8x8, A Different Communications Provider8x8, A Different Communications Provider

8x8 chose to develop its own technology and become a vertically integrated company.

I sent a survey to 210 cloud/hosted communications providers. 8x8 was one of the responders to the survey. 8x8, has been sending out many articles and white papers about subscribing to hosted communications services which stimulated my interest. They call their service a hosted PBX solution, 8x8 Virtual Office.

I spoke with Bryan Martin, the CEO, about the company. I was surprised to learn how much of their technology, especially the software, 8x8 has developed rather than buying and licensing VoIP systems and software from OEM VoIP vendors.

Their history is interesting. 8x8 started as a semiconductor company in 1987. In 1997, they moved into the VoIP chipset market. By 2002, 8x8 was offering residential telephone service. In 2006, 8x8 began focusing on business communications services. Their former name was Packet 8.

8x8 has pioneered and patented technology innovations, from video chips to voice compression. They own and operate their own technology, which is backed by 76 US patents. Over 23,000 businesses rely on 8x8 for their communications needs. The company supports about 40,000 residential lines. 8x8 is adding about 1,000 new businesses to their service every quarter.

Asked why 8x8 chose to develop its own technology and become a vertically integrated company, Bryan Martin presented 3 reasons:

1. The company wanted to control its own destiny and not depend on developments produced by others.

2. This approach allows 8x8 to differentiate itself from other providers.

3. By developing their own technologies, 8x8 avoids paying license fees, software subscription fees and royalties.

The internal software developers have created special features for customers that are not part of other providers' feature sets. In one case, insurance agents wanted their office caller ID to be displayed on the customer's phone no matter where the agent originated the call. Because 8x8 controls its own software, this was easy to accomplish at low cost. This self development approach carries over to the smart phone. 8x8 has apps for the IPhone and Android based products for the mobile user.

Asked how 8x8 treated their customers, Bryan said, "We work hard to obtain the customer with a 30 day free trial. We also require that the salesmen call the customer for 45 minutes when their equipment arrives, to help the customer through the installation and setup. In many cases when the customer does have a problem, they do not report it. By calling the customer rather than waiting for support call, 8x8 has created greater customer loyalty and reduced customer churn rate in half." The 8x8 service is approximately 90% business and 10% residential customers.

Bryan described the business customers as quite discerning in their consideration of a hosted service. When the customer is asked about their present communications bills, most do not have any real idea what they spend. In many cases, the bill is $2,000/month, which can be reduced to about $200/month when using the 8x8 service. The customers who most benefit from the 8x8 service are those that have multiple locations, mobile users and teleworkers.

The typical customer needs an educational sales person to help them to understand what a hosted service can do for their business and how it can improve their employee productivity. Although most smaller businesses do not request a Service Level Agreement (SLA), 8x8 does offer a SLA for those businesses that request it.

Although 8x8 calls their service a hosted PBX offering, 8x8 does support many Unified Communications features including video, audio conferencing, Internet fax, call recording and archiving, video chat, presence management and more. The average customer has 8 lines; however 8x8 does have customers with 1,000 lines. This is different when compared to many other providers who focus on the SMB with 50 lines or less per business. This was learned from the survey I mentioned earlier.

One of the 8x8 markets was supporting real estate companies, but due to the downturn, many of these customers have gone out of business. 8x8 now focuses on independent insurance offices, lawyers and financial institutions, companies that need to cover multiple sites and support mobile workers.

What intrigued me most were the features and functions 8x8 has because it develops it own technologies and does not rely on OEM vendors for their operation.