UCaaS Slowly Finding Home in Japan
Adoption of UCaaS services has been very strong in the U.S. and now Europe, but it's been much slower in Asia. This is especially true for Japan -- odd, because the country is so connected and appreciative of technology.
Synergy Research Group recently reported that the total hosted and UCaaS market in Japan is only growing at 4.4% annually. Unclear is whether this is due to lack of demand or lack of viable offerings.
The leading hosted UC provider is the national carrier, NTT, which offers hosted solutions based on platforms from Microsoft and Cisco. NTT acquired Arkadin in 2014, a large provider of hosted collaboration services that positions the company for global expansion. However, the domestic market in Japan remains small. After NTT, the competitive landscape mostly comprises domestic, independent providers often using open-source technologies.
Many of the Western providers support remote users in Japan, but few have made progress in establishing a domestic user base. One of the barriers holding back adoption has been regulation. However, several recent developments are stimulating both demand and supply.
Dialpad Partners with Softbank
Dialpad struck a partnership with Japan's Softbank, which is Google's largest G-Suite reseller in Japan. The partnership gives Dialpad access to Softbank's 2,200 sales representatives. Dialpad also hired a former Softbank executive to head up its Japanese operations, which will include a new Tokyo office and two planned data centers.
Dialpad offers voice, video, instant messaging, text, and online meeting tools, and has announced 40 new enhancements to its UCaaS and conferencing services. In addition, Dialpad integrates with Microsoft Office 365 and Salesforce.com, and, most significantly, offers a Chrome-based applet as its softphon, and a mobile client that uses the native dialer on Android phones. Dialpad (and RingCentral) are endorsed by Google, and Dialpad CEO Craig Walker was previously part of the Google Voice team. Although Google Ventures backs DialPad, its service uses standard Google APIs.
Dialpad recently experienced 138% growth and now has more than 35,000 customers worldwide, with increasing penetration into larger (+1,000 employee) companies, Walker told me.
BroadSoft Acquires PBXL
In late 2015 BroadSoft acquired PBXL, a cloud provider in Japan. BroadSoft has been very effective with smaller business accounts, and the company cited 70% of Japan's workforce comprises five million small businesses.
PBXL has since been relaunched as BroadSoft Japan, and it now offers BroadCloud there. BroadCloud is a fully managed, wholesale service that enables carriers and providers to create their own retail UCaaS services. BroadCloud was previously available in the U.S. and Europe.
BroadSoft believes that Japanese businesses will be particularly drawn to its BYOD and IP-based fax capabilities. "Through the acquisition of PBXL, we believe we are now positioned to expand our cloud footprint to a growth market eager to adopt cloud business services," said Michael Tessler, BroadSoft CEO, at the time of the acquisition.
Telecom services provider Nifty uses BroadCloud to power its ShaMo! service.
Aineo Networks in Japan has expanded from its UC premises-based business to UCaaS services. The company has previously sold equipment from Avaya, NEC, Nortel, ShoreTel, and Cisco, but turned to Mitel's Telepo solution to create its hosted PBX service. Its iPBX hosting service, launched in 2013, has experienced significant growth over the past few years, and Aineo reports accelerating demand for it.
"Both Japan and Korea currently have some of the best Internet available in the world. We have sold and serviced telecom equipment for 20 years and find the carriers are the biggest barrier to broader UCaaS adoption. iPBX gives our Japanese clients portable UC that can be used nationwide," Spencer Wolfe, managing director at Aineo Networks, told me. "Our apps, instant contact center, and easy APIs have made expanding our datacenters a quarterly ritual."
In Japan, number portability requires in-region data centers, so Aineo plans to add more data centers. The alternative approach is to use national "050" IP phone numbers, which lack a "local presence" associated with area codes.
These changes may signal the start of accelerated adoption of UCaaS in Japan. The shift seems inevitable as UCaaS continues to grow strongly in other countries with excellent wired and wireless broadband network availability.
Dave Michels is a contributing editor and analyst at TalkingPointz.