UC&C Leader Leapfrog?UC&C Leader Leapfrog?
How an Amazon build or Slack buy could affect the industry
July 25, 2017
Amazon, which some analysts speculate will be the first digital company to reach a trillion-dollar valuation, has confirmed during the first half of 2017 what everyone already knew -- that it's on a singular mission to expand its reach.
In the last few months alone, Amazon picked up Whole Foods for a cool $13.4 billion, announced its own "Geek Squad" to further compete with Best Buy for electronics and home installation customers, and signed on exclusive clothing brands for Amazon Prime subscribers.
With recent rumors that Amazon is looking to either create its own team chat application or purchase team chat darling Slack, the next market to be impacted by the Seattle giant could very well be the unified communications and collaboration (UC&C) industry. Here's what you need to know.
How Amazon's UC&C Story Would Change
In February, Amazon Web Services unveiled Chime for online video and audio meetings. A month later, at Enterprise Connect, the company launched Connect, a cloud contact center solution. In May, Amazon launched Echo Show, an enhanced version (adding a camera and small touch screen) of the popular consumer Echo device, to create a UC endpoint. The addition to the Amazon portfolio of Slack or a net new team chat application would provide the company with a nearly complete cloud UC&C lineup and create a strong competitor to long-standing market leaders Microsoft and Cisco.
The "new" Amazon UC&C portfolio doesn't suffer from any downstream or legacy issues, in contrast to Microsoft's and Cisco's stables of legacy, mostly on-premises platforms and their customers, as well as Cisco's gradually depreciating on-premises phone and video infrastructure. Unencumbered by these legacy issues, Amazon has the potential for quick growth. Additionally, an Amazon team chat offering wouldn't require the Microsoft Office 365 ecosystem or any specific Cisco hardware to function well.
Amazon's UC&C growth and eventual supremacy, however, is far from a slam dunk.
First, Chime, Connect, and Echo Show all suffer from lack of enterprise credibility. A Slack acquisition or new Amazon team chat entry would do nothing to dispel the notion that the Amazon UC&C portfolio still needs to prove it can handle enterprise-grade security and scalability. Second, in comparison to Microsoft or Cisco, much of the Amazon story is still more of an AWS-oriented "build" versus a full "turnkey" story with full functionality that just works out of the box. This approach won't fly for larger business organizations that are looking for as much plug and play as possible to keep costs low. Lastly, Amazon is missing any sort of a telephony/VoIP backbone. This isn't a deal-breaker at the moment, but would eventually be necessary to help slingshot Amazon into UC&C leadership contention.
To help bridge these issues, Amazon may decide to play a pricing game by offering a cost-effective UC&C "suite" bundle. This would greatly benefit the enterprise by putting pressure on competitor price points. Neither Microsoft, Cisco, nor any of the other UC&C players have introduced any sort of a UC&C-specific bundle with cost-effectiveness in mind. Amazon is well-known for employing this price tactic for consumer goods. It just makes sense it would replicate what works.
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Keeping Microsoft, Cisco in UC&C Driver's Seat
With Amazon's seemingly bottomless pocket to bankroll its UC&C push, Microsoft might be forced to accelerate the integration story between Skype for Business and Teams. For Microsoft, this accelerated integration would impact the server side as well as the client side, with a likely introduction of Teams as the new end user-facing client for Skype for Business.
When it comes to the third-party app/extensibility story, Slack's partner add-on story is much deeper and broader than the Microsoft model, although Teams is built with extensibility in mind, and it trumps the slow-developing Cisco Spark story. However, if Amazon ends up building a new app from scratch, it would also need to start fresh with its partner model. Depending on the final Amazon play, Microsoft would either find itself in the driver's seat or needing to double-down in its efforts of wooing third-party apps to support Teams.
Bots are another big part of the team chat story, with Slack, Spark, and Teams showcasing different forms of artificial intelligence to assist and further the team chat workflow. Cisco, and Microsoft especially, have much more compelling AI stories and assets already woven into their UC platforms and will likely continue to lead even after acquisition and market dust settle. Most importantly, the continued competition will further benefit customers by driving additional attention and investment in AI by all three vendors.
On the hardware front, Microsoft and Cisco continue to champion leading stories, even with the recent consumer infatuation Amazon Echo has garnered. Both companies will likely be able to keep their strong leads in hardware through internal development and in partnership with UC&C ecosystem partners like Polycom, Plantronics, AudioCodes, Jabra, and others. However, if Amazon continues to show signs of UC&C market share gains, the ecosystem players could easily begin to prioritize their newer devices to enable Amazon compatibility and embrace Echo.
Another consideration here is Microsoft's and Cisco's contact center stories. This remains an area where both Microsoft relies on third-party support, while both Cisco and now Amazon have their own in-house offerings. Although this is a side-story focus from the main Microsoft/Cisco vs. Slack differentiators, it will certainly be interesting to see which vendor ends up with the best team chat-call center integration story.
Other Key UC&C Market Issues to Consider
And for "everyone else," Amazon bolstering its UC&C presence would essentially convert the team chat market into a big-three race among Amazon, Microsoft, and Cisco. All other team chat offerings on the market would struggle to offer a tightly integrated enterprise UC&C story to support them. Should Slack remain a standalone company, team chat apps are still going to face a tough road of ahead. What's fact is that the UC&C market over the past two years has seen a flood of funding and new products, leading to increased competition as well as ongoing consolidation and change.
A final point must be made around adoption rates. Microsoft and Cisco have initiated strategic shifts to their respective UC&C cloud platforms (vs. on-premises). This change has forced enterprises to re-assess their UC&C cloud-adoption strategies, and overall UC&C enterprise adoption has slowed.
Looking forward, the mainstreaming of team chat may cause a further short-term slowdown as customers stop to assess Amazon as a new key UC&C player, and evaluate how much weight to give team chat as part of their overall UC&C strategic roadmaps. While this team chat contemplation won't materially affect the major vendors, it may further accelerate market consolidation as the pace of new and renewal contracts slow down in the interim.
Amazon's build-or-buy actions are still speculatory, as are any rumors of other buyers eyeing the team chat platform, yet the winds are certainly shifting and change is coming to the industry. The coming year may well prove to be the UC&C industry's most interesting yet.
