The VCaaS Future: Cloudy With a Chance of Hyperbole
The video conferencing market is undergoing fundamental change and the struggle for the existing vendor community is to remain relevant (and solvent).
Cisco's announcement last week of Collaboration Meeting Room (CMR), a videoconferencing-as-a-service (VCaaS) product, reminds me of the old bit about "fooling some of the people some of the time." CMR is not the company's first foray into VCaaS (it's actually #3). It's neither the first nor the last salvo in the VCaaS wars: Three days after the CMR announcement Lifesize announced "Lifesize Cloud," coincidentally that company's third generation VCaaS offering as well. Both the Cisco and Lifesize announcements, as well as one earlier by Polycom, are generally viewed as reactions to the "Blue Jeans threat." But the real story is much more than that, as even the guys from "too big for their jeans network" will attest. The video conferencing market is undergoing fundamental change and the struggle for the existing vendor community is to remain relevant (and solvent).
VCaaS is kind of like "Skype for the enterprise." The VCaaS provider provides all the video infrastructure needed by the customer, including bridges, gateways, NAT/firewall traversal, etc. These are delivered as a monthly subscription. Most VCaaS services today provide users with a virtual meeting room to which they can invite meeting participants - a well-established paradigm. Some services enable direct point-to-point calling as well. With VCaaS, customers avoid infrastructure CapEx (they still need hardware or software endpoints) and the responsibility for managing and scaling a complex infrastructure system.
Cloud: Unfortunately, the term "cloud" has been hijacked by many marketing gurus and used loosely to describe many services and architectures. The phrase "in the cloud" has become a metaphor for the Internet and often refers to platforms, software, or infrastructure that is sold "as a service." In truth, despite widespread marketing claims, a server hosted inside a data center or service provider facility is not by itself a cloud service. A true cloud service requires multiple data centers (with physical and/or virtual servers) operating in tandem and providing some level of redundancy (against network or power outages, hackers, hardware failures, etc.) and scalability while the architecture typically remains invisible to the user. Furthermore, a cloud service intended to deliver high quality, real-time video communications has an additional requirement: low-delay. Hence VCaaS really calls for a quality-of-service network for connecting cloud centers. This low-delay requirement is not crucial for services like Web applications and streaming services.
Visual communications is becoming mainstream. New recruits entering the workforce are digital natives for whom video and collaboration tools are second nature. Savvy managers understand that they need to offer more than email and desk phones for their information workers. Video and content sharing is the new voice. Between desktop, mobile, and room deployments, establishing and maintaining a video deployment with quality and reliability at scale is a daunting proposition. A more attractive approach is to use a service provider. VCaaS is the obvious draw.
VCaaS providers are flying into the VCaaS cloud from four separate directions.
1) Vendors like Polycom, Cisco, LifeSize, and Starleaf started out as video conferencing hardware guys and likely see VCaaS as a way to a) make cloud part of their marketing thrust and b) add to their revenue streams. While promising some level of support for all hardware devices, vendor-based VCaaS offerings appear to be optimized by each vendor for its own systems. They are also likely to be aimed at existing customers, those already in the fold. An important wrinkle to watch here is the go-to-market (GTM) strategy and implementation. Some vendors will sell VCaaS only through channel partners, some will sell direct to end users, some will do both, and some will start out with one strategy and likely change later as economics and market conditions change (see below). Another wrinkle is branding - will you be buying a VCaaS solution branded by your favorite vendor, favorite channel partner, or co-branded by both?
2) The independent pure plays like Blue Jeans Network, Fuze, Videxio, and Zoom. These guys are totally hardware independent and completely focused on video as a service. This is their sole business and all resources are laser focused on services. BJN clearly set the bar a few years ago with an innovative service that kick started this market with an ease of use and interoperability story that most others are still struggling to match. GTM is varied here as well, including selling direct, selling co-branded through re-selling partners, and selling white-labeled, through channels.
3) The channel vendors themselves. We've already seen several video conferencing channel partners like AVI-SPL and Video Guidance invest in the infrastructure hardware and software needed to create their own VCaaS offering. While this venture can represent a significant investment (high risk and high reward), the strategy does enable the VCaaS service to be customized and optimized around specific needs, something not likely to happen with any of the other strategies.
4) The UCaaS guys like WebEx, Microsoft Office 365, Citrix GotoMeeting, and Adobe Connect. These are fine services for collaborating when content is supreme and/or you are satisfied with small video images. They are more appropriate for desktop and mobile conferencing devices; for room-based meetings, a video-centric solution supporting continuous presence images and high-definition audio and video is more attuned to what people expect.
Like many other industries, with video conferencing in general and VCaaS in particular, the real innovations are coming from the upstarts. Blue Jeans, Starleaf, and Videxio have broken ground in VCaaS services, while Acano and Pexip are working on new VCaaS platforms. The established hardware vendors and the big service providers seemingly rest on their laurels and then acquire to appear innovative.
GTM and the Disintermediation future
Cloud anything, including cloud-based VCaaS, leaves little real role or value-add for the channel partner. From a video conferencing perspective, cloud requires no on-site integration, and if done correctly, minimal effort in installation, configuration, and tech support. Hence, Cloud is a natural for the vendors to go direct, to keep all the margin themselves, and many of the channel partners will acknowledge this in private. This disintermediation effect will magnify over time with the inevitable drop in prices that cloud and software enable. Cloud should force the savvy channel partners to focus on managed services, professional and consulting services, hardware maintenance, and possibly vertical application development. This will be a shock to many of today's video conferencing integrators. But for now at least, this is lost in the hype around cloud.