Twilio, Vonage Make List of Top CPaaS Vendors
Ericsson's pending acquisition of Vonage is a big one to watch in the CPaaS market.
June 3, 2022
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CPaaS
CPaaS providers can grow their traffic and revenue over the next one to two years through messaging apps. Although most CPaaS vendors already offer messaging app APIs, the pandemic caused a surge in the adoption and use of messaging apps by consumers and enterprises. This created an even more responsive environment for messaging apps as a customer interaction channel.
“In addition, in 2021, Meta (formerly Facebook), the owner of three of the world’s largest messaging apps by monthly active users, introduced its Messenger API for Instagram and updated its WhatsApp Business API to make it easier for developers and brands to launch and run campaigns on WhatsApp. CPaaS vendors are vital channels by which Meta’s messaging app APIs will be exposed to enterprise customers,” the Omdia report authors wrote.
CPaaS vendors have made substantial headway into the traditional SMS aggregator market in recent years. Developers and organizations find the relative ease with which they use CPaaS to add SMS and voice connectivity to their platforms appealing.
However, “the potential of a looming cannibalization of SMS aggregators’ enterprise customer bases, combined with growing downward pressure on revenue from voice and SMS, triggered the aggregators to pivot their platforms and business models into the higher-value CPaaS market,” according to Omdia.
Meanwhile, the CPaaS vanguards expanded their offerings.
“They added APIs, expanded into value-added services and packaged solutions, invested in their own communications capabilities and emerging technologies (such as AI), built out partner networks to address gaps in their offerings, and developed additional business models and pricing structures,” the Omdia report says.
The goal was to expand their customer base into the enterprise market while remaining true to their developer background. And, maybe the most salient point, the emphasis on the CPaaS industry has turned toward platforms that extend more prominently into enabling customers to engage in the omnichannel.
Customer experience is not a buzz term. It’s a way of doing business that is a hot trend among CPaaS vendors. It’s about putting the customer at the center of the vendor’s strategic and technology plans. This means that CPaaS vendors scrutinize how customers engage with their service providers.
Although CPaaS vendors have experienced recent growth, M&A among CPaaS vendors is not without its downsides. Primarily, the CPaaS market shows indications of being “overheated,” with “prices rising and the pool of acquisition targets growing smaller,” says Omdia.
Ericsson’s $6.2 billion acquisition of Vonage is the largest of a CPaaS vendor to date. However, Ericsson may be more interested in Vonage for innovation centered on 5G networks — and not mainly for the customer experience.
Leaders in Omdia’s CPaaS Universe are Infobip, Twilio and Vonage. Omdia asserts these CPaaS vendors have “articulated a clear strategy and vision for their platforms from an early stage. They have executed this strategy to progressively add the elements required to support a fully-realized CPaaS offering.”
Products Omdia evaluated were: Infobip CPaaS, Twilio CPaaS and Vonage Communications Platform.
“Challengers” are those companies whose products are those that provide noticeable competition to the leaders’ dominance. These companies’ CPaaS offerings include Avaya OneCloud CPaaS, Bandwidth CPaaS, Sinch CPaaS and Syniverse CPaaS Concierge.
London-based Infobip hasn’t made much noise in the CPaaS market despite a big footprint. It experienced organic and profitable growth as an SMS aggregator and messaging connectivity services provider before many others had positioned themselves as CPaaS vendors. The privately owned company took on its first investment round in July 2020 and a second in last November. It took that financing and made strategic investments in four companies last year. Before this period, Infobip mostly developed products and services in-house.
U.S.-headquartered Twilio is regarded as a leader among leaders in the CPaaS market.
“It built substantial market traction through a developer-focused go-to-market strategy and remains committed to that core market,” said the report’s authors.
Twilio has also invested in infrastructure, technologies and products to increase its revenue from the higher end of the enterprise market. It’s done so by positioning itself to offer an omnichannel customer engagement platform. According to Omdia, successful execution of this strategy should help Twilio finally turn a profit. Twilio generated $2.84 billion in revenue in 2021. However, as of the beginning of 2022, it has yet to turn a profit.
Alongside Twilio, Vonage is a pioneer in CPaaS.
“Vonage is leveraging its considerable assets in the form of the Vonage Communications Platform (VCP) to provide unified communications as a service (UCaaS) and CCaaS, as well as CPaaS,” says the report.
Since Vonage acquired Nexmo in 2016, VCP’s revenue has grown. This attracted Ericsson, which acquired Vonage in late 2021.
“Ericsson’s rationale for acquiring Vonage is to use VCP and its developer network as the foundation of a global communications platform on which enterprises and telcos can build and/or run applications and services that use the 5G network.”
Alongside Twilio, Vonage is a pioneer in CPaaS.
“Vonage is leveraging its considerable assets in the form of the Vonage Communications Platform (VCP) to provide unified communications as a service (UCaaS) and CCaaS, as well as CPaaS,” says the report.
Since Vonage acquired Nexmo in 2016, VCP’s revenue has grown. This attracted Ericsson, which acquired Vonage in late 2021.
“Ericsson’s rationale for acquiring Vonage is to use VCP and its developer network as the foundation of a global communications platform on which enterprises and telcos can build and/or run applications and services that use the 5G network.”
As the last two years have shown, not all CPaaS vendors are the same. As the pandemic continues, people have adopted various video calling services such as Zoom, Microsoft Teams and Google Meet for remote work and school. Video calling on apps such as WhatsApp, Weixin/WeChat, Facebook Messenger and FaceTime also grew. Consumers’ increased exposure to video calling means they are more open to enterprises using video calling for customer interactions.
We recently compiled a list of 20 top CPaaS providers offering products and services via channel partners. |
This represents an opportunity for CPaaS vendors, according to research firm Omdia. (Informa is the parent company of both Omdia and Channel Futures.) It has released its “Omdia Universe: CPaaS Platform Providers, 2022-2023″ report. In the study, researchers rank the CPaaS vendors that are market leaders in providing these additional capabilities: programmable APIs, phone numbers, cloud-based access to communications networks, developer resources, and PAYG contract-free pricing. In addition, most CPaaS providers offer a range of other technologies and services.
Omdia defines CPaaS as “a suite of technologies and services that enable developers and organizations to easily integrate communications into their customer-facing platforms across multiple use cases and vertical industries.”
To learn about CPaaS and which companies rose to the top of the Omdia list, see our slideshow above.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Claudia Adrien or connect with her on LinkedIn. |
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