Insider Report 7-2 (Feb 2023)

The Most Important Enterprise Communications News

This is the second Insider Report for 2023. This one is a bit longer than I wanted. The goal was to publish them more frequently and shorter. Two issues this year is ahead of last year’s schedule. 

LAYOFFS: I talked about layoffs in the last letter, but it’s what we news professionals call a developing story. It’s been brutal. Google 12k, Microsoft 10k, Amazon 18K (though not all tech), Meta 11K, Twitter 4K+1K, Salesforce 8K — and that’s just the household names. At least 250K tech layoffs were announced in the past 12 months, of which 85K were in January. While I still contend that January was the bottom, the layoffs have continued into February. Most recently Twilio, Dialpad, and Zoom. 

I want to be really clear about two things: Layoffs are a failure of management, and layoffs are really, really bad. 

A failure of management: Predicting the future is really hard. It was hard pre-pandemic and extremely difficult during the boom and bust of the pandemic. That said, it’s up to the leaders of each business to make a plan, then execute it — which includes approving budgets and requisitions for implementation. 

Economic shifts are a known variable. After several years of boom — surprise, the economy turned. The size and continued rate of layoffs have shocked many. It should not be assumed that all tech companies did RIFs, nor that the RIFs were equal in size. For example, Apple, Alianza, and AudioCodes avoided layoffs, and that’s just the As. 

In Tech CEOs Screwed Up, Ed Zitron wrote, “Responsibility dodging is running rampant around Silicon Valley. CEOs at companies like Amazon, Microsoft, Salesforce, and Meta set their companies on an unsustainable course, investing in boneheaded new ventures and assuming the pandemic-driven tech boom would be a new normal. Now that those expectations have been shattered, rank-and-file tech workers are bearing the brunt of these bad decisions, while the executives most responsible for the messes face little to no meaningful consequences.”

No CEO wants to see layoffs, but few took responsibility for it. Eric Yuan deserves some recognition here, as he accepted accountability. Zoom’s founder and CEO apologized, offered a generous exit package, reduced his own salary by 98%, and Zoom’s entire executive leadership team took a 20% hit to salaries as well as forfeited bonuses. Outside comms, Intel's CEO took a 25% pay cut and reduced executive salaries by 15% to avoid broad layoffs. 

Regarding the impact of layoffs, here are a few resources: JSTOR: “Our results indicate that downsizing is associated with decreases in subsequent firm profitability.” Academy of Management: “Managers believe downsizing is effective, despite empirical evidence to the contrary.” SSRN: “We show that layoffs announcements have an overall negative effect on stock market prices, and this remains true whatever the country, the period of time or the type of firm considered.” JSTOR: “People are the source of innovation and renewal, especially in knowledge-based organizations, and … the development of new markets, customers, and revenue streams depends on the wise use of a firm’s human assets.”

It’s shocking how deep some of these cuts went. Entire programs were erased. Among the casualties at Microsoft were the HoloLens, virtual reality, and mixed reality teams, leaving a meta-sized gap in its ’verse. At Google, layoffs spread through nearly every group, including projects like Chrome, Search, Android, and Google Cloud. Google has cut most of the jobs at Area 120, its in-house incubator. Amazon effectively eliminated its drone delivery program. 

Despite all this, I am still feeling good about 2023. We are off to a very bad start with layoffs (and mass shootings), but I’m optimistic the worst (of this correction and pandemic) is behind us. 5B people have smartphones now, and offline habits are fading fast. Everything (markets, value chains, offices, events, etc.) is being reimagined around the internet. 

Integrated Systems Europe: I attended #ISE2023 in Barcelona and found it to be an impressive event. It’s an usual event that blurs several US events including Infocom, CEDIA, and Enterprise Connect. Most of the enterprise comms vendors attending were focused on meetings, and most could be found in the same hall.   

I intend to publish my overall impressions separately. There were not many announcements. The conference is really a showcase and meeting place and contained some of the largest booths I have ever seen in an exhibit hall. At-show announcements include Neat Pulse preview (managed services)  and  Jabra roomkit (Panacast compute bundle).  

Announcements aside, I saw a few first: Such as Cisco demonstrating both Webex Go and Teams interop in its booth. Crestron had an impressive demonstration of its 1Beyond technology — a meeting room with seven cameras and seven displays. Zoom was previewing new events and third party digital signage. Logi previewed Project Ghost (covered below). See my from-the-ISE-floor videos.  

Avaya Chapter 11 Part Deux: Since last August when Avaya warned investors that its future as a “going concern” was in doubt, the company has had the wrong kind of cloud over it. Things may improve now that it has now formally filed for Chapter 11. 

Chapter 11 isn’t exactly good news. Shareholders will see their investments disappear. The stock traded at $30 in the spring of 2021, and that means someone bought it at that price. Actually, Avaya repurchased quite a bit of stock near peak prices  too. The point is that Avaya’s recovery was stalled until this debt issue could be resolved, and now there’s a path.

There’s multiple-stories here. The first has to do with Part Deux. How did the company squander its opportunities so badly since it emerged from its 2017 Chapter 11? 2018 was an optimistic year for Avaya. I summarized its rocky descent in this NoJitter post last August. I expect there will be more analysis of what went wrong. 

There’s the story about how competitors helped Avaya. RingCentral deserves some credit here. RingCentral was a partner, supplier, creditor, indirect Director, and competitor. RingCentral wiped Avaya’s debt and doubled-down on the partnership. The two companies entered a reasonable partnership that positioned both companies to benefit from customers migrating to UCaaS, but the alliance had some problems. The biggest being account control. RingCentral has now modified the partnership with a reseller option, similar to how NEC structured its partnership with Intermedia. I suppose Genesys too deserves some credit for removing itself as Avaya’s heir apparent. 

There’s also a story here about how to do Chapter 11. This is the first I’ve heard of a prepackaged Bankruptcy. If Avaya can really get in and out of Chapter 11 within 90 days, that’s impressive. Last time, it took about a year. 

I hope that Avaya does recover. As they say in finance, past performance is not necessarily indicative of future performance. Avaya has been losing customers for a decade, yet remains one of the largest vendors in enterprise communications. 

Sangoma Wholesale Carrier: Sangoma Carrier Services is now Sangoma Wholesale — though I am not certain that adds clarity. Initially known as VoIP Innovations, Sangoma Wholesale Carrier Services is built on +15 years of T(runking)aaS expertise. Sangoma owns and operates its own carrier voice network. The service includes a back office portal for partners/customers and a brandable end-user portal.

Teams Premium: A big part of the success of Teams has been its perceived free pricetag. Microsoft has made Teams available in every level of Microsoft 365 and even makes it available for free to nonsubscribers. That’s a great way to build market share. Teams is much more than another app; it’s the glue that brings together many of Microsoft’s cloud-delivered initiatives. 

The strategy has worked very well. Microsoft released FY23 Q2 results and revealed that Teams has +280M MAU. It’s not just messaging, either: Teams added 5M PSTN seats in the preceding 12 months. Active Teams Rooms increased 70% YoY to 500,000, and customers with more than 1K rooms doubled.

Impressive growth — so it’s time to start charging (more) for it. Microsoft Teams now has a Premium plan. This previously announced plan adds an unusual set of features for those that wish to purchase the optional upgrade. The features include virtual appointments, branding, live translation, watermark protections, webinar features, and more. 

Teams Premium is normally $10 per user per month, but Microsoft is offering a $7 per user per month introductory price through June 30, 2023.

One Small Offset for Mankind: Cisco expanded its commitment to reduced carbon this month by adding a Carbon Emissions Insights widget to the Webex Control Hub. It allows administrators to see estimated carbon emissions of their managed Webex devices. This comes as part of a larger program that includes powering its European data centers with 100% renewable energy. 

These efforts are fine, but there’s a bigger opportunity in enterprise comms: reducing commutes. How is it that there can be so much interest in net zero, yet no discussion (or measurements) regarding carbon offsets from telework? I understand it is a complex problem, but as enterprises globally are interested in reducing carbon, why not use telework to help them?  

The New AI Search Wars: I touched on this in the last issue: Many believe ChatGPT gives Microsoft the ability to disrupt Google’s dominance in internet search. I still don’t buy it. My doubts primarily relate to the business model. However, things progressed significantly already in February. 

Microsoft released an impressive new ChatGPT-bolstered Bing, and Google responded way too quickly with Bard: an experimental conversational AI service powered by LaMDA. Google also previewed a new search service with AI that will “distill complex information and multiple perspectives into easy-to-digest formats.” Yeah, right. 

What people really like about ChatGPT is its ability to write and communicate. It is not so impressive when it comes to answering questions. ChatGPT tends to make stuff up. Using ChatGPT3 for search results is just silly. At best, it should be as smart as the internet, but c’mon — everything is up for debate. Is the earth flat? Is Covid a hoax? Is Santa real? It was hard enough to decipher the internet, and now AI is contributing to the misinformation. 

On the other hand, these same questions can be effectively answered with Google’s (and Bing’s) Pagerank and links model (advertising also works). This method shows the most popular pages, and it is up to the user to evaluate the credibility of the sources. While training language models can be managed, effectively curating the vast amount of information on the internet remains challenging.

Google released Bard and lost $100B in valuation the next day. Why? Because Bard (also) gets stuff wrong. In Google’s promotion of Bard, it provided a sample question with a wrong answer. Oops. The market saw an inferior product and wants to pretend (for now) that ChatGPT’s results are trustworthy. 

I still don’t see disruption of Google Search, but I appreciate Google’s panic. The company has a weak track record of bringing new products to fruition, and eventually someone will invent a better solution for search. In other news, Google laid off staff in many of its innovation areas, including Area 120. 

The good news for Google is that Microsoft won’t let Bing just be Bing. Users have to swallow Edge, too. I would not be surprised if the ChatGPT enhanced results also eventually require a 365 subscription (monetization is still unanswered). Rather than innovative disruption, this is a story of which company is better at missing its opportunities. 

Project Ghost: There’s a legendary internet myth that NASA spent millions of taxpayer dollars to develop a pen that would work without gravity, while the Soviet cosmonauts simply used pencils. It isn’t true, but the Space Pen myth lives because simplicity is so often overlooked. 

Last May, Google gave us a sneak peek of holographic meetings with its Project Starline. Google spared no expense in prototyping these video booth-rooms that offer a 3D face-to-face meeting across a virtual table. I wrote about its science fair project and concluded it was too expensive for casual use cases. Let’s call Starline the space pen approach (piling more failures on Google after its massive layoffs and disastrous Bard launch).  

The pencil approach is what Steelcase and Logi concocted. This collaboration on video booths was previewed at ISE as Project Ghost. It uses an illusion effect first popularized in the 1800s called Pepper’s Ghost. The illusion projects images onto reflectors that can create ghost and/or 3D effects. It’s the secret to the ballroom scene in Disney’s Haunted Mansion. 

Project Ghost doesn’t create ghosts or 3D images. It presents the remote participant without a visible screen (or bezel) with a real 3D background. It’s a stunning 2D experience. The Steelcase video room-booths, specifically designed for meetings, combine Logi’s Rally system with a hidden, single-pane reflector. As an added bonus, the Logi camera is directly behind the reflected image of the remote participant, which solves eye contact just like a teleprompter does. 

Project Ghost is still in development. Logi and Steelcase vaguely hinted about the product being a year away, but I suspect that’s getting accelerated due to favorable responses at ISE. The tech is known, so it’s just a matter of nailing the package/design. The prospective market includes all accounts using Teams, Zoom, and Meet. No pricing info was provided, but the Rally system runs around $2K, so that plus whatever Steelcase charges for its customized room-booth. My guess is around $8K-$12K per room. 

Logi and Steelcase built Project Starline. Well, that’s not quite true. Starline will require the invention of a new video platform, new endpoints, new codecs, new distribution, and new networking to handle all the data — not to mention a new base of users to sell it to. Project Ghost offers a similar effect with existing video gear, services, and distribution. 

Pepper’s Ghost is poised to return for its third century of popularity: 19th century at fairs, 20th century at Disney, and the 21st century in meetings. And while everyone loves a Space Pen, there’s a helluva lot more pencils out there. 

Dialpad Upgrades its App Marketplace: Dialpad announced several enhancements to its App Marketplace that were designed to allow customers to better integrate their apps and workflows into the Dialpad workspace. This included an updated App Marketplace that simplifies search and discovery of integrated apps.

ChatGPT Enters CCaaS: It is pretty obvious that ChatGPT3 is a game-changer. It was introduced in November, and by December it was clear it would be the story of 2023. I am sure every CCaaS provider is working on it, and the first solutions have arrived from NICE and Cognigy. 

NICE announced its integration of CXone Expert with OpenAI's generative modeling used in ChatGPT. The integration allows organizations to create human-like conversational consumer experiences without engaging human agents. Cognigy announced and demoed its LLM enhanced chatbot that leverages LLM and predictive AI models. In Cognigy’s demo, the caller kept going off the expected script with various inquiries and requests. The bot provided reasonable responses while steering the caller back to scheduling an appointment. It was a convincing demo that bots can improve the user experience. 

Conversational AI is already changing every aspect of the contact center. ChatGPT3 brings a whole new set of interactive capabilities that can be classified as game-changing. However, its not as simple as every CCaaS provider agreeing to OpenAI’s terms and conditions. Customer service has to be specific, targeted, and transactional. This requires a tight integration with related systems as well as the contact center itself. The AI doesn’t solve this; a modular approach to CCaaS and AI is required. 

The benefits of AI are broad and include everything from reduced costs and increased scalability to multilingual support. The risks of AI, especially LLM AI, are less understood. Training desired answers, as well as correcting bad/wrong behaviors, will be difficult. For example, in Cognigy’s demo, the patient attempting to schedule an appointment asked if someone could watch his kids during the appointment. The chatbot did a great job of politely saying no, but I wonder how a family-friendly practice might change its response. 

Zoho UCaaS: Suites are in. While, at a minimum, UCaaS today is voice, meetings, and messaging, more providers are adopting the term “suite” — it’s almost as popular as “platform.” However, the mother of all suites comes from Zoho. I don’t even think Zoho knows anymore how many apps are now part of its suite — last I heard, it was over 50. Most of them are integrated, browser-based plus mobile. 

Zoho has slowly been expanding into communications. It has its own meetings app (Zoho Meetings) and Cliq for messaging. It now has Trident, a new communications and collaboration client within its Zoho Workspace suite. 

Zoho does particularly well in SMB. Its marquee app is Zoho CRM. The company has had challenges with getting its customers to embrace the full suite (the average Zoho customer uses 12 Zoho apps). That’s probably in part because their customers have had to turn to other providers such as Microsoft and Google to fill some gaps. With Zoho Trident, customers may have a reduced need to supplement their Zoho Workplace subscriptions. 

The Workplace Suite has a disruptive price range from $1-$6 per seat per month. For $6 a month, users get mail, messaging, audio/video calling, calendar, tasks, project management, shared drive, and e-signatures. Most Zoho apps are pre-integrated with features like SSO and universal drag and drop. There are also Zoho add-ons such as Dashboards, Blue Pencil (AI-grammar), webinars, and access to the Zoho Marketplace apps. 

The client supports telephony and SMS, but these services require a calling plan. Zoho has several options, including a usage-based option. The Basic plan is $34/user/mo and includes unlimited US domestic calling. 

Zoom Virtual Agent Zoom launched its Virtual Agent based on Solvvy technology. 

GoTo Customer Engagement is now available. It’s a CCaaS solution with multi-channel customer communication, analytics, and digital channels. The service also includes web chat and SMS widgets, outbound and inbound features, a shared inbox across channels, and VOC surveys. The CCaaS sector is crowded, and more providers keep coming, but then Google was among the last of the search giants. GoTo also announced a new Miro integration. Miro is now available for GoTo Connect, GoTo Meeting, and GoTo Training customers.

Playvox and SFDC: Playvox announced the launch of a global collaboration with Salesforce that enables Service Cloud customers to more efficiently manage forecasting, scheduling, adherence, capacity planning, and long-term scheduling within Salesforce Contact Center. With this launch, Playvox’s entire WEM suite becomes available on the Salesforce AppExchange. 

Twilio’s Business Units: In its latest restructuring, Twilio announced that the company is splitting into two business units: Twilio Data & Applications and Twilio Communications. The former will be led by Elena Donio, and the latter will be led by Khozema Shipchandler. Flex, Twilio Engage, and Segment are in the Data & Applications unit. Lawson said Twillo got “too big,” particularly in communications. 

Acquisitions and Funding

Mitel and Atos: Mitel intends to acquire the Unify division of Atos. Pending a few approvals, the deal is expected to close in the second half of this year.  

This is a good thing for both companies as well as RingCentral. I don’t think Atos ever wanted Unify. It likely got bullied into it by Siemens as a means of managing/supporting its largest customer during its multi-year transition to Teams. Once that was complete, Atos really had no need for Unify. 

The Unify story is actually quite tragic. The company was originally spun out of Siemens with telephony and networking. It failed to leverage the two divisions and sold off networking first and then voice to Atos. Before that, the brand, SEN, rebranded as Unify, and developed a messaging prototype called Project Ansible. In hindsight, Ansible was more than Slack before Slack. The board only partially funded Ansible, and that gave us the less-than-Slack Circuit. The IP of Circuit (that's a funny phrase) is enjoying retirement in Belmont, CA as it became the property of RingCentral. 

Atos desperately wanted to sell Unify, so they can get back to being a proper GSI. Atos customers come out ahead as their OpenScape products were being highly neglected. The only R&D by Atos that I can recall was with regard to Circuit. The acquisition is great for Mitel because it expands its installed base of single-tenant implementations. Unify customers can be found in over 100 countries and the deal supposedly brings Mitel 5,500 global partners. It’s also good for RingCentral because its revised GTM (or Go-to-cloud) model with Mitel is more effective than its other legacy RingCentral partnerships such as the one with Atos. Terms were not disclosed. My assumption is Mitel got it for a song. 

SharpenCX Funded: Sharpen announced it secured investment from TELEO Capital. Neither the amount nor terms were disclosed. I would like to have seen the pitch. While CCaaS does appear to be a lucrative opportunity, it also has too many smaller vendors, especially as Amazon, Microsoft, and Google all intend to expand their investments. Sharpen has been stumbling since 2011 and lost its leaders to EdifyCX several years ago. The company’s niche is “happy agents make happy customers,” but I think it’s the other way around. 

Leadership Changes

Nidal Abou-Ltaif was named SVP, Global Head of Sales at Avaya. He is now responsible for global GTM and channel strategy. This is the first major executive appointment at Avaya since Alan Masarek arrived as CEO back in August. Though elevating Nidal above his former regional peers, Masarek still has withheld “C-level” appointments (other than an interim CFO). I suspect he’s waiting for financial restructuring, but then, aren’t we all. I expect news on that front soon. 

Smita Hashim was named Chief Product Officer at Zoom. Hashim was a VP of Product Management at Microsoft for the past 11 months, but I met her at Google when she relaunched Google Voice. At Google, she held various product management roles over her 16-year term there. She replaces Oded Gal who held the CPO role for over seven years. The announcement didn’t get much notice as Zoom’s layoffs got more attention at about the same time. 

John Hernandez left Genesys and is now leading the Microsoft Platform Management & Security business at Quest Software. Hernadez previously led the Genesys Multicloud initiative — up until Tony inexplicably killed it. I get that Genesys wants to be a cloud pure-play, but the timing was so awkward. Why kill a leading single-tenant platform with so much uncertainty around primary competitor Avaya? Well, at least he had a great run at Cisco.  

Lumen named tech veterans Sham Chotai as EVP of Product and Technology and Jay Barrows as EVP of Enterprise Sales and Public Sector. While Lumen talks a lot about network transformation, its own transformation is noteworthy. In addition to significant asset sales, it has also been making a number of executive changes, including its CEO. 

Srinivasan Raghavan has joined RingCentral as its Chief Product Officer. Raghavan has been at Five9 for the past four years and Cisco before that. 

Ujet named Kristin King as its first Chief Customer Officer (CCO). The addition of the CCO role to its c-suite emphasizes UJET’s commitment to the success of its customers and validates customer relationships as a core growth driver for UJET. Kristin joined UJET in 2021 as Vice President of Customer Success and was promoted to Senior Vice President of Customer Success in September 2022. 

I missed Scott Wharton’s promotion at Logitech last year. Scott went from VP/GM of the Video Collaboration Group to VP/GM of all B2B products and services at Logitech. It’s a significant expansion of responsibility. Scott is now responsible for about 40% of Logi’s revenue, but based on what we saw in video, that percentage will likely increase. 

We now know where Salesforce co-CEO Bret Taylor is heading. He left Salesforce last year and now intends to build a new AI startup with 18-year Google veteran Clay Bavor. Bavor started and led Google’s AR and VR efforts and also ran Project Starline. The as-yet-unnamed new company is inspired by ChatGPT3. Taylor posted on LinkedIn: “Rarely do you encounter a new technology so powerful that it feels inevitable that it will change the course of every industry. I remember feeling that way when I first used a web browser in high school, and then again when I first saw Steve Jobs demonstrate the iPhone in 2007. I have that same sense of excitement and inevitability about modern AI, especially given recent advances in large language models.” I wonder if they will be co-CEOs. 

Goodreads 

1. House Republicans introduce bill to return federal employees to the office Anger of remote work causes House Republicans to introduce a bill that will force federal employees back to their office. 
2. Evernote and Notion take aim at enterprise collaboration market I’ve been saying this for years, UCaaS suites should embrace notetaking apps. 
3. The Digital Workplace Is Designed to Bring You Down It’s clear that something in the great digital-workplace experiment has gone wrong.
4. Employers are rebranding hybrid work Flex work is here. 
5. Layoffs Often Leave Companies Worse Off Executives should be careful about making deep cuts. Having too few workers is almost always worse than having too many. When organizations are shorthanded, morale plunges and profits suffer. 
6. How Apple Has So Far Avoided Layoffs: Lean hiring, no free lunches, and relatively slow growth of its workforce at 20% over the past three years.
7. Big Tech Is Really Bad at Firing People Almost without fail, big tech handled layoffs horribly, with casual brutality and tone-deaf displays — such as at Microsoft, which hosted a private Sting concert at Davos the night before firing 10,000 people.
8. For Tech Companies, Years of Easy Money Yield to Hard Times Rock-bottom rates were the secret engine fueling $1B startups. Reality bites.
9. Google trials its own AI chatbot Bard after success of ChatGPT Google is releasing its own artificial intelligence chatbot, called Bard, as it responds to the huge success of Microsoft-backed ChatGPT.
10. The market crash could finally break Big Tech's addiction to subscriptions I agree that usage-based models will win, but most SaaS providers want per-seat. 
11. Tech CEOs screwed up The CEO is now a figurehead who receives all the benefits of a company’s success without being endangered by any of its failures.

Other stuff

• Avaya Chapter 11 on NoJitter
• Dave’s videos from ISE 2023
• My Video from Five9 Porto
• TalkingHeadz with David Petts of Mitel
• Bots Rule, Agents Drool 
• UCaaS and Cellular Together in Perfect Harmony 
• Boycott the Banning of Meetings 
• SMS and UCaaS Changes, Livestream with RedOxygen
• Poly Weekly News @ISE

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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

 

Check out my new interview series called Influence Me! This is a series of interviews with industry influencers. Three episodes so far. 

2023 Insider Reports

1. January 17, 2023

The Free Insider Lite Reports are back. They disappeared after Elon killed the Twitter feature. They are now part of TalkingPointz. Like other newsletter services, sign up for free, and receive posts in your email. There’s been one so far this year. Each issue will have some original content. This first issue discusses the enshitification of Twitter. Sign up here. 

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• And now Insider Lites (free).