The rise of the cloud as a preferred application delivery model has been well documented over the past several years. The cloud has grown in popularity because it creates choice and emphasizes flexibility, which is the opposite of the old IT model that had businesses locked into certain communications technology for up to a decade or more. For example, UCaaS lets buyers pick and choose the services they want, decide who they want to deliver them to, and pay for what they use on a monthly basis.
But the cloud hasn't applied to one element of UCaaS -- the actual IP phone. Businesses typically need to pick a phone and stick with it through the term of their contracts. If a company decides the phone it bought isn't the right one any longer and wants to swap it out, the answer is something like, "Too bad, so sad." The experience is similar to what happens on a personal level when you purchase a cell phone and you're stuck in that dreaded two-year contract. You purchased the new BlackBerry thinking it's all the rage, but then decided an iPhone would be better. No problem, just wait two years and upgrade!
DaaS Differentiator
Polycom this week introduced a device-as-a-service (DaaS) pilot program that can bring greater flexibility to the IP phone decision. The DaaS pricing model brings greater flexibility to service providers and their subscribers.
Other DaaS programs available today require the typical long-term commitment. Polycom's program, however, operates month to month, with subscribers having the option of upgrading, downgrading, canceling, or returning the phones with no penalty. The DaaS offering also includes a full replacement program for phones that fail within the first seven years.
This should be good news for Polycom's Internet telephony service provider (ITSP) partners and their customers as it takes the risk out of phone selection, giving companies the ability to adopt higher-end phones they might otherwise have avoided. IP phone prices can vary greatly, and while some of the features on the higher end ones might be appealing, who wants to take the risk of buying phones that have features no one uses? Nobody, that's who, which is why decision makers will typically defer to a lower-cost model when presented with several options from which to choose. Now businesses can try out higher-end phones for a few months, decide if the choice is worth the premium, and, if not, swap out for less expensive models.
This also puts the onus on the ITSP to check in with the customer a month or two after inking the contract to make sure it is indeed getting the most value out of those shiny new IP phones. And, if Polycom happens to release some new models partway through the contract period, the customer can upgrade to the latest technology with no fees or penalties. This is ideal for businesses that want to ensure they always have the "latest and greatest" equipment in the hands of their end users.
Tipping the Balance
Polycom has definitely put its money where its mouth is, making almost its entire phone line available through the DaaS model. This includes all the VVX business media phones as well as the RealPresence Trio and widely deployed SoundStation IP5000, IP6000, and IP7000 conference phones. Service pricing depends on the cost of the selected phone, but starts as low as $2.65 per device/month for a phone retailing at about $100.
The financial benefit to the ITSP is massive, removing the burden of having to purchase, own, and keep phones in stock. Polycom has had the lion's share of IP phones sold through ITSPs, but Yealink has been coming on strong. DaaS should keep the scales tipped toward Polycom for ITSPs looking at Yealink phones.
From Polycom's perspective, you might look at the DaaS program and think the company is doing this out of desperation, as the "as a service" model puts the financial risk on the vendor. Equipment being returned or early upgrades can greatly eat into margin. However, the third-party intermediary is actually doing the financial engineering, so Polycom's margins on the DaaS phones is the same as it is with upfront purchasing.
The pilot program is currently available to Polycom's ITSP partners in North America, and my understanding is that the company has gotten a commitment from six partners and has another three or four in the works. I would expect Polycom to expand the DaaS offering to Europe and other regions as the program matures, as well as to start including video endpoints. Polycom's Debut videoconferencing solution aimed at the midmarket seems like a no-brainer for DaaS.
Customers are adopting the cloud because they want flexibility and choice, but UCaaS endpoint programs typically offer very little of either. Polycom's DaaS model brings flexible, software-like pricing to IP phones.
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