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Dave Michels
Dave Michels is a Principal Analyst at TalkingPointz. His unique perspective on unified communications comes from a career involving telecommunications...
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Dave Michels | January 21, 2016 |

 
   

Free UCaaS?

Free UCaaS? I have plenty of reasons to think providers may one day offer UC as a freemium service.

I have plenty of reasons to think providers may one day offer UC as a freemium service.

To the best of my knowledge, you can't get UCaaS for free -- yet. While UCaaS providers could create the underlying service using free technologies such as Asterisk, WebRTC, and Internet Relay Chat, none to date has built a freemium UCaaS offer aimed at businesses.

Blasphemous concept? Consider the following trends:

  1. Business-oriented freemium services, including audio (freeconference.com) and video (zoom.us) conferencing, are on the rise.
  2. The cost of telephony continues to drop. Google Voice offers free U.S. PSTN calling, and Skype runs about $0.023/minute.
  3. Providers could easily monetize free UCaaS via paid upgrades (freemium), advertising, or both.

The four general approaches to delivering a free product or service are:

  1. Cross-subsidy (Black Friday deals)
  2. Third-party pays (Facebook)
  3. Gift economy (Wikipedia)
  4. Freemium

The fourth -- and newest -- model is largely made possible by attractive cloud economics (see my related post, Freemium or Your Money Back).

Giving away a viable service as a business practice is counterintuitive, but the cost of selling products is not trivial. Freemium can be a cost-effective way of building a customer base. Any go-to-market strategy involves various costs associated with sales and service, marketing, and demand generation. Only about 30% of the price that a customer pays for a premises-based UC solution goes to the manufacturer.

Instead of that traditional approach, providers can host free services, and then upsell their subscribers into paying customers. IBM, MIcrosoft, Cisco, and many others now offer freemium, business-oriented services.

One of the harder parts to making freemium work is determining where to draw the boundary between free and paid services. However, UCaaS is a naturally stratified service. If providers offered the base level for free, they may find enough opportunity to create a sustainable service.

With many of the hard costs (PSTN access and long distance) and actual usage declining, the concept of freemium UCaaS may be more feasible than ever. I can foresee a free, entry-level service that offers limited features with restricted minutes. Upgraded options could include endpoints, advanced features, conferencing services, and advanced applications such as contact center. The business customer would have a comprehensive service, but only pay for features as truly needed.

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Here's an example of how Zoom has incorporated a freemium service in its pricing model.

Providers also could supplement the freemium model with third-party advertising. They could even offer an ad-free option as one of the upgraded features. In addition to normal in-app advertising, an advantage UCaaS providers have is they can display ads on a desktop phone as well as append them to voice messages.

Highly targeted advertising can be very lucrative, and UCaaS providers are in a unique position to discover a lot about customers. The UCaaS provider could identify keywords from spoken conversations. For example, travel agents and hoteliers might want to target business customers discussing a "trip" or upcoming "travel."

The UCaaS provider knows who and where you are, as well as who and where business relationships are located. It can obtain further profile information by analyzing voicemail and instant messages, plus an app (especially on a mobile device) could access email, GPS, contacts, and calendar details. While some may consider this to be a violation of privacy, it's a common practice with consumer services such as with Gmail and Facebook. I suspect many business owners will accept this deal if the technology is fully automated.

Many UC and UCaaS providers are looking to provide more contextual awareness as a feature. Maybe the real business model is to provide contextual awareness as an advertising hook. A UCaaS provider is in a great position to analyze customers for interests and opportunities.

I see plenty of indicators that free UCaaS could be viable... and inevitable.

Join me at Enterprise Connect 2016, March 7 to 10 in Orlando, Fla., where I'll be moderating the sessions "Contextual Communications: Coming of Age at Last?" and "The API Ecosystem: Getting What You Need" and overseeing the Innovation Showcase on mobility. Register now using the code NJPOST to receive $200 off the current conference price.

Dave Michels is a contributing editor and analyst at TalkingPointz.

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