Insider August 2024

Curated Enterprise Communications News and Insights from August 2024

Featured

Boardwalk, Park Place, and the Googleplex: In a landmark ruling on August 5, a US federal judge declared Google a monopolist, ending a years-long antitrust case against the tech giant. Judge Amit Mehta of the US District Court for the District of Columbia ruled that Google violated the Sherman Act by maintaining an illegal monopoly over search and search-related advertising. The case, brought by the Department of Justice in 2020, focused on Google’s practice of paying billions to companies like Apple to ensure its search engine remained the default on devices and browsers. This ruling will have lots of repercussions. 

The court’s decision could significantly restrict Google’s business practices, including limitations on its agreements with phone manufacturers and software partners. In extreme cases, the company could be forced to divest parts of its business to foster more competition in the search and advertising sectors. Not only would this impact Google’s revenue, particularly the more than $300 billion it generates annually from search ads, but it could also open up the market to smaller competitors previously edged out by Google’s dominance.

This ruling is one of many indications that governments are increasingly concerned about abuses from big tech. Microsoft, Apple, and others are already fighting antitrust pressures from the EU. Regulators on both sides of the Atlantic are stepping up efforts to rein in the anti-competitive practices of the major tech firms. Expect complaints to follow. 

These actual complaints are not big deals. If Google stops paying billions to Apple to be the search default, someone at Apple won’t make their bonus. Microsoft’s decoupling Teams will actually increase its revenue. The more significant impact is not what the complaints are about. The real story is that tech giants are going to become cautious. 

Bill Gates said that Microsoft’s antitrust case over the browsers was what caused it to miss smartphones and mobile. All the tech giants are aware of the target on their back — and that hunting season has started. Combine cautionary and distracted tech giants with widespread tech layoffs and expected interest rate cuts, and we can anticipate an explosion of startups. 

Free Speech: Pavel Durov, Telegram’s CEO, was arrested for charges linked to Telegram’s moderation — or lack thereof. Does Europe really care about Telegram, or is this a show for Mr. Musk? Elon Musk and X are in the crosshairs of European regulators for letting hate speech run wild on X (formerly a good social network). Thierry Breton put EU pressure on Musk to comply with Europe’s view of free speech or face penalties. Musk replied to Breton with a profanity-laden post on X. 

Then there’s the situation in Brazil. A Supreme Court justice demanded that X delete some content, and X refused. The judge then said he would jail X’s legal representative for failing to comply, and Musk responded by closing all offices (no employees in Brazil). A law in Brazil requires that to operate an internet service, you have to have an employee in the country. The judge has now frozen Starlink’s assets. 

Brazil has done this before with WhatsApp and has banned WhatsApp (multiple times). That had to do with revealing encrypted information, which Meta can’t do as it doesn’t have the ability to decrypt user messages. We also saw a similar drama play out in India with the old Twitter. On top of all that, financial institutions are grappling with significant losses related to loans and investments tied to X. 

Everything is fine at X — except for losing money, wiping out creditor value, and international relations. Danto points out that this will eventually become the definitive textbook case of letting ego drive business decisions straight into the toilet.

X and Telegram are not the first and won’t be the last. The US and many other countries have had trouble regulating their own domestic comms companies, but super-national comms services are super-complex. 

We don’t know what’s going on in France with Telegram, but if it is being targeted for simply enabling secretive communications, we are headed into dark times for digital privacy. Can France block E2EE in the EU? Will other member states follow suit? If so, privacy is doomed. 

Musk wants to be a free speech champion, but what’s free speech? Musk defines it as “that which matches the law.” But in Brazil, a single judge can demand content be deleted, executives be arrested, and unrelated assets be frozen. Both sides look moronic. 

In related news: The platform Signal is being blocked in Venezuela and Russia as both governments crack down on encrypted messaging apps to suppress internal dissent. In Venezuela, the block follows protests over disputed presidential election results, with President Nicolás Maduro attempting to maintain power. Signal and X have been restricted by multiple internet providers. In Russia, the communications regulator claims Signal violated national laws. Access to the app has been restricted, with users needing a VPN to register new accounts. Turkey has restricted Instagram for allegedly not complying with local laws after the platform was accused of blocking condolence posts following the assassination of Hamas leader Ismail Haniyeh. Turkish authorities stated that the ban would be lifted once the platform addressed unspecified legal shortcomings.

General News

National Public Data Breach: In April 2024, the hacking group USDoD claimed it had stolen 2.9 billion personal records from NationalPublicData.com, a company that specializes in collecting and aggregating public records. These records have surfaced on the dark web, and researchers have confirmed that many are authentic. 

This is one of the largest data breaches in history. It compromised sensitive personal information (including home addresses, phone numbers, and Social Security numbers) belonging to tens of millions of individuals, sparking widespread concerns about safety, privacy, and potential identity theft. So big that the US government may fine the company — possibly as high as $100.

MS MFA: Microsoft has announced the mandatory implementation of multi-factor authentication (MFA) for all Azure sign-ins as part of its enhanced security efforts. Starting in the second half of 2024, MFA will be required to access the Azure portal, Entra admin center, and Intune admin center, with other Azure services following in 2025. Microsoft is clearly responding to last month’s government report that it doesn’t take security seriously. 

Michels likes MFA but believes security should be an optional right. Google started pushing YubiKeys in 2018, but the authentication device has always been an option. Some apps get 2FA; some don’t. 2FA seems kind of obvious until it doesn’t work. For instance, most people can’t receive a text message during a flight. Michel has also become annoyed with geographical security: “Why can’t I access my movies on Max in Europe? Why won’t Farmers Insurance allow me to log in (and pay) from abroad?” 

Android Says, “No Thanks, We’re Full.” Google has announced that its Google Play Security Reward Program (GPSRP) will be discontinued on August 31, 2024. Launched in 2017, this program incentivized security researchers to find and responsibly disclose vulnerabilities in popular Android apps. The decision to end the program comes as a result of Android OS’s increasing security posture and fewer actionable vulnerabilities being reported​.

With the Microsoft Device Ecosystem Platform (MDEP) on the horizon and s-l-o-w-l-y creeping closer, it’s clear that the Android world is evolving. The wind-down of the GPSRP signals a shift in how tech giants are approaching security and bug identification —relying more on in-house solutions as platforms grow more resilient. 

Tech Layoffs: This past month, Cisco announced plans to lay off approximately 5,000 employees, representing a reduction of roughly 7% of its total workforce. Many tech firms are downsizing and reshifting resources to AI. Similarly, Five9 revealed it would also cut approximately 7% of its workforce (about 180 employees) as part of a restructuring. Times are very uncertain. We have AI variables, a shaky economy, an extraordinary number of leadership changes in the sector, downward guidance revisions, election drama, a warming climate, and political instability in Ukraine and Israel. It’s tough right now for everyone.  

Intel also announced plans to cut 15% (more) of its workforce, but this has little to do with the tech layoff wave. Intel failed to innovate and gouged customers with power-hungry, poor-performing processors. To hide this, it accepted vast amounts of money to “build” obsolete chip fabs with the odd intent to manufacture obsolete computers in the US (no factory ever came online.) Meanwhile, it missed every fundamental change in its industry: ARM took over mobile chips. Nvidia took over GPU chips. Apple and Google developed their own processors. Intel is now discussing its situation with investment bankers to determine the best plan for the future — never a good sign.

Zoom Docs! Zoom decided to skip the promised beta and launched Zoom Docs this month. As TP previously shared, “Docs” is a misleading name. Sure enough, a quick search of the coverage finds a lot of articles comparing it to Google Docs (and Office365). Zoom did not set out to recreate word processing from the ’80s (though it nailed email from the ’80s). Zoom wants its Docs app to be the next generation, a tool that should be compared with Notion and Microsoft Loop supercharged with Zoom AI Companion. 

At least, that was the vision. We are only a few weeks into version one. TalkingPointz expects that Zoom will rapidly iterate Docs, and it will become much more capable. This isn’t just another app on the side; it is planned to be a significant scope creep for Workplace. Expect more at Zoomtopia (October). Did anyone else notice “Meet Happy” was replaced with “Work Happy?” 

In other news, Zoom announced webinars that can scale to 1M attendees. Zoom is building a strong portfolio on events, including the recently updated Production Studio and the broadcast-ready Zoom Liminal Apps. 

No Metaverse After All: Meta is shutting down its Spark AR platform, marking another step back from its grandiose metaverse vision. Anyone paying attention could see that AR avatars had no future; they never had a leg to stand on. Michels: The metaverse is coming, and it will be glorious. Expected arrival: One year after the AR/VR eyewear costs <$100. 

AI News

AI Regulation Whiplash: Earlier this year, OpenAI, Google, and other leading tech firms publicly advocated for government intervention to regulate the rapidly evolving AI sector. However, as state-level AI regulation bills have begun to emerge, these same firms are now pushing back against the proposed laws. At the heart of the controversy is California’s SB 1047, which proposes stringent rules for AI safety, including shutdown protocols for large-scale models and reporting requirements for safety incidents.

Critics of SB 1047 argue that while it aims to prevent AI misuse, it could stifle innovation and disproportionately burden smaller developers. Startups fear that compliance costs and liabilities could drive innovation out of California. Open-source advocates worry that requirements like shutdown switches are incompatible with the decentralized nature of open-source projects. Larger firms such as OpenAI have called for national rather than state-level rules.

Despite these criticisms, SB 1047 received support from notable AI researchers like Geoffrey Hinton, who emphasized the need for responsible AI legislation. The bill was amended to address some concerns and was passed by the California State Assembly. If signed into law, it could set a precedent for other states, potentially sparking a wave of similar legislation. The question now is which is better: regulation by the industry or government? 

AI is Bad For Business: A recent CNN article revealed that the once-coveted “AI” label is now starting to backfire for brands. Research highlighted in the article shows that slapping “AI” onto a brand’s identity can diminish its value. This shift in perception is a stark indication of the AI backlash that is building. As companies and consumers alike become more discerning, the initial enthusiasm for artificial intelligence is being tempered by a growing recognition of its limitations and unmet promises. This is great news, unless you changed your UCaaS logo to “AI.” 

Simply stated, generative AI hasn’t lived up to its hype. A staggering 96% of C-suite executives expect AI to boost productivity, but Forbes published research in which 77% of employees reported that AI has led to increased workloads, reduced productivity, and even job burnout. 

Danto: Generative AI is in the early innings. It’s an exciting technology brimming with potential but offering few real-world benefits. The AI we have today is not the AI we were looking for — it’s just the first step on a much longer journey. Michels: No one knows what AI or generative AI is. The tech keeps evolving, but the “AI” term has stayed the same for +50 years. Contact Center interaction and meetings summaries are specific features, but AI is vague. 

And Speaking of Trust: Sara Jeong in The Verge highlights a critical transition in our perceptions of reality as AI technology advances. Consider the AI-powered photo-editing tools included in Google’s new Pixel 9 phone. The “Reimagine” feature blurs the lines between actual and manipulated images, raising concerns over the authenticity of photographs. Distinguishing between real and AI-generated content is going to get harder. 

Danto believes the outcome is frightening if we extrapolate this to enterprise communications. The original purpose of videoconferencing was to add eye contact and body language — essentially humanity — to enhance digitized communication. Our video tools and platforms offer artificial backgrounds, appearance touch-ups, eye-gaze correction, and other rudimentary AI manipulation. We can only wonder how long it will be before enterprise video becomes more fake than real, with artificial sincerity and simulated body language.

Michels: Nothing to see here, folks. People have been doctoring photos since the camera was invented. I have a hunch that some of those supermodels are also touched up on magazine covers. Trust in photos is long gone. And anyone who’s seen a good magician knows we can’t trust what we see, either. 

Alexatropic: Alexa 2 is coming; this time, it will be powered by Anthropic’s Claude. Why not? Amazon is powering Claude with a prior $4B investment. Alexa’s issue, though, is less about AI and more about UI (and revenue) — a speech UI does not appear practical for shopping. If it isn’t shopping, then how will Alexa pay for itself? 

Meetings and AV

MTRoA: While waiting (and waiting, and waiting) for Microsoft’s MDEP, a new version of Microsoft Teams Rooms (MTR) on Android was released. Version 1449/1.0.96.2024080804, released in August, introduces several notable features and improvements​. One of the key updates is the ability for IT administrators to upload custom background images for Teams Rooms on Android devices. This feature allows customization of the main room display, extended display, and touch console with company-branded backgrounds in PNG, JPG, or JPEG formats. It is available to customers with a Teams Rooms Pro license​.

Another significant addition is the support for Zoom meetings via Direct Guest Join. Users can now join Zoom meetings directly from their Teams Rooms on Android by entering a meeting ID and passcode, provided that Direct Guest Join is enabled.

Furthermore, several bug fixes accompany the update, addressing issues like meeting drops on Cisco devices and problems with built-in background downloads​.

Other MS Teams News: Microsoft introduced several other Teams updates this month. There were some improvements to the Teams client, such as enhanced search functionality with message suggestions, the ability to set custom sound notifications for urgent messages, and a revised meeting gallery layout that adjusts participant displays based on activity. Custom emojis were also introduced, allowing users to create and share personalized emojis with their tenants. Additionally, the Copilot dashboard became available for all Copilot for Microsoft 365 customers, providing insights into usage and performance for organizations with over 100 seats​.

There were also updates related to Microsoft Teams Rooms and devices. Speaker recognition was rolled out to all Teams Rooms on Windows, enabling the identification of meeting participants through cloud-based processing. The Jabra PanaCast 50 was certified for Multi-Stream IntelliFrame technology, improving meeting layouts. Device updates included features such as pan-tilt-zoom control for Teams Rooms and improved call management on Teams phones, including explicit recording consent. 

Urgently Replace Old Teams Phones: Some legacy Teams devices running older Android versions, particularly Android 8.1 and Android 9, will no longer function properly after September 30, 2024. These devices rely on a legacy chat service for notifications of incoming calls. As of the cutoff date, Microsoft will decommission this chat service, effectively breaking the incoming call functionality for these older, unsupported devices.

Open AI and Videocameras? OpenAI is leading a $60 million funding round for Opal Camera Inc., a startup that makes high-end webcams, including its latest product, Tadpole, a $149 device offering 4K resolution. Other investors, like Founders Fund, are also participating. Opal is expected to continue developing AI-powered creative tools, expanding its offerings beyond webcams.

While the funding news might sound exciting, the reality is that webcams have become so commoditized that investing in them feels a bit like shrugging over which brand to buy. Nowadays, it’s more about the software behind the camera than the camera itself. 

You Can Hear Me Now: Cisco announced the general availability of its industry-first Webex AI Codec, designed to enhance audio experiences, especially in challenging network conditions. The AI Codec intelligently adjusts bitrates and redundancies to ensure clear communication during calls, even with packet loss above 30%. This innovation improves audio quality under various conditions, reducing the impact of poor network connections. It is part of Webex’s ongoing efforts to integrate AI for improved productivity and communication across its platform. (This is the machine learning wing of AI, not the overhyped generative part of AI.)

Crestron Adds New Certifications: Crestron announced new Zoom certifications for its 1 Beyond Cameras and Flex Pods. Additionally, Crestron introduced the TST-1080, a wireless touchscreen controller now integrated with Zoom Rooms, offering mobility and enterprise-grade security. Then, toward the end of the month, Crestron employees began soft-announcing that the Videobar 70 (our review here) is now orderable for MS Teams. The solution is pending certification by Microsoft and is expected to ship next month. We’ll share formal details once they are available.

HP|Poly extends desktop support to Cisco Jabber & Webex: The Poly Lens Desktop Version 1.5.0 update introduces call control support for Cisco Webex and Jabber on Windows, enhancing compatibility with diverse UC platforms alongside existing integrations with Microsoft Teams and Zoom. This update allows users to switch between communication platforms without sacrificing functionality. 

New Barco Displays: Barco has refreshed its mid-range LCD video wall portfolio with the introduction of the OverView LVD-5521D and KVD-5521D, featuring narrow bezels and automatic color and brightness calibration. These 55" displays offer noiseless operation and better energy efficiency and are designed for critical applications such as control rooms.

Modular Cloud AV: Xyte announced the launch of “Xyte Hubs,” a modular structure that helps AV manufacturers accelerate cloud deployments and manage devices more efficiently by offering tools for operations, support, and marketing, among others. The system allows manufacturers to create branded cloud solutions quickly and offer subscription-based models. Xyte developed a cloud platform for device manufacturers to manage connected hardware, enabling remote support and enhanced services for manufacturers that have not developed their own cloud solutions.

Boom Hub: Boom Collaboration has launched ZYGO, a new multi-connectivity hub designed to simplify conferencing by offering one cable connection with charging, triple 4K display support, and multiple device compatibility. The platform-agnostic ZYGO aims to address the growing demand for BYOD and plug-and-play conferencing solutions, providing users with streamlined connectivity and control in various meeting environments. Danto explains that there are several BYOD connectivity hubs for conference rooms on the market, and most fall into varying degrees of terrible. (Michels is disappointed with the HP USB-C Dock G5.) 

Zoom Smart Tags: Zoom's new Smart Name Tags feature leverages AI to apply virtual name tags to participants in a Zoom Room. Individuals can add their name tags manually or opt for automatic recognition. Key benefits include enhanced inclusivity, as everyone's name is visible regardless if the speak. Smart name tags must be enabled via admin settings, and individual users can enroll and consent through their profile.

Customer Experience

Time Is Money: US President Biden addressed poor customer service recently, accusing companies of treating hardworking Americans like “suckers” by subjecting them to frustrating loops when attempting simple tasks like canceling subscriptions or memberships. As part of the “Time is Money” initiative, Biden announced proposals to improve customer service. The initiative includes potential rules and regulations to address widespread aggravation caused by poor service, such as a draft FTC rule requiring companies to simplify subscription and membership cancellations.

Michels: You can’t legislate good service, but there’s some value here. If you can subscribe online, you should be able to cancel online. 

Intermedia Teams: Intermedia launched Unite for Microsoft Teams Advanced, which offers integrated communication features directly into Microsoft Teams without requiring a separate Teams phone license. The solution brings Unite’s business phone features to the Teams environment, including voice, video, chat/SMS, and contact center capabilities. This development aims to enhance the Microsoft Teams experience for businesses by adding enterprise-grade telephony and business texting features, improving communication and collaboration efficiency.

Unite for Teams Advanced significantly enhances the Microsoft Teams experience, providing a more well-rounded communications and collaboration solution. This integration not only offers advanced telephony features but also helps ensure continuity and reliability, making it a robust choice for businesses seeking to optimize their communication infrastructure.

Invoca Adds 3 Platforms: Invoca introduced new measurement and audience-building features for TikTok, Pinterest, and Snap Inc. The new capabilities aim to help marketers enhance their impact across all stages of the customer journey, allowing them to better track attribution and optimize their efforts from initial engagement to final sale on these platforms. 

Nuanced Communications: Microsoft announced that its Nuance acquisition will stop supporting premises-based contact centers. “We will discontinue the sale of Nuance Enterprise hosted and on-premise license products on August 9, 2024. This decision supports our commitment to providing maximum value to our customers through Dynamics 365 Contact Center and Azure AI services.”

This completes Microsoft’s abandonment of Nuance ASR/TTS solutions. They got rid of all the Nuance Enterprise salespeople earlier this year. It’s odd that they are killing off an existing base in the name of Microsoft Dynamics 365 Contact Center, which doesn’t yet have a base. 

Still Going To: GoTo introduced more than 40 new features for its GoTo Connect product portfolio. Among the key updates are new integrations with Zendesk and ServiceNow. GoTo also added the ability to use WhatsApp as a customer communication channel. Additionally, AI-powered analytics tools are now available to track customer satisfaction and monitor agent performance. GoTo Webinar has a revamped user experience, which now supports hosting on mobile devices. 

All of these updates are in line with industry trends. GoTo has lost most of its early mover advantages, but it’s good to see these additions to the suite. 

An Epic Talkdesk: Talkdesk strengthened its healthcare vertical play by embedding its Copilot directly into Epic Cheers CRM. The same agent assist available within its Healthcare Experience Cloud no longer requires the Talkdesk Conversations window to access it. Epic is not reselling Td. This integration benefits common customers by allowing them to get Copilot for their agents delivered within Epic’s Cheers healthcare CRM.

New AI Tools for RingCX: RingCentral has announced a series of AI-powered enhancements to its RingCX contact center solution. These include real-time AI support for both agents and supervisors, designed to improve customer interactions by providing in-call assistance and actionable insights. The updates also introduce advanced AI coaching tools that analyze agent performance and offer personalized feedback, automating much of the quality management process. Additionally, RingCX now supports a “bring-your-own” intelligent virtual agent (IVA) framework, allowing businesses to integrate their preferred IVA for customer self-service tasks. These new tools aim to enhance efficiency and personalization within customer service environments. 

UC and Messaging

WhatsGap: Mobile telephone numbers are central to how WhatsApp manages and authenticates users. It was a clever approach to minimize fraud and ensure unique IDs. However, it’s also a security concern because it requires users to share their cell numbers. That’s likely to change as WhatsApp now expects to support usernames. A unique number is still required but won’t have to be shared. This is likely a response to Apple soon supporting RCS, which does require number sharing. 

SIPPIO: SIPPIO Bridge enables organizations to connect their traditional PBX systems with Zoom and Microsoft Teams. The integration aims to enhance the functionality of existing PBX investments by incorporating the robust collaboration features offered by these platforms. SIPPIO is also now partnering with Tango Networks, suggesting it will be able to offer UCaaS Mobility 3.0 services. 

Enreach Contact: No, it’s not a contact center service. Enreach launched its new UCaaS Mobility 3.0 solution, Enreach Contact Anywhere, this month. The solution combines traditional UCaaS with native cellular services (not OTT apps). Though the takeup of UCaaS Mobile 3.0 solutions has been slow, Michels contends the concept remains confusing. Adoption will remain slow … until it pops and will likely be driven by IT instead of users. Cisco and Microsoft offer UCaaS Mobile 3.0 in both MNO and MVNO flavors, but neither provider has shared adoption figures. The feature will be less popular in the US due to locked phones. Enreach is European and serving Europe which tends to be more mobile savvy. It will be interesting to watch how it does. 

8x8 Active Assessor: 8x8 introduced Active Assessor, a solution designed for … landlords? It promises to help landlords and UK housing associations identify and resolve issues and schedule home visits. The system integrates 8x8’s AI-powered messaging and video technology to proactively engage tenants and streamline evaluations by automating data collection.

Verizon Satellite Messaging: Apple, Google, and soon Verizon are providing satellite messaging services. Verizon’s service, accessible via “certain smartphones,” will enable emergency messaging and location sharing through a collaboration with Skylo. In the future, text messaging via satellite will also be available, with no additional charges planned. The Pixel 9 Pro, Pixel 9 Pro XL, and Pixel 9 Pro Fold are among the compatible devices.

Threadiverse: Meta’s Threads now plays with the fediverse, also known as the open social web, which powers Twitter-like services Mastodon, Pixelfed, PeerTube, Flipboard, and others. Meta announced that users on Threads can see fediverse replies in other posts besides their own. Also, users can see fediverse replies in other people’s posts. Threads API posts, created via third-party apps, will also be syndicated to the fediverse. Danto had hoped Threads would provide a viable alternative to Musk’s Twitter, but Its lack of comparable features (live video, multiple hashtags in a post, etc.) keeps that from happening. Instead, it has created a new, different service (that’s less effective for brands). 

Hootsuite, Sprinklr, Sprout Social, Grabyo, and others have integrated Threads access into their platforms, which makes Threads more useful to brands. This will likely attract big broadcasters like @potus and @EvanKirstel, which immediately brings more content into Threads, even without increased users. Users must enable fediverse sharing. Meanwhile, Bizzaro-X continues to reduce its reach and API service (no free tier, increased prices). 

Calltower Device Management: Calltower now offers Phonism’s multi-vendor device management for non Cisco devices.  

The Business Section

Five9 to Acquire Acqueon: Five9 announced a definitive agreement to acquire Acqueon, a pioneering real-time revenue execution platform. Two narratives to highlight here: First, the contact center wants to stop being CRM”s bitch. Instead of relying on CRM for its data, the contact center is turning to data from multiple sources, including itself. That means CC needs to include orchestration. Five9 wants Acqueon to become its orchestration engine for every interaction across a customer’s journey. Secondly, Acqueon gives Five9 a more encompassing “total (proactive and outbound) experience.” 

Avant CX Effect: Avant acquired technology distributor CX Effect to enhance its business, sales, and service opportunities in CX and AI. They claim the acquisition will add over 40 new suppliers to Avant’s portfolio. Details of the deal, including the number of employees involved, were not disclosed.

Kramer ZeeVee: Kramer Electronics hopes that acquiring ZeeVee will bolster its position in the AVoIP sector. ZeeVee brings with it advanced technologies and expertise in IT and AV convergence. The acquisition does not clarify Kramer’s direction, which became unfocused after recent personnel and portfolio changes. Danto says the recent public dispute with rAVe highlighted the confusion.

Avocor To Be Purchased: AUO Display Plus intends to acquire collab and interactive display maker Avocor. Despite Avocor’s good reputation, its compute-plus-touch products never gained widespread popularity. AUO Display Plus, a subsidiary of AUO Corporation, is a Taiwanese manufacturer focusing on several verticals, including education, enterprise, retail, healthcare, and transportation. AUO Display Plus also develops display applications and integrated hardware and software solutions. Danto considers this a face-saving exit for Avocor. Its CEO, Scott Hix, is to become the GM of the Education and Enterprise Business Group and CMO of the Display Plus team.

Gamma Buying Placetel: Gamma Communications, a European technology-based communications services company, intends to acquire Placetel from Cisco to further expand its position in Germany. Placetel, a part of Cisco since 2018, claims to serve 35K (small to large) customers. The acquisition should strengthen the collaboration between Gamma and Cisco and lead to further integration of Webex Contact Center and CX solutions to Gamma's portfolio. Gamma has been steadily expanding its presence in Europe in recent years. The acquisition of BrightCloud was covered last month. The acquisition is subject to financial statements and regulatory approval but is expected to close in September.

SoundHound and Amelia: SoundHound, an AI and voice interface technology, is acquiring Amelia AI (and its debt) for $80 million in cash and equity. The combined company is expected to have $160M in cash, $39M in debt, and a market cap rising to $1.4B. It’s not the best exit for Amelia, which was a rising star until recently. Earlier this year, Amelia’s partnership with NICE dissolved. 

Ericsson Sells iconectiv: Koch Equity Development LLC (KED) announced an agreement to acquire iconectiv from Ericsson and Francisco Partners. iconectiv will become a wholly owned subsidiary of KED, retaining its current leadership team. This acquisition reinforces KED’s focus on telecommunications software and data services, as well as Ericsson’s struggles. iconectiv, a key partner to major communications service providers, offers solutions for network management, digital identity, fraud prevention, and number portability.

Benchmark Capital: Dmitry Netis of The Benchmark Company provides Insider subscribers with financial insights on a quarterly basis. Dmitry leads M&A advisory and serves as a Managing Director and Co-Head of Technology Investment Banking at Benchmark. Dmitry has over 25 years of experience serving as a strategic advisor to many technology growth companies, assisting them with strategic positioning, restructuring, M&A, and capital financing options. He has been immersed in the cloud communications and CX sectors for over 15 years as one of the first Wall Street research analysts covering this space by serving his institutional and private equity clients. He has published on many of the early pioneers, private companies, and big whales of enterprise communications with investment banks William Blair and Stephens.

The summer doldrums quarter came and went but not without a major shock to small cap universe. The sharp rally in US small-cap stocks has hit the headlines in July. In one week, the small-cap index Russell 2000 jumped over 11% over the five trading sessions, outperforming the large caps in closing the nearly 2.5-year slump. “Rotation trade made the small caps from dead money to Wall Street darlings”, wrote Reuters, on the heels of renewed optimism of the pace of future rate cuts. During the first two weeks of July, the Fed Funds futures market moved to price additional interest rates cuts by the end of the year (to 4.75%). Based on empirical evidence that suggests that small caps have outperformed the large caps two-thirds of the time in the last century, no one wanted to miss the rally, and short squeeze out of Russell 2000 ETFs unraveled. 

Then came August, with Nasdaq (technology universe) rattled by Intel’s crash, which missed 2Q expectations and issued disappointing 3Q guidance, suspended its dividend, and announced it was laying off 15% of its workforce. By August 5, the new question arose after financial markets were rattled by the weak July jobs report, showing slower growth than expected and an uptick in the unemployment rate to 4.3%, which led to a major sell-off in equities. Japan’s Nikkei dropped more than 12%, while U.S. stock markets fell by more than 2.5%. Will the Fed make an emergency rate cut? The small caps were sliding again, and recession fears arose with mixed feelings about whether the Fed will act to stop the bleeding. What is priced in with high-level of certainty at this point is the 50-basis point cut at the Fed’s next meeting in September. Many economists predict that 75-basis points might be necessary. 

Notwithstanding, the small cap stocks continued to underperform, and the first trading session in September, was not any more hopeful. Nvidia, which once again put-up a monstrous earnings quarter last week (although expectations were all priced in with investors facing tough QoQ and YoY comparisons and questions lingering aroundBlackwell GPU shipment delays), plunged 10% in the opening trading session of September dragging along a basket of tech stocks in the U.S. and Asia. Traders appear to be bracing for further volatility in September (a historically weak month for equities) and portfolio rebalancing, which could further exacerbate the small-cap equity universe with likely losses [trades] on-deck between now and end of October. This is the window-dressing time when the mutual funds—active and passive—add up their realized gains and losses for the fund’s fiscal year. 

Understanding these macroeconomic trends helps explain what stocks this newsletter is mainly focused on—cloud communications, collaboration, customer experience, and Conversational AI—are facing, with 10 sector-specific developments I would characterize as follows:

1. UCaaS has reached commoditization and appears to be a race to the bottom. Voice has a history of racing to the bottom, and this time is no different. NICE’s announcement of a full-featured communications suite called 1CX with unlimited telco usage for $5 per user per month is a prime example of that. 8x8 delivered a 2.8% decline in YoY top line revenue—its highest on record— and Zoom grew just 2% YoY posting an inline quarter.
2. Microsoft’s Dynamics 365 Contact Center, a Copilot-first CCaaS platform, became generally available on July 1, 2024. Pricing per agent starts at $95 per month with a premium version at $195 per month. Another contact center app recently launched, Queues App for Microsoft Teams, allows businesses to manage, monitor, and handle inbound and outbound customer calls from their central UCaaS platform. While still years away from truly disrupting the market, Microsoft headlines aren’t helping incumbents. The Copilot AI association is further freezing the market. Case in point: Five9’s guide down, which  the first real sign of the CCaaS market’s growth beginning to slow. 
3. Speaking of AI, Gartner’s recent study revealed that a majority of customers do not want companies to use AI in their customer service offerings. 88% of respondents admitted to having “major concerns” about AI, while 64% stated that they would prefer companies to not use AI for customer service. Yet, 60% of customer service and support leaders are under pressure to adopt AI by their organization. Additionally, the survey highlighted the following concerns: 60% of respondents fear that the use of AI will make it more difficult to reach a human agent; there were substantial concerns around AI taking people’s jobs (46% of respondents) and providing incorrect information to customers (42%); while the rest also cited concerns of data security (34%) and AI bias/inequality (25%).
4. All these headlines about AI, aren’t translating into much growth across 3 major sub-sectors—UCaaS, CCaaS, and CPaaS—keeping investors equally worried. The familiar prem to cloud (PBX replacement) transformation narrative is out with the new reality of AI/Automation settling in. While underlying infrastructure is still being built, the SaaS application universe is waning.
5. The premises-based vendors like Mitel, Genesys, Avaya, Alvaria and others (particularly with CrowdStrike’s patching vulnerability making the news last month) are seemingly getting a new life—while not necessarily growing, are holding their own by significantly slowing down their declines. The aggressive sales tactics popular with several cloud vendors in the not-so-distant past, i.e., by overcompensating the channel for top line growth at any cost with clear disregard to the bottom line—have helped slow declines of prem vendors, as the market rotated to profitability metrics. 
6. Interestingly, Mitel and RingCentral broke off their partnership for which RingCentral paid $650M several years ago (and Searchlight reciprocated by investing $200M into RingCentral) to gain exclusive access to the Mitel base of ~35 million users. Brushed under the rug in a silent manner (with little news flow activity outside the one-liner in the earnings call) RingCentral walked away with legacy UCaaS assets—MiConnect and Sky (former Shortel M5 UCaaS product). Both cloud products contributed $139M in revenue for the full year of 2017 ($73M in 2016) and $68M for the first three months of 2018. Cloud product had roughly 65% gross margins and about 1 million subscribers which led to Searchlight Capital acquiring Mitel in April 2018. Putting a conservative estimate of about $75-100M in annual revenue (following years of partnership likely moved the focus onto a RingCentral’s UCaaS product), these assets are likely also pulling up growth for RingCentral in the most recent or upcoming quarters by approx. 1-2 percentage points. It’s hard to see how buying slower/negative growth peers such as 8x8, as widely speculated, would make this combination attractive. Plus, RingCentral’s CFO has just announced she is leaving the company for a relatively smaller project management software vendor, Asana.
7. We are watching closely for new developments at Avaya, with the retirement of CEO Alan Masarek last week. Masarek led the recent transformation of the company. Current chairman of the Board at Avaya, Patrick Dennis, who is no stranger to the private equity community within this market, having led Alvaria Software (formerly Aspect) and Guidance Software (acquired by OpenText), stepped up to fill Masarek’s shoes. Expect the asset monetization brain trust to kick into high gear. Renewed investor confidence in the sector may also depend on the success of Genesys which has been prepping for public exit for several years now.
8. AI and automation are driving a significant change in pricing models. Public and private investors alike, are challenged with whether the price-per-seat model works anymore. It often came scrutinized in very large (centralized) deployments, where the cost of owning the equipment and security tended to be lower than the cloud-based pay-per-seat model. With AI exploring the usage-based pay-per-drink model, investors are wary of the new frontier, looking for certainty around a combination that works—cost of replacement of human seat, cost per virtual agent, cost per minute of compute/GPU used, task completed and/or services performed? One of the CX vendors, Zendesk, recently unveiled an innovative outcome-based pricing model, which is directly dependent on the performance of Zendesk’s AI agents. Perhaps AI could also be used to optimize this pricing formula for individual customer needs. All of these will need to be sorted out over the next few years.
9. With several deals being announced, strategics are beginning to open their wallets—feeling the need to snap up assets while they remain undervalued, buyer finances and balance sheets strengthening given recent belt tightening, and the view that these dour market conditions can’t stay here forever (with Fed cuts looming and inflation which appears to be under control) and a likely post-election relief rally not far away. To that end, Five9’s acquisition of Acqueon (an outbound revenue generation and recovery tool) for no less than $167 million appears to hit on that trend (Acqueon is speculated to have approximately $20M in annual revenue, putting the multiple in the 8x ARR territory). As far as interesting AI vendors, we’ve longed to highlight over 150 vendors in the CAI space, many of which will need to consolidate away or will fail. Two more prominent vendors that continue to standout are Cognigy (which raised an additional $100M in Series C funding for a total of $175M in June) and Kore.ai (which raised $150M in January for a total of $223M).
10. The PE community has been watching the sector fearsomely, jaded by the AI inertia, slowing growth of pure-play vendors in each of the subsectors, and voice commoditization trends. Insofar, anxious to show returns and exits to their LPs, the PE deal makers resort to financial engineering tactics such as repackaging several assets in their longer vintage portfolios into one bigger asset. Selling this bigger, more profitable business to another PE (secondary buyout), achieves the desired liquidity and exit for investors (until leverage economics make sense again on the heels of an improving interest rate environment which is likely to open up some LBO deal flow by early next year.)

Leadership Changes

NICE: NICE announced that Scott Russell will become the new CEO on January 1, 2025, succeeding Barak Eilam, who will retire after more than 10 years as CEO and 25 years at the company. Scott brings over 25 years of experience in enterprise software, including 14 years at SAP (Global CRO) and leadership roles at IBM. 

Cisco Webex Leadership: Every three to five years, it seems Webex leadership completely changes. This edition appears to have been triggered by Javed Khan’s departure. After nine years, Javed left Cisco to be President of Software and Advanced Safety and User Experience at Aptiv, a company focused on the connected car, a space Michels has been reluctantly learning about. (With few exceptions, the auto industry is completely paralyzed regarding software. Javed will likely be very successful.)

Javed has left a lasting impact on Webex. He fixed portfolio gaps, absorbed (at least) four acquisitions, and developed/promoted many staff. Perhaps most significantly, he accomplished one of the industry’s greatest pivots (Cisco Webex ♥️Teams). 

Pleased to see that Anurag Dhingra will assume the role of SVP and GM of the Collaboration business. He has over 25 years at Cisco, served as CTO, and most recently led the Collab software engineering group. Also, very pleased to see that Jay Patel will take on a new role as SVP and GM of Webex. The new CX unit (reporting to Anurag) combines digital channels and CC (Jay Patel came from the IMImobile acquisition). Vinod Muthukrishnan returns to Webex as the CX COO, reporting to Jay. Anurag reports to SVP Jeetu Patel, who was named as Cisco’s Chief Product Officer. 

Five9 announced it promoted company veteran Matt Tuckness to EVP of Sales and Customer Success, focused on $1M to $10M TCV deals.

Zoom’s CFO Kelly Steckelberg announced that, after seven years, she will leave the Workplace provider following Q3. Zoom also announced it is adding Mike Fenger to its board of directors. Mike currently oversees Apple's global product sales.

Danny Gunter became the latest RingCentral boomerang, returning this month as its Chief Technical Officer. He was at Dialpad most recently but ran PS at Ring for four years before that.

Aurora Multimedia has appointed industry veteran Hal Truax as VP of Sales and Marketing to lead global initiatives and drive innovation in the AV sector. With over 30 years of experience, Hal is expected to enhance Aurora’s brand visibility and revenue worldwide.

Goodreads

1. Americans Express Real Concerns About Artificial Intelligence - Gallup
2. New WhatsApp Update Should Stop You Using RCS On Your iPhone - Forbes
3. The 10 Biggest Tech Company Layoffs Of 2024 (So Far) - CRN
4. The Hotelification of Offices, With Signature Scents and Saltwater Spas - NY Times
5. Sonos considers relaunching its old app - The Verge
6. As Alexa turns 10, Amazon looks to generative AI - The Alexa division reportedly lost $10 billion in 2022 alone. At a certain point, a loss leader simply becomes a loss. 
7. Adding AI to a brand diminishes its value - CNN
8. How AI Works to Deliver Outstanding CX - What we know about how generative AI and conversational AI can improve customer experience (CX) and employee experience (EX).
9. Intel’s Immiseration - Intel is dying. Wintel is dead. There are business case stories here in both Intel’s fall and Microsoft’s ongoing success. 
10. A16Z compiled a list of the most popular consumer generative AI apps.
11. Why the Arrest of Telegram’s CEO Should Worry Everyone. Yes, Including You - Pavel Durov was arrested by French authorities on Saturday, kicking off a firestorm of concerns about government overreach, privacy, and free speech.
12. Verizon is going to launch satellite messaging this fall - Apple’s recent iPhones and Google’s new Pixel 9 already offer built-in satellite messaging services, and Verizon will have one, too.
13. The 10 Biggest Tech Company Layoffs Of 2024 (So Far)
14. The World’s Call Center Capital Is Gripped by AI Fever — and Fear - The experiences of staff in the Philippines’ outsourcing industry are a preview of the challenges and choices coming soon to white-collar workers around the globe.

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Recent Insider Reports (only new Insider Reports are behind the paywall) 

1. Insider Jan 2024
2. Insider Lite Feb 2024
3. Insider Feb 2024
4. Insider Lite Mar 2024
5. Insider March 2024
6. Insider April 20, 2024
7. Insider Lite May 2024
8. Insider May 2024
9. Insider June 2024 
10. Insider Lite July 2024
11. Insider July 2024
12. Insider Lite August 2024

TalkingPointz Insider Reports are available through a subscription service at TalkingPointz.com.

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Meet Us

Dave Michels is Founder and Chief Protagonist at TalkingPointz and Editor in Chief of the Insider Report. [email protected]. David Danto is AV Aficionado at TalkingPointz. [email protected].