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What a difference a year can make for UCaaS providers in this highly competitive and rapidly changing field.
Demand for UCaaS has exploded as the COVID-19 pandemic rages on globally. But the market already was seeing shifts in demand, the arrival of new players and legacy providers upping their game.
This is our third annual “CP List” focused on UCaaS providers, with analysts and other experts sharing their views on what it takes to succeed with the technology. It includes an updated list and fresh views on changes in the competitive landscape.
Forrester analyst Jay McBain cites continued maturation of the UCaaS market with consolidation and price compression as indicators.
Forrester’s Jay McBain
“There are startups building disruptive point solutions … and the larger providers need to welcome them into the ecosystem,” he said. “With line-of-business executives making 65% of all tech decisions, the number and diversity of UCaaS buyers have expanded considerably. Providers need to understand these new customer journeys, and build a channel program that attracts partners who can best serve these new customers.”
Brian Babich, AppSmart‘s senior director of sales, said we haven’t seen a race to zero as with bandwidth services.
AppSmart’s Brian Babich
“The industry has dedicated resources to application integration, improving analytics and development of their own collaboration tools,” he said. “Clients are experiencing value in the improved performance of the UCaaS platforms and recently added integration features. There is always room for negotiation on pricing if the deal is the right size and the provider sees where the fit makes sense for them to win the business.”
Raul Castanon, senior analyst of workforce collaboration for 451 Research/S&P Global Market Intelligence, said incumbent providers are “upping their game” with AI-enabled capabilities, and a unified end user experience with tight integrations across messaging, voice and video.
COVID-19 is creating additional challenges for UCaaS providers, he said.
451 Research’s Raul Castanon
“These are no doubt tough times for UC/UCaaS vendors,” he said. “On one hand, even though it is an opportunity to expand their market footprint, it will put their capacity to the test and they will have to invest heavily, but may not see the benefits until much later. Furthermore, the spike in usage is made up largely of freemium users and only a small percentage will convert to paid customers. Not all vendors will be able to sustain an unexpected increase in demand without the corresponding revenue for too long. If this situation extends through the end of the year, it could lead to market consolidation and [fewer] vendors.”
Jon Arnold, principal analyst at J Arnold & Associates, said the big question is who’s making money.
“A lot of companies like Slack are making a lot of waves, and building up numbers and stuff, but they’re not making money,” he said. “RingCentral is just about at break even, I think Vonage is kind of making some money and I don’t think 8×8 is profitable at the moment. There’s been a very big push in the market over the last year or two to build market share and it’s the freemium model where you just build up your customer bases quickly and as high as you can, and then you worry later about how to make money with it. And some companies may run out of runway to do that.”
Crowding and “commodifying” are making it harder to make money, Arnold said. Companies will need to be more aggressive and give it away just to stay in the game, he said.
Arnold & Associates’ Jon Arnold
“That’s going to take its toll,” he said. “That’s going to drive eventually a lot of the smaller players out and I think that’s going to be important. So to me, that’s what success looks like in this environment when markets are tanking and investors are nervous, and when they see companies bleeding, they run far and fast.”
Based on feedback from analysts and experts, and recent news reports, we’ve compiled a list, in alphabetical order, of 20 top UCaaS providers that are making the most of the current competitive landscape and charting success. The list offers a mix of well-known providers as well as lesser-known companies that are making big strides in UCaaS.
8×8
Arnold and McBain cited 8×8 as a successful provider. This week, 8×8 rolled out its new Business Readiness Kit that helps businesses and organizations prepare their employees to safely and securely work from home. It provides cloud voice, chat, video meetings and contact center on one, open cloud technology platform.
Avaya
Avaya remains on our list of successful providers. The company hopes to make a big splash in the market with its new Avaya Cloud Office by RingCentral. Avaya Cloud Office allows workforces to meet, share and collaborate no matter where they are.
“It used to be enough to say we can make the phone ring and be easy to deploy,” Babich said. “In recent days, partners are being asked by their clients to move them to UCaaS providers that can provide the integration, away from what was a solid working system.”
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