UCaaS Experts 'Puzzled' by Renewed Zoom-Five9 Talk

Update Dec. 6: Five9 late Tuesday issued a brief statement denying any intent to be acquired. "Although Five9’s general policy is not to comment on market rumors or media speculation, Five9 was approached with such an opportunity; however, Five9 is not pursuing any such acquisition."

Two years ago, Zoom offered Five9 nearly $15 billion to acquire it.

Five9 shareholders had other plans, however, politely shutting the deal down before it could assemble one of the most influential unified communication brands on the planet.

Two years later, the duo are reportedly back at it again, behind closed doors, looking to make a deal. It appears that market conditions today are slightly more favorable if the two are in talks once more. 

But the two still face an uphill battle — convincing the board that shut down the deal last time. Five9's channel leader, Jake Butterbaugh, has publicly stated it has some 950 channel partners globally, 700 of which are in North America.

According to Diane Myers, principal analyst at Metrigy, the UCaaS market is a tough one, given Microsoft's strength.

Metrigy's Diane Myers

"Zoom is No. 4 in terms of UCaaS market share following Microsoft, Cisco, and RingCentral," Myers noted to Channel Futures.

Metrigy forecasts the global UCaaS market to grow 9% in 2023, to $20.6 billion.

"By comparison, the CCaaS market is growing in double-digits," Myers added, with Metrigy forecasting the global CCaaS market to grow 18% in 2023, to $6.6 billion. In context, Five9 is the third largest CCaaS provider, following NICE and Genesys, Myers said.

Anurag Agrawal, founder and chief global analyst at Techaisle, told us the pairing could be fruitful.

Techaisle's Anurag Agrawal

"The fusion of Zoom’s supremacy in video conferencing and Five9’s proficiency in cloud contact center could potentially forge a robust, all-in-one platform for customer interaction," said Agrawal. "This synergy could not only draw in new clientele but also fortify their standing against competitors such as Microsoft and Cisco."

What Might a Zoom Acquisition of Five9 Mean This Time Around?

In the time since the botched acquisition attempt, Zoom launched a CCaaS offering. In February 2022, we were introduced to Zoom Contact Center, which has since picked up hundreds of business customers and introduced features like a function that enables contact center agents to escalate chats to video.  

What Zoom might greatly benefit from this time around is Five9's advanced artificial intelligence capabilities and the more than 2,000 customers − from enterprises to SMBs − that use Five9's contact center technology. 

With such an expanded portfolio, the move appears, at least on the surface, to make little sense, says Steven Karachinsky, who heads UCaaS-focused Ziro.

"I'm a bit puzzled by Zoom's decision to acquire Five9," he said. "Zoom has made great strides in developing its contact center capabilities as of late."

Karachinsky believes that even though Zoom is not "as robust as Five9 is currently, the significance of this difference is unclear, especially considering the advancements in AI technology." 

Given Zoom's strides on the AI front, Karachinsky told Channel Futures the second go at a Zoom-Five9 pairing has left him puzzled. 

UCaaS expert Robert DeVita, founder and CEO of Mejeticks, has similar feelings on the matter.

"Zoom's acquisition of Five9 makes much less sense today than two years ago when Zoom was looking to enter the CCaaS market. They still have a few gaps to fill, but nothing major," DeVita told us. 

He said the Zoom Five9 acquisition would make sense for Zoom to gain access to Five9's customer base, but that's about all.

Unified Comms, Contact Center Market Consolidation on the Rise

Irwin Lazar, president and principal analyst at Metrigy, told us from a consolidation standpoint, there's a lot of market convergence between UC and CC vendors.

"Our Workplace Collaboration: 2023-2024" global study of 440 organizations found that 52.3% were already using a converged WC/CC platform, or planned to deploy one," he said.

Further, according to Metrigy data, another 30% evaluated converging solutions.

"So it would make sense for Five9 to look for a UC buyer and for Zoom to leverage Five9 to accelerate and strengthen its contact center offering," said Lazar.