Apr 07, 2016

The Gist of ITEXPO – Jan 29, 2016

Uh Oh, Microsoft is Closing the Gaps – Jan 15, 2016

Is There Anything Impressive About VoIP? – Jan 11, 2016

End of Year Summary (Tidbits part 2426) – Dec 31, 2015

Unified Hope for UCaaS – Dec 16, 2015

Vonage Picks Up Another One – Aug 20, 2015

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Everyone says that mobile will win. A former executive at Synnervse believes that 5G will trump fiber. When your career is wireless, you think 5G is going to be awesome. When your career has been wireline, you don’t think anything is better than fiber.

Yet, this headline: “75% of internet use will be mobile in 2017 according to forecast” is kind of misleading. “Zenith Media has released a forecast which says that mobile devices will account for 75% of global internet traffic in 2017.” Globally that would appear to be on point since much of the world is mobile only. Laptop and desktops aren’t booming. I wonder if tablets are considered mobile or only if they are on a 4G plan.

Mobile internet use passes desktop for the first time, study finds. “The combined traffic from mobile and tablet devices tipped the balance at 51.2 percent, vs. 48.7 percent for desktop access, marking the first time this has happened since StatCounter began tracking stats for [global] Internet usage.”

Keep in mind that Mobile vs Desktop has unique User Behaviors. Maybe 55/45 is as far as we go.

“For someone in telecom, the surface-level answer seems obvious. Millennials grew up in the age of cell phones and the Internet. They expect constant connection, mobility, and innovation. This explains why millennials are shaking up personal mobility and communications. But how is it that they’re having such an impact on business communications and collaboration too?” from this report.

To continue, “Millennials are becoming the majority in the workforce. They’re already the largest generation in the U.S. workforce and should be more than half of the global workforce by 2020. Millennials are becoming managers and leaders. Their preferences and early-adopter tendencies are shifting the conversation about tech in the workplace.”

This might be why so much emphasis is on 5G and mobility, but let’s not forget that the 2 RBOCs get about half their revenue from mobile, so they will hype up the biggest half of their business.

I don’t know how 5G will trump fiber to the home, especially for Boomers and older. Reading tablets and phones with old eyes is a challenge, believe me.

As we have recently witnessed with IOT and hacked phones, security will be an issue. A big issue. No idea how we handle that going forward since people still use password for password (and 1234 for PINs).

If 5G is sold in buckets of data, how does that compete against cable wi-fi or an almost unlimited fiber pipe? “Wi-Fi Expected to Carry up to 60% of Mobile Data by 2019“. Is that still mobile only?

Fiber has had set-backs, especially with Google Fiber, but it is also on the rise. More than 600 independent telcos have FTTH projects in the works. Getting pole access via telco, power and government entities is a maze of red tape. Yet cell towers are facing bigger hurdles as no one wants one in their neighborhood. Companies like Crown Castle and Zayo are building out small cells along their dark fiber routes to help 4G fill-in. No idea how dense it will need to be for 5G — or the lasting effects of that many radios and wi-fi routers per block.

What about the economic effects of fiber? “The evidence is mounting: investment in fiber improves the economic performance of a community as well as its quality of life,” said FTTH Council President and CEO Heather Burnett Gold. Would fixed 5G present the same economics?

We will see a certain amount of the market go wireless only. “The latest data from the Centers for Disease Control paints the picture of a growing mobile first society in the U.S., with nearly half (45.4%) of U.S. households wireless only,” from the CDC’s National Health Interview Survey (NHIS).

5G will change things for a few companies. Point to Point licensed wireless has made a few CLECs happy (and profitable). But it isn’t for everyone or for every where.

Tags: 4G, 4g, broadband, cellular, fiber, ftth, mobile, mobility, wi-fi, wireless
Related tags: millennials becoming, global internet, trump fiber, mobile, fiber, internet

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Musings on Ma Bell – Oct 26, 2016

Copper is Coming to an End – Oct 05, 2016

Tidbits #2438 – Jun 07, 2016

Bringing Wireless Expertise to Your Customers – Jun 06, 2016

The Broadband Competition Problem – Sep 23, 2015

Phone Companies, Channel and Other News – May 29, 2015

Google Disrupts Cell Service – Apr 22, 2015

The Latest Buzz(words) to Offer – Apr 22, 2015

Mobile Device Management is Booming – Jun 24, 2014

Scale Won’t Fix Sprint – Mar 12, 2014

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Copyright On Rad’s Radar?

Sponsored by Apex Technology Services, a leading IT Services company

Everyone says that mobile will win. A former executive at Synnervse believes that 5G will trump fiber. When your career is wireless, you think 5G is going to be awesome. When your career has been wireline, you don’t think anything is better than fiber.

Yet, this headline: “75% of internet use will be mobile in 2017 according to forecast” is kind of misleading. “Zenith Media has released a forecast which says that mobile devices will account for 75% of global internet traffic in 2017.” Globally that would appear to be on point since much of the world is mobile only. Laptop and desktops aren’t booming. I wonder if tablets are considered mobile or only if they are on a 4G plan.

Mobile internet use passes desktop for the first time, study finds. “The combined traffic from mobile and tablet devices tipped the balance at 51.2 percent, vs. 48.7 percent for desktop access, marking the first time this has happened since StatCounter began tracking stats for [global] Internet usage.”

Keep in mind that Mobile vs Desktop has unique User Behaviors. Maybe 55/45 is as far as we go.

“For someone in telecom, the surface-level answer seems obvious. Millennials grew up in the age of cell phones and the Internet. They expect constant connection, mobility, and innovation. This explains why millennials are shaking up personal mobility and communications. But how is it that they’re having such an impact on business communications and collaboration too?” from this report.

To continue, “Millennials are becoming the majority in the workforce. They’re already the largest generation in the U.S. workforce and should be more than half of the global workforce by 2020. Millennials are becoming managers and leaders. Their preferences and early-adopter tendencies are shifting the conversation about tech in the workplace.”

This might be why so much emphasis is on 5G and mobility, but let’s not forget that the 2 RBOCs get about half their revenue from mobile, so they will hype up the biggest half of their business.

I don’t know how 5G will trump fiber to the home, especially for Boomers and older. Reading tablets and phones with old eyes is a challenge, believe me.

As we have recently witnessed with IOT and hacked phones, security will be an issue. A big issue. No idea how we handle that going forward since people still use password for password (and 1234 for PINs).

If 5G is sold in buckets of data, how does that compete against cable wi-fi or an almost unlimited fiber pipe? “Wi-Fi Expected to Carry up to 60% of Mobile Data by 2019“. Is that still mobile only?

Fiber has had set-backs, especially with Google Fiber, but it is also on the rise. More than 600 independent telcos have FTTH projects in the works. Getting pole access via telco, power and government entities is a maze of red tape. Yet cell towers are facing bigger hurdles as no one wants one in their neighborhood. Companies like Crown Castle and Zayo are building out small cells along their dark fiber routes to help 4G fill-in. No idea how dense it will need to be for 5G — or the lasting effects of that many radios and wi-fi routers per block.

What about the economic effects of fiber? “The evidence is mounting: investment in fiber improves the economic performance of a community as well as its quality of life,” said FTTH Council President and CEO Heather Burnett Gold. Would fixed 5G present the same economics?

We will see a certain amount of the market go wireless only. “The latest data from the Centers for Disease Control paints the picture of a growing mobile first society in the U.S., with nearly half (45.4%) of U.S. households wireless only,” from the CDC’s National Health Interview Survey (NHIS).

5G will change things for a few companies. Point to Point licensed wireless has made a few CLECs happy (and profitable). But it isn’t for everyone or for every where.

Tags: 4G, 4g, broadband, cellular, fiber, ftth, mobile, mobility, wi-fi, wireless
Related tags: millennials becoming, global internet, trump fiber, mobile, fiber, internet

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Related Entries

Musings on Ma Bell – Oct 26, 2016

Copper is Coming to an End – Oct 05, 2016

Tidbits #2438 – Jun 07, 2016

Bringing Wireless Expertise to Your Customers – Jun 06, 2016

The Broadband Competition Problem – Sep 23, 2015

Phone Companies, Channel and Other News – May 29, 2015

Google Disrupts Cell Service – Apr 22, 2015

The Latest Buzz(words) to Offer – Apr 22, 2015

Mobile Device Management is Booming – Jun 24, 2014

Scale Won’t Fix Sprint – Mar 12, 2014

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Sponsored by Apex Technology Services, a leading IT Services company

These acquisitions are coming faster than I can type!!! Sheesh! Broadsoft is buying VoIP Logic!

This is ironic because when BSFT bought Intellinote and made a bunch of announcements about spreading BroadCloud and BroadBusiness, I remarked they should just buy VoIP Logic. And then they did.

This adds some white-label expertise to the mix for Broadsoft as it looks to ramp up white-label revenues. There aren’t any more carriers to bring on the BroadWorks platform, so from here on out, BSFT has to sell white-label licenses. And acquisitions make Wall Street happy because you confuse the organic revenues with inorganic ones.

It pivots now from a software company to a service provider — and directly competes against many of its clients either directly or indirectly. As it powers Verizon’s One Talk, Rogers’ Unison and ACCESS4 (in Australia), it is picking one carrier in a market over another. This isn’t sitting well with quite a few BSFT clients.

But what can you do? On the one hand, BSFT should have been a more innovative software company (where’s the Slack integration?). On the other, it decided to look quarter to quarter at licensing revenues. It didn’t want to become like Taqua (who was scooped up by Sonus ).

The VoIP industry has a problem: too many providers, more coming every week and not enough buyers. It reminds me of the cellular industry. MVNOs come and go pretty fast. The Top 4 guys are battling it out in a bloody price war.

Only in VoIP, it is a struggle to find ways to bring value. Cellular is stealing the small business market. Most other small businesses that I speak to just want to replace POTS or PRI. The PBX industry is do a slow fade at about 3-5% per year but that isn’t the erosion everyone predicted. Cloud Communications just isn’t selling like warm donuts at Krispy Kreme.

More consolidation is needed. And not mergers like VTech and snom. We need stronger VoIP companies to emerge – with a brand to build some demand and be able to execute on it.

Congrats! to VoIP Logic. The CEO, Micah Singer, was on a number of my ITEXPO panels over the years.

Tags: broadsoft, mergers, UC, voip
Related tags: white label, software company, white, label, broadsoft, industry

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Uh Oh, Microsoft is Closing the Gaps – Jan 15, 2016

Vonage Picks Up Another One – Aug 20, 2015

An Afternoon of VoIP News – Aug 05, 2015

Vonage Buys Simple Signal – Mar 17, 2015

The Latest in VoIP Updates – Sep 19, 2011

Broadvox and Cypress: What Now? – Oct 17, 2010

The State of UC&C – Part 3 – Sep 14, 2016

UCaaS: It isn’t All Bad News – Aug 25, 2016

What Pain Does UCaaS Solve? – Aug 22, 2016

National Harbor: In the Bubble – Aug 17, 2016

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