No Jitter is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

How Cisco-BroadSoft Acquisition Impacts UCaaS Ecosystem: Page 5 of 7

Continued from previous page

Much More Than UCaaS

Important to note is that with the announced acquisition of BroadSoft, Cisco will not only gain huge market share in UCaaS, but also will effectively become a supplier of technology that enables SIP trunking as well as residential VoIP services. Since hosted IP PBX and UCaaS generate much greater revenues and cloud is all the rave, most discussions around BroadSoft and the acquisition focus on this part of BroadSoft's portfolio. However, BroadSoft currently supports and will bring to Cisco millions of SIP trunking users, as well as the potential for many more as businesses with premises-based systems continue to look for VoIP connectivity to cut costs and gain access to advanced network-based features. BroadSoft providers also support millions of residential VoIP users and can continue to grow their installed bases, though the potential is more limited due to the user shift to mobile communications.

Overall, with BroadSoft's technology portfolio added to its own, Cisco is becoming the most powerful provider of VoIP solutions to the service provider community.

Beyond Cloud UC and VoIP Connectivity

Last year, at Connections 2016, BroadSoft launched the Powered by BroadSoft program. Intended to strengthen BroadSoft's brand as well as augment service provider ability to sell and deploy UCaaS, the program currently supports 116 channel partners, many of which are reporting significant results. At this year's Connections, the company launched a new digital customer lifecycle platform -- BroadCloud Channel Support System -- and three new services, as follows:

  • Go-to-market services, including digital campaigns, microsites, sales enablement, branding, and digital transformation services
  • Onboarding services, including customer training, installation, and migration services
  • Adoption services, including service assurance, customer support, channel help desk, billing services, analytics and reporting

With BroadSoft's acquisition, Cisco gains access to this powerful program, which will help it further solidify its relationships with the service provider community and accelerate the move to cloud. The program can benefit Cisco, its provider partners, and end customers. Naturally, the branding may be subject to change.

Impact on Various Stakeholders in the UCaaS Ecosystem

Cisco and BroadSoft Together

The coming of Cisco and BroadSoft together will create a powerful competitor with strengths in the following key areas:

  • Complementary cloud communications offerings catering to a broad customer spectrum, from very small to very large businesses, across all vertical industries
  • Dominant market share of the global hosted IP telephony and UCaaS installed base (estimated at about 47% at the end of 2016)
  • Highly diversified overall solutions and services portfolio, including networking, service provider and premises-based communications VoIP/SIP, IP telephony and UC solutions, communications endpoints, infrastructure (e.g., gateways and SBCs) as well as lifecycle, managed, and professional services for both end customers and channel partners
  • Strong reseller channel including telcos, value-added resellers, systems integrators, interconnects, IT services providers, managed services providers, and others
  • Expanded geographic reach
  • Considerable R&D, marketing, and sales resources
  • Strong brand

Potential challenges facing the new entity include the following:

  • Post-acquisition workforce redundancies and cultural integration
  • Portfolio rationalization (discussed in more detail below) resulting in 1) short-term delays in product development, as well as distractions from sales, marketing, and partner support, and 2) long-term impact on provider offerings
  • Increased channel conflict due to Cisco's premises-based solutions business
  • Some resellers and technology partner alienation due to various factors including philosophical disagreements on technology openness (discussed in more detail below)

Partner Ecosystem

Communications endpoints and technology vendor partnerships have represented an important part of BroadSoft's ecosystem and value proposition over the years. While Cisco IP phones account for a significant portion of BroadSoft's installed base, Polycom IP desktop phones and conferencing devices hold the lion's share among BroadSoft customers. Grandstream, Mitel, Panasonic, VTech, Yealink and other endpoint vendors also rely heavily on BroadSoft customers as an important addressable market.

Cisco would be wise to maintain these phone vendor partnerships to provide choices to service providers and end customers. It may, however, be tempted to create artificial barriers (e.g., require additional certifications) or incentivize bundling of Cisco phones with BroadWorks licenses in order to boost its own share among BroadSoft users. Media gateway and SBC vendors (such as AudioCodes, Edgewater, Patton, and Ribbon) may face similar predicaments, as might Adtran, which recently launched a BroadCloud solution as part of its ProCloud portfolio alongside its managed router and Wi-Fi solutions. With Cisco possessing a comprehensive solutions portfolio, third-party vendors may find themselves having to compete on unequal terms for share among the BroadSoft customer base going forward.

Multiple technology partners provide value to the BroadSoft community, as well. These include application developers (e.g., Kakapo Systems), security and fraud prevention technology providers (e.g., Tollring), call recording providers (e.g., Dubber), CPaaS providers (e.g., Zilkr and Telestax) and others that may find their roles in the BroadSoft ecosystem are likely to change. As many of these vendors support open standards, they can continue to deliver considerable benefits to providers and customers using BroadSoft as well as Cisco solutions, if Cisco doesn't alienate them in order to promote its own technologies.

Continued to next page: Impact on Various Stakeholders in the UCaaS Ecosystem, continued