Analysts, Channel Call Zoom's Five9 Acquisition 'Complete Surprise,' 'Logical Move'
The industry has been pointing toward consolidation between UCaaS and CCaaS providers.
July 20, 2021
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Jolene Langford owns Portland, Oregon-based consultancy Athenium Technology Group, which sells offerings from both vendors. She said she sees the move as a positive, although it surprised her.
“I knew Zoom was likely on the hunt for a contact center play; I just didn’t think they’d go that big,” Langford said. “Both Zoom and Five9 have had an amazing few years. Five9 is at the top of their game, so I guess I’m just shocked they would sell.”
She said she’ll wait to see how the integration plays out.
“It’s a logical move as not having a back office or corporate solution can sometimes be a deal breaker when selling contact center. Will it change how I sell both of them? I don’t know yet. It depends on how much they intend to merge their back-end architecture. If they start merging a bunch of things, it could get bumpy for customers,” she told Channel Futures.
Raul Castanon is senior research analyst with 451 Research, part of S&P Global Market Intelligence. He said entering the contact center space is a logical move for Zoom.
“With lockdown measures ending in several regions, the question of how it could maintain growth kept coming up,” he said. “The acquisition of Five9 will position Zoom within the call center space, setting the stage for long-term growth with a strategy encompassing the broader cloud communications opportunity – including unified communications, online events, developer tools and contact center.”
The move should place Zoom in direct competition with large technology vendors with a broad cloud communications portfolio encompassing unified communications and contact center offerings, Castanon said. That includes 8×8, Avaya, Cisco, Genesys and Vonage.
“There is also a second generation of cloud providers focused on multichannel digital interactions, wrapping voice together with chat, email, social media messaging and in-app communications as bundles that transcend the contact center – such as Twilio, RingCentral, Sharpen, CallVU and Talkdesk,” he said. “At the same time, some of the legacy voice-centric companies, notably Genesys, have shifted their development, and through smart acquisition and positioning, transitioned successfully to the more modern cloud-native platforms. Beyond traditional contact center competitors, Cisco is a key rival. Both Five9 CEO Rowan Trollope and Zoom CEO Eric Yuan are former Cisco executives. In addition to a portfolio that includes unified communications and contact center offerings, Cisco is aggressively expanding its capabilities around hybrid and virtual meetings and events with recent acquisitions that include Socio Labs and Slido.”
Brandon Knight, who leads Telarus‘ contact center practice, said the industry has been pointing toward consolidation between UCaaS and CCaaS providers. Consider RingCentral and Nice’s recently expanded joint offering.
Knight also doesn’t think M&A announcements like this will stop.
“We’ve always talked about customer experience driving this industry, and now we’re seeing it,” he said. “The customer demand is really saying, ‘I want all this stuff to work together. I don’t want multiple vendors to deal with.'”
Knight said he’s excited to see how the companies complement each other. Zoom brings a household name and a massive footprint.
“They’re the big behemoth in the space,” he said. “They’re an awesome partner for us, but a lot has happened really quickly in a very short time for them with trying to keep up with demand.”
On the other hand, Five9 has been working with channel partners since before Zoom’s 2011 founding. Knight said Five9’s “personal touch” could pair well with Zoom’s scale and resources.
“I’m hoping Five9 can maintain that personal look and feel that partners have become used to and yet benefit from having the ownership and magnitude that comes with a company like Zoom,” he said.
Jon Arnold is principal of J Arnold & Associates. He told us he predicted such a deal back in May.
“In terms of contact center, Zoom has relied on partners for CCaaS, but it has the means to make acquisitions if it wants to jump in as a direct competitor,” he wrote in a column for No Jitter, also an Informa (Channel Futures’ parent company) publication. “Zoom’s lack of pedigree in this space may make channels and end buyers wary, but this hasn’t stopped the company from pushing into new markets. Given the potential growth opportunity with CCaaS, it’s easy to see why Zoom would want to be a direct player. There are several pure-play CCaaS vendors out there, and as the UCaaS space becomes more saturated and commodified, I wouldn’t be surprised to see Zoom make a move if this space continues its momentum.”
Joe DeStefano serves as CEO of ROI Communications, a firm Five9 named a “Rising Star” in its annual partner awards. ROI also sells Zoom.
He praised the Zoom and Five9’s complementary products.
“We are very excited about this powerful next-generation combination as we feel it will bring more seamless integrations and broader capabilities to our customers and drives further innovation across the entire provider set in the UCaaS and CCaas solution areas, which benefits all end users,” DeStefano said.
He doesn’t anticipate the acquisition causing any disruption to customers. The partner will continue to interact with both companies as it always has until further notice.
DeStefano said he expects Five9 to provide the same level of pre-and post-sale support. However, he said Zoom may “bring more resources and a broader tool set.”
“We’ve already been speaking with Five9 about how their existing Zoom partnership will bring additional value to joint customers, so we expect this to only accelerate that opportunity to bring more value,” he said.
Avant has enjoyed a strong relationship with both vendors. The services distributor named Zoom its best new provider last year, and Five9 named it a “Rising Star” partner.
Avant president Drew Lydecker said the $14.7 billion cost underscores the joint rise of the UCaaS and CCaaS markets. He called the transaction “a no-brainer for both customers and the channel.”
“Both companies needed to do this because of the competition for transforming the legacy installed base,” he said. “Our Avant Research and Analytics CCaaS 6-12 report indicates the three top reasons for customers switching to a CCaaS solution are expiring service contracts, legacy platform end-of-life and outgrown current platform. There is a monumental shift in customer experience happening right now with a landgrab to transform legacy customers who are needing to adapt, and CCaaS is the answer.”
Intelisys president Mark Morgan said the transaction reflects ongoing trends in the marketplace.
“The Zoom-Five9 announcement is further confirmation of the continued consolidation of the marketplace and the growing importance of XaaS solutions,” he said. “We look forward to continuing to support our partners’ communications requirements in a hybrid environment.”
Intelisys won Five9’s “Master Agent of the Year” recognition last year.
Intelisys president Mark Morgan said the transaction reflects ongoing trends in the marketplace.
“The Zoom-Five9 announcement is further confirmation of the continued consolidation of the marketplace and the growing importance of XaaS solutions,” he said. “We look forward to continuing to support our partners’ communications requirements in a hybrid environment.”
Intelisys won Five9’s “Master Agent of the Year” recognition last year.
By Edward Gately and James Anderson
Zoom’s nearly $15 billion Five9 acquisition had analysts and the channel buzzing Monday. The owner of a consultancy said it took her by surprise, while one analyst predicted it earlier this summer.
The companies disclosed the $14.7 billion all-stock transaction Sunday evening. Through the Five9 acquisition acquisition, Zoom can extend its global communications network with a cloud-based contact center as a service.
Eric Yuan, Zoom’s founder and CEO, called the Five9 acquisition a “no-brainer.”
Zoom and Five9 initiated a technology alliance in 2019. It provides integration with Zoom Phone and the Five9 contact center.
Jay McBain is Forrester’s principal analyst of channel partnerships and alliances.
Forrester’s Jay McBain
“This is a complementary acquisition for Zoom, allowing them to further build out the UCaaS/CCaaS platform,” he said. “Five9 has a strong channel and robust customer base it has acquired over the past 20 years. One of the risks is that this will be Zoom’s first billion-dollar acquisition (15 times over), and bringing together a 30% growing business [Five9] with one that is on a 400% growth rocket ship [Zoom] will be interesting to watch.”
We recently compiled a list of 20 top UCaaS providers offering products and services via channel partners. |
Zoom was a newcomer on the latest Omdia UCaaS Scorecard of North America providers.
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