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5 UCaaS MQ Mysteries Examined

This year’s Gartner Magic Quadrant (MQ) for UCaaS follows the trends we’ve seen in recent years but puts major, unanswered questions on the table for enterprise decision-makers.
On the opening page, Gartner provides this strategic planning assumption: “By 2023, 40% of new enterprise telephone purchases will be based on a cloud office suite – either Microsoft Office 365 or Google G Suite.”
This strategic guidance is loaded with mystery. Here are some of the puzzles from my point of view:
1. Does Gartner really mean all new enterprise telephony purchases, including on-premises and cloud-based implementations?
The statement doesn’t qualify the “40% of new,” so the most likely view is that this means two companies, Microsoft and Google, will be dominant players in the enterprise telephony market. With 60% of the market to share between the dozens of companies in 2019’s UCaaS MQ and the eight remaining on-premises companies in 2018’s UCC MQ, only Cisco seems likely to have a market share position in the same league as Microsoft and Google by 2023. That’s a pretty dramatic statement about the evolution of the market.
2. What does new enterprise telephony “purchases” really mean?
It’s already clear that neither Microsoft nor Google is selling enterprise telephony as a separate product. The Microsoft Teams Phone System is an add-on feature to entry-level Office 365 licenses and is bundled in the top of the line E5 enterprise license. If an enterprise is buying the E5 license for other reasons, such as security and compliance features, analytics, or mobile device management, the Phone System license is essentially free.
Google G Suite raises similar questions. At this point, Google prices its voice service separately, but perhaps will soon bundle it into G Suite pricing with an add-on for various levels of public switched network telephone number access.
So, in either case, is there even a “new purchase?” Maybe, the statement should be “40% of all new enterprise telephony license activations in 2023?”
3. Is this really a statement about the success of Microsoft Office 365?
Published data about Office 365 adoption shows Microsoft is far outpacing Google. However, Google is making a viable push in the market with an “equal but less costly” position. So, it’s fair to assume that both are in the race. But, if their combined share is forecasted at 40% in 2023, it’s unlikely that will be 20% apiece. Should we assume the split is 35%/5% or 25%/15% or something in between? Clearly, the company with the larger market share will have more to invest in ongoing development, an important aspect for strategic planning.
4. What does Gartner see that we don’t yet see?
Gartner receives in-depth briefings from the vendors that wish to be in the Magic Quadrant. What did Gartner see from Microsoft and Google that drove this strategic planning assumption? My guess is that Gartner saw at least two things.
First, enterprises are delivering communications technologies as part of applications and business process workflows, especially as part of office suites.
Second, business communications as we’ve known it is obsolete. Imagination seems inadequate to forecast all the ways that machine learning, artificial intelligence, adaptive workflow management, workstream collaboration, and similar new methods will change how enterprises work. It’s clear that the IP-PBX vendors won’t be the leaders in this new world, while Microsoft and Google have that capacity, though amidst many challengers.
5. What did Gartner miss?
Well, for sure, it missed the importance of vertical market application software and function-based software companies in this market evolution. Now that communications platform-as-a-service (CPaaS) vendors have modularized communications down to basic functions, any vertical market or function-based application software company that wishes can add communications to its product suite quickly and at competitive prices. By 2023, that is certain to be occurring, since it’s already being done by companies such as Salesforce (CRM, sales, and service functions), ServiceNow (service functions), Cerner (healthcare), Slack, SAP, Oracle, IBM, and many others. This applications wave is already here and communications will be defined by usage profiles and vertical markets.
So, perhaps the strategic planning assumption should say, “By 2023, 40% of new enterprise telephone purchases will be based on a cloud office suite – either Microsoft Office 365 or Google G Suite – while another 10% to 30% of new licenses that contain user-sufficient enterprise telephony capabilities will come as part of an industry or functional application package.”
In addition, Gartner didn't mention the future of enterprise telephony for over 50% of enterprise workers, including the sub-contract and gig workers, who may not be using enterprise telephony at all by 2023. Most likely, they will be working on cellular or Wi-Fi devices with their own phone numbers, if they even use phone numbers at all.
In one sentence, Gartner has changed the foundation for communications technology strategic planning for every enterprise. Our recommendation is to study this mystery before making your next enterprise telephony investments. What do you think? Want to discuss this? If so, please post below and start planning for Enterprise Connect 2020.