Insider Report 7-1 (Jan 2023)

The Most Important Enterprise Communications News

Welcome to the new format for the TalkingPointz Insider Report. Since their origin seven years ago, the TalkingPointz Insider Reports have been published monthly. The monthly format offered clear boundaries but was oblivious to news cycles and travel commitments. Starting this year, the report will be more frequent. The goal is to deliver more timely (and shorter) issues.  

So Far This Year

Layoffs: The R-word keeps coming up. Many vendors are lowering their guidance. Lower projections call for smaller budgets, and that means layoffs. Remember that whole Great Resignation thing? Those were the days. During the boom of the pandemic, many were frustrated that big companies benefited more than small companies, but this so-called “correction” is less selective. Salesforce, Amazon, and Alphabet are leading the pack. 

Salesforce expects to cut 7K jobs, about 10% of its workforce. It appears they are attempting to undo some acquisition gain. Tableau (acquired for $15.7B in 2019) was hit very hard. I hear Slack (acquired for $27.7B in 2021) is being hit hard, too, but haven’t seen the numbers. We did see that Slack’s highly trumpeted post-acquisition growth slowed from 9.3% in Q2 to 6.9% in Q3. “Are customers really likely to base their office chat decision on their existing CRM system?” - The Register. 

I take no pleasure in writing that Peak Slack is behind us as I wanted to see Slack succeed. Everyone I know that has experience with Slack and Teams considers Slack the better designed solution. But Microsoft is very good at targeting IT decision-makers, and bean counters love a “free” bundle. 

The fit with Salesforce is not proving itself. Layoffs, combined with the recent losses of its Salesforce Champion (Bret) and Visionary (Stewart) may be too much. I fear Slack will be lucky to be a footnote in Teams’ autobiography. There’s also some great campfire stories to tell the kids about Cisco Spark and Unify Circuit. 

For Amazon, the company now expects to cut 18K employees, though few if any in AWS. Excluding AWS, Amazon lost $8.1B in the first nine months of 2022. While that’s a big number, it was offset by the $26B it generated in ad revenue. The Alexa team is getting hit particularly hard. The company reported billions in losses at Alexa. Turns out speak-to-shop isn’t a big hit, although the Lex tech is being leveraged in AWS. Inquiring minds want to know how that NFL investment paid off. 

ChatGPT Disruption: OpenAI continues to dominate the news. Two stories that received a lot of attention so far this month include Microsoft/OpenAI potentially disrupting Google and Microsoft possibly investing $10B in OpenAI. The first story is about disrupting Google’s near-monopoly on search by using OpenAI to deliver results instead of links. Google, too fat on advertising revenue to focus its attention on the future of search, gets disrupted by arch rival Microsoft Bing. It’s a great story of disruption, but I don’t buy it. 

Certainly, Google deserves to be disrupted. The company has an abysmal track record on both innovation and execution. It had significant head starts on cloud compute and web office apps but leads neither. The vast majority of its internal projects have failed (44 in the Google Cemetery) including Wave, Picasa, Hangouts, Nexus, and Reader, not to mention its failed siblings that include Loon, Sidewalk Labs, Fiber, Verily, and Waymo. 

However, I don’t buy that Bing/ChatGPT can disrupt Google Search — at least not anytime soon. ChatGPT can clearly communicate to us in natural language, but understanding our queries will be harder. Searching is an iterative process, and link results shape the queries. Even if Bing/ChatGPT can provide the answer (instead of links) on its first try, there are still several unknowns around the business model. These results will be more expensive to provide — it’s not just the search that matters but the revenue, too. The links format lends itself well to ads. Perhaps MS is thinking of an ad-free model instead, but this will also take time to develop and may be too costly to absorb in Microsoft 365. 

Regarding Microsoft’s investment in OpenAI, $10B is an impressive number. It values OpenAI at $29B despite not having a business model. Is it too high? Impossible to say, but probably not. At least this week, we are talking about the leader in a new explosive generation of AI. 

I have no idea how ChatGPT will end up being used once it’s not free. The potential of computing that understands language feels significant. The terms of the deal include OpenAI’s tech running on Azure and being embedded in Microsoft’s products. Not to mention a reasonably low-risk assurance of payback from future revenue. The closest comparison is probably Google acquiring DeepMind in 2014 for $500M (pocket change). 

By the way, the writing is on the wall regarding the end of free access to ChatGPT. OpenAI has signaled it will soon charge. The new “pro” version that has been teased would end unavailability caps and throttling. Pricing to be announced. 

Speaking of Microsoft and AI, VALL-E is a new text-to-speech AI model with impressive voice simulation. Somehow, it takes just three seconds of audio to synthesize a specific voice that can say anything. It sounds dubious, but so did DNA evidence when it was new. This will be fantastic for speaking with the dead. Clearly, advances in AI are accelerating and will continue to dominate the news. New capabilities in enterprise comms should not be too far off. 

Hybrid Work: My position remains that hybrid work is a (necessary) transition to a more distributed future of work. Transitions take time as we have to work out the details like supervision skills, payroll taxes, and more. A significant part of the working world is based on location. One of the reasons I'm so confident this will change is because remote/distributed work is cheaper — and businesses tend to favor cheaper. There’s a lot of noise about returning to work. Managers want things just the way they were, and that’s understandable: Change is hard. 

We know we can rely on Elon Musk if we want a glimpse into the future. Musk is a big proponent of back-to-the-office. He claimed that remote workers are only “pretending to work,” and he immediately reversed Twitter’s remote work policy after acquiring it in November. Then the future arrived, and Musk decided to shutter Twitter’s Seattle office. Evidently, the high cost of office space led Musk to reconsider the value of pretend work in the Emerald City (Seattle Times). 

Businesses will eventually broadly accept the modern reality of distributed work. In addition to economics, there are ESG pressures. As severe weather events continue, increasingly concerned companies are setting aggressive goals to reduce their carbon footprint. Decreasing commutes reduces carbon emissions and improves morale. Speaking of severe weather, decentralized workforces are also a form of business continuity. Expect offices to downsize over the next several years and increase in-person “events” in hotels and other rentable venues. 

Microsoft Increasing (and Decreasing) Pricing: In an attempt to level global pricing (foolhardy), Microsoft will increase the price of its subscription services in Europe on April 1 (Fools Day!). Subscriptions paid in the DKK, Euro, and NOK will see an 11% increase, SEK prices go up 15%, and the still-mighty GBP rates only go up 9%. I wonder how much exchange rates will change between now and April 1? (Regardless, I doubt these prices are going down.) 

Microsoft is also introducing a lower-cost tier for Microsoft 365 at the end of the month. Microsoft 365 Basic is priced at $1.99 per month or $19.99 per year and includes 100 GB of storage, Teams, Outlook email, and support. 

Comms Gone Straight: A new comms company called Ciphr is targeting enterprises that value privacy. The OnyxCorp rebrand was necessary as its prior business of protecting the privacy of criminals and drug traffickers is no longer in. I previously covered a few of these big busts that sent comms pros to prison. Vice.

Ciphr has a new app called Mode (beta) that offers “privacy & protection for team communication.” The website says Mode protects chats with end-to-end encryption and disappearing messages, and also includes video calling and file sharing. Mode is not available in the US. Amazon calls this Wickr and ironically targets Feds. 

Teams Mobile by Verizon: Newly announced, Verizon Mobile for Microsoft Teams. I published a UCaaS Mobility 3.0 Research Note last June in which I use the UCM3 term to describe the convergence of cellular and UCaaS, which I consider a big deal. In this case, the Teams UCaaS phone number becomes the native cellular number, and Teams administrators can centrally manage desk phones, softphones, and smartphones. The only catch is that the Verizon user has to be on a corporate account. 

I expect UCM3 to be a game-changer. It fixes the numerous problems associated with UCaaS Mobility 2.0, also known as OTT apps. I also expect that a lot of Teams users with AT&T and T-Mobile will make the move to Big Red for this feature. The launch should also increase general awareness of UCM3, which remains very low. Though already available in the US from Cisco and RingCentral, neither provider has generated much fanfare. However, now we are talking about two market leaders that love marketing. Microsoft first announced the feature as Operator Connect Mobile at EC22 last March. 

I just presented UCM3 and can share the deck on request. 

Bem Vindo Cinco Nove: Five9 announced the opening of its new European Research and Development Hub in Porto, Portugal. The office will serve as the company’s European engineering headquarters. The site opens with +100 employees, and plans to accommodate 300 within a few years. This is important for both Five9 and Portugal. It should assist with Five9’s European expansion which includes its announced intent to expand its data centers in Amsterdam and Frankfurt. Porto also became the new home for many employees who relocated from Eastern Europe due to the war. 

Portugal gets a major tech player to hire its residents and contribute to its economy. Talkdesk has done very well in Portugal and attracts students from all the major universities as a Silicon Valley Unicorn. “We are thrilled to welcome Five9 to Portugal, landing in the West Coast of Europe from the West Coast of the USA,” said Luís Castro Henriques, Chairman & CEO of Portugal’s Trade & Investment Agency. 

The Next Chapter for Avaya: Bloomberg reported that Avaya is nearing its Chapter 11 filing (it could come this month). Back in August, the company announced doubts it could remain a “going concern.” “The company has been in negotiations with first-lien lenders including Apollo Global Management, Ares Management and Invesco… A potential Chapter 11 filing could open the door to litigation from certain investors who have seen their investments plunge in value, the people said.”  

The company hasn’t made any official statements, but there’s quite a bit of angry online chatter. Many competitors have launched campaigns aimed at the Avaya base. 

NoFiltered MICE: MICE Media and NoFilter announced a partnership to co-develop a decentralized approach to media. This one is a bit of a head-scratcher. The main TalkingPointz are that MICE Media is a new kind of media company that decided to leverage NoFilter, a new kind of video streaming company, to create a Web3-inspired, decentralized and immersive experience. I would like to double-click on the decentralized and Web3 parts, but it appears I will have to wait until later in the quarter when the platform launches. 

Devices from Lenovo: Lenovo expands its Teams Certified lineup with two new monitors, the ThinkVision T27hv-30 and T24mv-30. In addition to a dedicated button to start Teams calls, the new devices have built-in cameras, microphones, and speakers and are Windows Hello-ready for fast logins. These near-all-in-one (no compute) AV monitors make a lot of sense. Similar products are available from Apple, Cisco, DTEN, HP/Poly, and others.  Lenovo also announced a certified “Conference Call Base Speakerphone” for USB audio. Lenovo, like HP, sees a big opportunity in Teams conferencing hardware, previously a niche business. 

Acquisitions

Ericsson’s plan isn’t clear yet, but it is dropping several clues. Regarding its acquisition of Vonage, it plans to expand its customers from CSPs to enterprises. It’s talking up APIs and 5G but seems to have lost or changed its interest in IoT. Ericsson’s IoT Accelerator and Connected Vehicle Cloud businesses will be transferred to Aeris. Ericsson’s IoT employees will also go to Aeris. The deal is expected to close this quarter. 

Verint acquired appointment-scheduling technology from Qudini. The technology appears to be a Calendly-type solution for brands. Verint intends to integrate the appointment-scheduling technology into customer-facing parts of a business, including contact centers, branch offices, and retail stores. The solution could extend the reach of Verint’s Customer Engagement suite to include customer appointment scheduling both in and out of the contact center. The service includes scheduling and reminders. 

Tofane Global announced the acquisition of DIMOCO Messaging, an SMS aggregator based in Liechtenstein and Austria that delivers around 2 billion messages annually.

Leadership Changes

Leadership Changes: The new year kicks off with lots of leadership adjustments. Lumen Technologies announced that Ashley Haynes-Gaspar joined the company as EVP Customer Success, Wholesale and International. Zoom Video Communications announced that it has appointed Cindy Hoots, of AstraZeneca, as an independent director on its Board. Neat expanded its leadership team to include Todd Meister, who joins the company as Chief Operating Officer. Real-time call reporting and business insights provider Akixi announced that Mike Wilkinson joined as Chief Product & Marketing Officer (CPMO). Phonism welcomed Marc Tribbe as Chief Product Officer and James Lee as Chief Operating Officer.

Something to Consider 

When you regularly write about the innovations in customer service, it’s easy to forget the abysmal state of most customer service. Over the holidays I got a fraud alert from PNC Bank. The transaction was legit, but I had to call to confirm (really?). That took three days because the fraud department was closed for the holiday weekend (really?). When I did call, she was unable to verify my identity. She asked me to name the branch location where I opened my account. I knew the answer, but she had bad information, likely because I opened my account at a bank that was acquired by a bank that was acquired by PNC. Failing validation, she transferred me to the wrong department. 

We all know SouthWest Airlines had a rotten Christmas. Things got worse for some customers when Southwest employees called airport police to have passengers without a valid ticket removed from the terminal. A ticket to a canceled flight is not a valid ticket.

I suppose bad service isn’t particularly new, but it seems to be getting worse.  The WSJ reported Amazon’s ranking on the American Customer Satisfaction Index has fallen to a record low. This is the company that attributes its growth and success to its obsession with customer satisfaction. 

I will say I had another opportunity to call roadside assistance from Farmers Insurance (that’s twice in a year as well as twice in a decade). The bot was a delight. The data-entry bot sent me a link and guided me as I entered data from my smartphone. Since I was doing the data entry, I didn’t have to verbally spell-out things. It was an example of conversational AI + multimodal communications delivering a great self-serve experience.

These stories make me wonder if the CC sector has over rotated on empathy and human touch. I believe the goal is resolution. So far, the machines and self-service have not done well resolving issues. We interpret that as a desire to speak to an empathetic human. But what if the machines can resolve our issues? Just a few years ago, I was the one screaming “representative” at the bot. Today, I find myself more willing to give the bot a chance, and sometimes it succeeds. Dear PNC Bank, please give the bots a try in the fraud department.  

Goodreads 

1. The Internet Is Kmart Now People, trends, companies, culture — they live, and then they die. They come and go, and when they depart, it’s not by choice. 
2. Salesforce Customers Not Swayed by Slack, Analysts Say Carhartt’s CIO says the addition of the messaging app hasn’t made Salesforce’s products more appealing. 
3. Goldman Sachs no longer expects recession in euro zone in 2023 Economists at Goldman Sachs no longer predict a euro-zone recession after the economy proved more resilient at the end of 2022.
4. Don’t Ban ChatGPT in Schools. Teach With It. I assume this is déjà vu all over again. Remember when they wanted to ban calculators in math class? 
5. Remote worker ordered to repay employer for “time theft” The court decision comes as more companies install tracking software on workers’ computers.

Other stuff

• TalkingHeadz: No Code Foundry with Michael Beckley of Appian
• TalkingHeadz with Raluca Monet on Google CER CCaaS 
• TalkingHeadz with Jeff Lawson of Twilio
• Dave and Zeus discuss Trends Emerging from 2022

• CCaaS Chat with Analysts CXToday
• Review of 2022 with Giuseppe
• Dave and Evan discuss Dec Insider, Year-end Review 

TalkingHeadz Podcasts are available on most podcast apps. No commercials or sponsors. TalkingPointz Insider Reports are available through a subscription service at TalkingPointz.com.

The Innovation Showcase for Enterprise Connect 2023 is now accepting applications. We are seeking companies that have a new angle on collaboration. Learn more here: Enterprise Connect 2023 Is Seeking Innovation