CommTech is Hot
It happened. The biggest IPO of the year so far is a company that provides phone and messaging services. The stock soared more than 90% on its first day of trading ($15-$28.97) – a jump of 91% (and that’s not counting the fact it was expected to open around $13. Twilio grew 88% in 2015.
What does it mean besides the fact that the IPO will raise $150 million for Twilio? It means comms is hot and comms is changing.
Twilio is a direct competitor to more traditional UC and UCaaS companies. It doesn’t offer “UC” systems, but enables its customers with an alternative approach to communications. Twilio customers are building communications directly into other apps as well as creating their own versions of UC related applications such as contact centers, messaging apps, and basic telephony services.
What we are really seeing as yet another industry shift toward APIs. Let’s look over the past decade or so and key transitions that have already occurred”
- Voice to UC
- TDM to IP
- Hardware to Software
- Software to Virtualized Containers
- Software to services
At the last Enterprise Connect conference the API Ecosystem was one of the most popular tracks. It’s hard to see when a transition begins, but it’s pretty clear now we are in one. The API model makes communications accessible to every website and desktop and mobile application.
Twilio didn’t cover a lot of competitors in its S1. That’s dangerous – most S1s tend to be so exhaustive that you feel like a fool for still investing. However, in their defense most of their competitors are much smaller. Twilio was the first to break-out and it took time for others to create new or adapt services that mimic Twilio’s success. However, Twilio will not be a monopoly. Like most industries there will be a few giants and lots of smaller or specialized competitors. The APIs are not hard to imitate, the heavy lifting lies in carrier relationships.
Who are the candidates?
Genband Kandy: Kandy is Genband’s version of Twilio. I recently published a 2Pager on Genband that features Kandy. It is not a pureplay like Twilio, and it differs in some important ways including the fact they are getting enterprise partnerships (SAP and IBM) and can enable carriers to leverage existing services.
Vonage/Nexmo: Nexmo is considered Twilio’s primary competitor. It is a pureplay API service with global reach, and it is experiencing 40-50% growth. In May Vonage surprised many when it acquired Nexmo because many see UCaaS and APIs as two different industry. The thing is the industries are converging. Vonage has three UCaaS services (Premier, Essentials, and Skype4B), a consumer VoIP service, and now a CPaaS. The company is expanding globally. Vonage entered business UC just a few years ago (via acquisitions) and is now recognized by IHS as one of the top providers. I’ve seen some financial analysts that estimate Nexmo to be worth $500M (about double what Vonage paid for it). Vonage stock has been on a strong upswing since the acquisition.
Cisco/Tropo: Cisco has the name and reach to make a huge difference, but didn’t have the product or service – until recently. Spark is new product, but Cisco isn’t a startup. Cisco Spark is ties together all of its collaboration products. At its core Spark provides workstream messaging similar to Slack and countless other services. But also offers enterprise UC and contact center solutions, telepresence and video conferencing rooms, and its web meetings base. It’s hybrid model creates a powerful migration strategy and its partner strategy potentially means rapid global expansion. Additionally, with the acquisition of Tropo, Spark is building out a strong platform as a service capability. Spark is the primary focus of Cisco Collaboration and the rate of development and innovation is impressive.
There are too many to list here – Plivo, Bandwidth, Vidyo, ShoreTel, ININ, Zang – the list is long.