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BroadSoft: Where to next?Chris Koehncke
I’m heading tomorrow to attend BroadSoft’s annual user conference, Connections, in Phoenix. If voice is dead, no one seems to have told the attendees as this event consistently has grown year after year.
Mobile substitution inside the enterprise, usage of other Internet comms tools (like Skype/Hangouts) or my personal favorite, just not talking anymore to anyone – hasn’t seemed to have fazed much the continual revenue growth for the hosted UC marketplace. However, this growth has come a huge cost to those in the stand-alone hosted UC space. Vonage, 8×8, and RingCentral spend an incredible amount of money acquiring customers and this marketing bill works out to 50%, 62% and 65% (respectively) of total revenues for each of these vendors.
In my own experience, as a service provider, these economics may be unsustainable and the risk is they simply run out of cash. The CEO’s of these firms would argue they are growing the business and, assuming manageable churn, they could easily crank down the SG&A spend and this would flow directly into cash profit. The spiky stock trading of these firms clearly indicates there are some definite believers and non-believers in this story. You can guess which side I’m on.
Way out in Peoria, Illinois – folks don’t know about Slack, perhaps they’ve heard about Skype but used it once on that European vacation years ago, the office IBM Selectric still gets regular use and they may even have a postage meter (Pitney-Bowes continues to grow and it’s a $4b a year business).
This type of market rewards the telco operator well, they don’t appear to be moving much, but they are acting and are in the unique position to win customers who do move, start-up or turn-over. They obviously are winning UC desktops with new fangle IP phones but with the same familiar curly cord they’re familiar. This, of course, benefits both the telco and BroadSoft.
Time may not move fast, but it does move. Those folks in Peoria may not have heard of Slack, but my guess is they’ve heard of Dropbox, Microsoft and Google all of whom have the long-term financial might to play in or even redefine the new UC space.
The crowd at the BroadSoft Connections event does know who Slack is, they also know Dropbox, Microsoft & Google plus a long list of well-financed companies who all have the potential to play and disrupt this cozy tea party. The arrival of this disruption, is as yet TBD, but like most disruptions appear often with little initial notice and with competitive weapons you haven’t previously seen.
Will mobile continue to destroy this space? Will every app suddenly have its own communication element? Will we have a renewed communications all-in-1 tool that lives alongside these other capabilities? Will we start to talk more if frictions are removed? Or is the continued non-speaking trend likely to continue? Video?
Thus, I will be looking specifically for what this Connections audience perceives as the opportunity/threat and whether they will risk making a first move or simply packing away dry powder ideas/early products just in case.
- BroadSoft, a provider of UC infrastructure is having its annual customer conference this week.
- Expect to see some announcements, likely on their forward direction in light of perceived competitive pressures from non-traditional players.
- I’ll be listening for a sentiment analysis and post during the week.