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Recapping the Top 5 Comms Acquisitions of 2022
For the past several years, I have written an annual post on the most significant deals in enterprise communications (to revisit the 2021 post click here, for 2020 click here). 2022 started out as a very active year for mergers and acquisitions (M&A), but deals have slowed down after spiking during the pandemic. Economic jitters, reduced access to capital, and higher interest rates have wallets closed — but not for long. The economy is creating some compellingly low valuations.
Despite the current caution, I expect to see deals ramp up quickly in 2023. Partly, everything is on sale, but also M&A provides enterprise communications vendors an attractive way to expand their offerings. While several providers have lowered their guidance, the fact is enterprises haven’t stopped communicating or collaborating. Layoff rumors alone can cause a spike in communications.
In the past, the demand for comms solutions was closely correlated with economic strength. No one wants to buy equipment when times are tough. But what if times are not as tough as they seem? I expect things will rebound soon.
Regardless, tougher economic times can drive the need for newer technologies. For example, a drop in revenue could accelerate the need for contact center automation and self-service. Also, the emerging need to embrace hybrid work is expected to stimulate a wave of customer purchasing.
Enough about the future, let’s take a look at the most interesting communications acquisitions that occurred in 2022.
1. HP and Poly
I wasn’t too excited about this when it was first announced in March 2022. In 2018, Plantronics and Polycom merged and created Poly, and I still wanted to see how that was going to play out. But the pandemic changed everything. Suddenly, video meetings were the norm, and in-person gatherings were the exception — and the genie has no intention of going back into the bottle.
Back in 2011, video was a niche solution. HP exited the video space by selling its Halo videoconferencing business to Polycom. But now that video has become mainstream, HP’s interest returned. It was one of those “be careful what you wish for” dynamics as the video industry has been expecting widespread adoption for decades, but a sudden surge in demand is too much for many. Poly and other equipment suppliers had supply chain challenges.
Meanwhile, HP was searching for new growth areas, and video collaboration looked pretty good. HP has enjoyed a long-term partnership with Microsoft, and Microsoft Teams was experiencing rapid growth. It had already been dabbling with a Microsoft Teams Room solution featuring its Slice PC. HP likely also saw an opportunity to expand its headset business from just one model.
Also, the communications industry is expanding its focus to hybrid work solutions — more desktop devices, more screens, more cameras, and more headsets. When sectors transition from niche to mainstream, they attract bigger vendors. I expect we will see both Lenovo and Dell also expand their collaboration solutions, but it will be a challenge to catch up to HP. The deal was announced in March and closed in August.
2. Microsoft and Nuance
Back in 2021, Microsoft announced its intent to acquire Nuance for $19.7 billion. The spin at the time was all about healthcare. Microsoft’s initial press release used the word “healthcare” 17 times. While Nuance did have a reasonable focus on healthcare, the company is essentially a conversational AI vendor, which is becoming very important in the contact center, and something that Microsoft didn’t miss.
The deal closed in March 2022, and in July, Microsoft launched its Digital Contact Center Platform largely based on Nuance technology. Initially, the platform is limited to digital-only interactions and only integrates with Microsoft's Dynamics CRM. The solution is new but features proven technology from Nuance, including audio speech recognition, text-to-speech, machine learning (ML), and natural language processing (NLP). Nuance enabled Microsoft’s first foray into the contact center, and the Digital Contact Center Platform is well suited for Dynamics users.
Microsoft’s Digital Contact Center Platform will likely expand in many ways. I expect it will support more CRMs, and add support for voice either through Azure Communications Services or Teams.
3. Zoom and Solvvy
Also, on the conversational AI front, Zoom acquired Solvvy back in May. Zoom tends to acquire technology tuck-ins and acqui-hires. That was one of the concerns regarding the never completed acquisition of Five9 — it didn’t fit Zoom’s M.O. Once the Five9 acquisition was off the table, Zoom quickly reverted to its usual approach, and it started to build and iterate its CCaaS solution from scratch.
That’s a tall order, but building a viable conversational AI solution from scratch in 2022 isn’t reasonable. Zoom found a conversational AI company of the right size and location to acquire. The team was predominately in California, and it would allow Zoom to accelerate automated transactions and better leverage customer knowledge base articles. Solvvy brought to Zoom ML automation tools that it could scale with its CCaaS vision.
4. Vonage and Ericsson
I’m cheating a little with this one, as I also included it on my list of important acquisitions last year, but the deal took longer to complete than expected, and we are beginning to better understand the vision behind it.
This acquisition was announced back in November of 2021 but didn’t close until July 2022. The announcement was a surprise, as Ericsson is mostly associated with wireless infrastructure. Ericsson exited its enterprise communications business when it sold its PBX division to Aastra (now Mitel) in 2008.
When the Ericsson-Vonage news hit, it wasn’t clear if Ericsson was looking to get back into enterprise communications or if it just wanted Vonage’s CPaaS capabilities. In a September briefing with analysts, it became clear that Ericsson intends to leverage Vonage to expand its enterprise offerings and to transform the way 5G services are exposed, consumed, and paid for. Börje Ekholm, CEO of Ericsson, said the company intends to expand its Wireless Office offering with Vonage’s UcaaS and CCaaS subscription communications services and make them available for rebranding by its communications service provider (CSP) partners.
Ericsson sees the next technology wave being driven by public cloud services and the proliferation of mobile devices. Specifically, these trends are changing how businesses communicate with their employees and how they interact, sell, and support their customers. The company intends to become a first mover in the creation of a Global Network Platform that features wireless network-based APIs.
5. Lumen and Colt
Lumen intends to spin off its EMEA infrastructure to Colt Technology Services. It’s similar to its prior announcement in LATAM with Stonepeak. Essentially, Lumen is prioritizing its software-powered platform services over physical infrastructure.
It’s a bold move for what was once a traditional carrier. Carrier networks were built and measured by physical infrastructure for decades. However, the pipe view of networks has become a form of tunnel vision. Smaller network providers, without owned infrastructure, can offer impressive reliability and agility.
Lumen is working to refine the modern network global operator. It is monetizing its physical infrastructure in a way that is creating new strategic partnerships. This allows Lumen to invest in its platform vision. For example, Lumen gives its customers a digital portal with unprecedented control over network services.
Bonus: Google and UJET
This isn’t an acquisition, but I’m including it because it was a near-acquisition. Last March, Google announced a new partnership with UJET. Google already has a strong presence in the contact center market, specifically its CCAI suite of solutions, which is supported by most contact center vendors. It also has its Chrome Enterprise Recommended (CER) for CCaaS program that highlights the value of Chromebooks and ChromeOS as an agent desktop.
However, Google Cloud didn’t have its own CCaaS solution, and Amazon is showing there’s inherent benefits to using the same cloud infrastructure for compute, data, and customer engagement. And that’s how the Google CCAI Platform was born. Suddenly, Google has a complete end-to-end contact center solution that includes cloud infrastructure and computing, CCaaS, AI, and agent desktops. Google considered various partners and selected UJET for its modern approach, agility, and elaborate SDK.
UJET is a relatively small CCaaS provider, and that might change now. The transition from premises-based to cloud-delivered contact centers continues, and UJET is now finding itself on the short list of many projects.
This concept of near acquisitions is something I expect to see more of 2023. Google essentially got the benefits of an acquisition by offering access to its customer base. This model could be attractive for other firms, such as Avaya.
A few other interesting combinations that occurred in 2022 include: Sangoma grabbing Netfortris, Crestron acquiring 1 Beyond, Enghouse purchasing Campetella, and Ooma scooping up OnSip. I should also acknowledge that the year isn’t over yet.
Dave Michels is a contributing editor and Analyst at TalkingPointz.