It’s December now, so it’s time to deck the halls, find out who has been naughty and nice, and nog some eggs. It’s also time for us analysts to put on our prognosticating hats and predict what we’ll likely see in 2020. Here is ZK Research’s top five predictions for communications in 2020:
1. UC-IoT becomes a thing – The UC industry has largely been driven by the need to make interpersonal communications better, and IoT is machines talking to machines. UC-IoT enables people to talk to machines and vice versa. IoT is now mainstream, and businesses are connecting devices at a furious pace. Enterprises that integrate IoT with UC systems will have the ability to streamline workflows through voice interfaces, automated messaging and other communications enabled processes. UC-IoT can be a game-changer for smart cities, smart buildings, manufacturing, and healthcare as critical information can be analyzed and disseminated to the people that need it quickly. This is an area that is ripe for innovation, but the only two UC vendors that have a defined strategy are Mitel and Avaya. Cisco and Microsoft both have big IoT businesses but have done very little to bring UC and IoT together. Expect to see that change in 2020 as UCIoT becomes real.
Companies most likely to benefit: Avaya and Mitel
2. Endpoint hardware is back
– The communications industry, like all markets, tends to see trends ebb and flow. A few years ago, talking about endpoint hardware made one look like a Luddite as phones, cameras, and other devices were largely considered a commodity, and “good enough” was considered just that. In 2019, the pendulum has started to swing back towards hardware mattering, as endpoint manufacturers are loading these devices up with features to differentiate. Again, if one is looking for a proof-point, look no further than Zoomtopia
, where despite having several partners in the room space, Zoom chose to tap the big brain and vision of OJ Winge and the Neat.io team to build a turnkey Zoom rooms solution. They seem to be trying to match the experience Cisco customer get with Webex rooms. At the Poly analyst event, we also were treated to a bevy of new devices with integrated AI capabilities. If ever there was a time for the combination of Plantronics and Polycom to shine, it’s now, particularly, with the “Yoda of endpoints,” Tom Puorro, heading up Poly’s Group Systems. The choice of hardware does matter, and that will become apparent in 2020. Good enough is no longer good enough.
Companies most likely to benefit: Poly and Cisco
3. The rise of hybrid clouds
– Just as the sci-fi world was eagerly awaiting the next chapter in the Star Wars saga (The Rise of Skywalker), I’ve been awaiting the next episode in the cloud communications story (the rise of hybrid clouds), which should be released in 2020. The adoption of cloud communications has been dominated by small and mid-market customers with a preference for a SaaS model. Now that larger enterprises are jumping on the cloud bandwagon; the preference will be towards private and hybrid clouds. Anyone looking for a proof point needs to look no further than the AWS re:Invent conference
where the company announced the general availability of its Outpost private cloud stack. AWS CEO Andy Jassy discussed at length how customers want to keep their data local and have greater control of security. He was speaking broadly about cloud, but the trend certainly holds true for communications. Eventually, hybrid will be the norm where the call control and data are local and advanced functions such as AI are done in the cloud. Companies want cloud, so the question is which cloud? It’s not always SaaS.
Companies most likely to benefit: Avaya, Cisco, and Mitel
4. Reshuffling of the UCaaS deck chairs – In the 90s and early 2000s, the network industry was known as Cisco and the seven dwarfs, as Cisco dominated that industry. UCaaS is starting to look like that as RingCentral has pulled away from everyone else. In 2020, expect to see Ring come back to the path, and others come up. I believe Zoom’s entry into calling, and AWS to a lesser extent, will cause some downward pricing pressure on UCaaS services. Zoom can afford to push the price of calling down as its anchor product is meetings, which is sticker than calling. The commoditization of calling will make it difficult for companies, like Ring, that rely on it as their anchor product. Vonage is the most interesting vendor in the space as its One Vonage software stack is finally ready to compete with a portfolio approach as it brings CPaaS, CCaaS, UCaaS, and meetings together.
Also, I see some friction between Zoom and its historical partner, RingCentral. Ring will still dominate but expect to see the gap between it and everyone else get smaller. I also think 2020 will see Oracle take cloud communications seriously. After dancing around the market for years, the company appears to be ready to compete. We will also see consolidation in the market with the most likely vendor to be acquired being Fuze. This month, the company announced it was laying off 25% of its workforce. Recently, I talked to some of its customers and former employees, and the company struggled under Andy Byron’s leadership, and he made some questionable decisions, which will most likely result in them needing to sell.
Companies most likely to benefit: Vonage and Zoom
5. Sales, marketing, and contact center converge – It’s widely believed that customer experience (CX) is now the top brand differentiator, and competitive advantages often start first in the contact center. However, contact centers alone don’t provide a complete view of CX, as customers also deal with sales and marketing departments of their favorite brands directly. Outbound interactions with sales and marketing are typically done via a MarTech automation platform, and inbound is done via a contact center. If these organizations aren’t in alignment, it can create a negative experience. For example, consider the case where a customer has a negative experience with a hotel chain and calls the contact center to complain and is left dissatisfied. If the sales organization is unaware of this and contacts an unhappy customer to sell them a vacation package, this may further aggravate the customer. If the salesperson knows, an entirely different approach can be taken where the interaction starts with an apology, and the vacation package offered at a discount.
The expansion of the contact center to sales and marketing will nearly double the size of the total addressable market. MarTech leader, Selligent, has been aggressive in cutting deals with contact center vendors and currently has deals in place with Cisco and Genesys and is working on others. Salesforce and Adobe are other big names in MarTech, but I’ve been told by a number of the contact center vendors that Selligent’s data is better. Also, with Salesforce’s now poking its contact center partners in the eye with AWS, there’s more incentive to partner with Selligent. I believe there’s a chance Cisco might acquire Selligent as it’s highly complementary to CloudCherry and would keep the data out of its competitors’ products.
Companies most likely to benefit: Selligent, Cisco, Genesys, Avaya, and the CCaaS field. This is a rising tide.
6. Video becomes better than in-person meetings – It’s often said that doing a video call is almost as good as being in person, and that’s been true of late as the quality of video systems is now so high. In 2020, we will see new AI features built into video that make doing a video call better than being in person. Consider the case of in-person meetings, everyone introduces themselves, and the meeting gets going. Since everyone is always multi-tasking, no one can ever remember people’s names, titles, or why they are even in the meeting, which can cause some embarrassing situations. Most of the video vendors are working on AI-based systems that superimpose each participants' name and other relevant information onto the screen. Any many of the meeting solutions are integrating transcription, meeting minutes, translation capabilities, and other features that improve virtual meetings. This will create an interesting dynamic as people will join video calls even when sitting across the table from someone. Years ago, John Chambers often said that “video was the new voice,” and that was a nice vision but wasn’t “game-changing”. In 2020, we’ll see many new capabilities come to video, which will make it “the new meeting.”
Companies most likely to benefit: Cisco, Poly, and Zoom
Bonus Prediction: Cisco Clarifies its AI Strategy
I’ve had many people ask me, “what the heck is going on with Cisco’s collaboration group?” It’s a good question, as the leadership team that reports to Amy Chang, EVP and GM of Cisco Collaboration, have mostly turned over. Cisco acquired Accompany and brought Chang along to bring its Cisco Collaboration to the next level. The company also purchased Voicea to bring conversational AI into the fold. Their former leader, Omar Tawakol, now runs the contact center group at Cisco, which left some people scratching their heads, as he isn’t a traditional contact center person.
There is a method to the madness though, as he is an AI person, and Cisco has squarely centered its strategy about creating differentiated experiences with AI. Watch Chang’s keynote from Enterprise Connect 2019
or any of her sessions from Cisco’s user conferences, and she talks primarily about the vision of how AI infused into UC and CC can be game-changing. AI in UC and CC is something all vendors talk about, but for Cisco, it’s everything as its value proposition is centered around the end to end Cisco experience, so a Cisco meeting room needs to do more than a Microsoft one built in partnership with any number of vendors. Without end-to-end AI across the portfolio, Cisco will continue to get into knife fights with Zoom in meetings, Slack for team collaboration, Avaya in UC, etc. AI matters to the entire industry, but it matters to Cisco as it has the broadest and deepest product set in the industry.