Zoom’s plan to acquire Five9 continues to be analyzed from many angles, as highlighted in a host of articles, podcasts, and video blogs from industry analysts, summarized in this
No Jitter article. Analysts have a broad view of the competitors in the combined unified communications and contact center markets — and are never short of opinions!
As mentioned in my post
on the acquisition news, Zoom/Five9 is not the first deal of its kind. Three years ago, Vonage acquired EMEA contact center leader NewVoiceMedia. Vonage stated then that the reason for the move was because the company had “seen strong customer demand for integrated UCaaS and cloud contact center solutions, particularly among mid-market and enterprise customers.” How has Vonage seen the market readiness for bringing together these two solutions over the intervening three years? I reached out to the company and spoke with CEO Rory Read for some answers to that question.
A Platform Journey: Years in the Making
First, Read commented on what Zoom’s acquisition means for the market. “I think one of the key things about the combination is that it reinforces the concept of a communications platform,” Read responded. His answer highlighted that the market direction is not just about combining UCaaS and CCaaS but creating a platform that includes video, meetings, rooms, artificial intelligence — all of the components of a communications platform.
The graphic below, from the March 2021 Vonage Investor Day presentation
, summarizes the company's journey. The acquisition of CPaaS company Nexmo in 2016 was a major move, as Vonage transitioned from a consumer to a business customer focus. It became the foundational building block for internal development that enabled Vonage to build its own UCaaS, acquisitions for CCaaS (NewVoiceMedia) and video (Tokbox) in 2018, and finally AI (over.ai) in 2019.
The announcement of the Vonage Communications Platform in 2019 was the culmination of a journey to create an offering that could deliver on the full range of entire enterprise communications needs.
When asked on how Vonage’s platform story relates to the conversation of composable applications, Read responded, “While the merging of UC and CC is what the market needs, the importance of agility — a key differentiator for our business — continues to grow as businesses of all sizes realize the need for flexibility, customization, augmentation, and personalized solutions through the use of APIs.” Vonage Communications APIs are core to our composable approach, he went on, as flexible application building blocks, adding further customization and value to our UCaaS and contact center applications.
The continuing demand for Vonage APIs is demonstrated in the company’s financial results. In the first fiscal quarter of 2021, Vonage reported 47% growth in its API business. API revenues now account for 53% of all Vonage Communications Platform revenue, up from just 44% year over year.
A Retooled Go-to-Market Strategy
During the 1Q2021 financial analyst call, Read reported that Vonage, “continued to see traction on cross sales.” In fact, six out of the top ten deals in the quarter included both VBC (UCaaS) and VCC (CCaaS). “We are pleased with our initial progress, but there is more work to do to fully capitalize on the market opportunity,” he went on to say.
Read explained that go-to-market changes were needed to address the Vonage Communications Platform market opportunity. Vonage changed its model from one that had sellers selling to all segments to one that concentrated direct sales resources to large deals, as shown in the graph below.
Read also explained that prior to his arrival, the unified communications and contact center sales forces were still fairly separate. Those groups have now been aligned under a single sales leader and have begun doing shared account planning.
Vonage’s ongoing efforts to create a combined UCaaS, CCaaS, and CPaaS platform, as well as a single-sales motion, will likely be mirrored by Zoom and Five9 as they come together. With 8x8, RingCentral, Avaya, and Cisco also in the mix, the new attention being paid to the importance of a combined UC/CC/CPaaS solution will inevitably result in "a rising tide (that) lifts all boats."