Insider Report 7-3 Mar-23
The Most Important Enterprise Communications News
Next week is Enterprise Connect. There will be quite a bit of news, so I thought I’d better clear the backlog with this Insider Report. The next Insider Report will cover the news and announcements from EC23, and there will also be a TalkingPointz Research Note on EC23.
Enterprise Connect is the largest general conference for enterprise communications. The pandemic disrupted and disturbed the annual ritual. Yet the conference provides an excellent annual snapshot of the trends and topics of enterprise communications.
It’s pretty clear this year that AI will be a big theme. This has been building for a while, but the recent breakthroughs with ChatGPT have turned up the AI dial to 11. While it’s truly exciting to see sci-fi become sci-nonfi, it’s also super boring. AI is fascinating, but when every vendor promises the same benefits, the differences or nuances [sic] get buried. AI requires considerable imagination and effort to evaluate what it can do and how to compare solutions. You can’t kick the tires of AI in a booth, nor see it, or even throw it — and you are going to want to throw it.
Other big themes at EC will be CCaaS and related topics. Note, I said CCaaS, not contact center. Avaya is not exhibiting, and I doubt Genesys or Cisco will have anything to say about single-tenant CC solutions, though I do expect every CCaaS provider to be specifically targeting Avaya clients. CCaaS is one of the more interesting (dynamic, innovative, lucrative) aspects of enterprise communications right now. One area in particular that I expect to receive considerable attention is WFO this year as it converges with CCaaS.
The Biggest Threat: In hindsight, we had it pretty good during the pandemic. Other than the loss of loved ones and canceled plans, the recession brought a sector boom, tremendous innovation in remote meetings, a new category of hybrid work, widespread interest and adoption in UCC technologies, and increased demand for all things related to collaboration.
Perhaps underappreciated at the time was the singularity of the crisis. Everyone was focused on the pandemic itself and the treatment, cure, and risks of COVID. Today, it’s hard to tell what to be worried about. The pandemic is still a factor, but its boom phase is over. Now, there’s cause for alarm with inflation. Or perhaps it’s employment levels being too high, causing the government to increase rates. Higher rates are causing more concerning issues, such as declining sales forecasts, widespread layoffs, and a slump in real estate. Clearly, businesses need to make money (prioritize profits) and adapt to the end of free money.
Higher interest rates are kind of working, too — so much so that the Feds clearly indicated interest rates will continue to increase. Oopsie: Turns out higher interest (and lax regulation) may cause bank failures. Just two days after the Feds predicted more rate hikes, the dominos started falling with three bank failures (Silvergate Capital, Silicon Valley Bank, and Signature Bank). Credit Suisse was about to fail, but UBS acquired it. First Republic is also facing trouble, and midsize bank stocks are still reeling. The Feds now are in a hard spot between high inflation and bank failures.
I might also mention that this Covid thing isn’t over, there’s war in Ukraine, a Russian fighter just took out a US drone, US-China relations continue to cool while China and Russia are exchanging mash notes, extreme weather (55 feet of snow in the Sierras and now floods) continues, and the list goes on. I thought January was the bottom, but I’m less confident now. Recession is back on everyone’s minds, and layoffs are continuing. Whatever you may have considered the biggest economic concern yesterday, it has likely been replaced by something else today.
The good news for the UCC sector is that remote work works. While return-to-office mandates continue to make headlines, the bottom line is that the option and flexibility of distributed/hybrid work is powerful in a period of economic uncertainty.
8x8 NYC: 8x8 hosted its first ever (industry and financial) analyst event. It took place in NYC at NASDAQ, and featured a closing bell ceremony. The marketing team used the opportunity to launch a brand campaign: Communications for the Customer Obsessed. It’s a clever double-entendre because it describes its CX capabilities as well as the passion of its customers.
The tagline also hints at 8x8’s plan to lead with CX, and position its UCaaS as an add-on. Note: I said CX, not CCaaS. 2023 appears to be the year that CCaaS providers intend to bust-out of the contact center. For 8x8, it’s a logical progression of its XCaaS vision.
We also learned about the 8x8 Intelligent Customer Assistant (ICA). The first edition offers versatile self-service over digital channels, but ICA will soon expand to include voice. This is a powerful solution that will be available globally. Why do I trust a ver 1.0 product? Because ICA is 8x8’s integrated version of Cognigy, which was once again named a Leader in the recent MQ for Conversational AI Platforms. We also got a glimpse of some upcoming projects like Supervisor Workspace.
This was my first (brief) opportunity to meet the interim CEO, Samuel Wilson. Though he skipped the kick-off dinner and didn’t mingle much, he seems comfortable and confident in his role and 8x8’s future. Perhaps more importantly, the staff seem to like him. I expect that the “interim” prefix will disappear soon. Also in attendance was CTO Bryan Martin (Mr. 8x8). I posted a livestream interview with Bryan.
I do feel 8x8 is on the right track. It’s been on this track before, but that’s a different story. 8x8 is well positioned (UCaaS, CCaaS, video, global, nimble, etc), but sometimes gets distracted. The discipline of a CFO as a CEO may be just what the provider needs.
What Has Microsoft Become: Pre-pandemic, Teams was still trying to catch up to Slack (a company that used to matter). However, the pandemic has been very good for Microsoft and Teams. Like most organizations, Microsoft’s customers had to scramble to find a meetings solution, and many found that they already had an option included in their MS subscriptions. Microsoft has suddenly become a not-to-be-trifled-with juggernaut in enterprise communications. We have not had a vendor this dominant in communications since the Bell System.
Historical note: The Bell System, once the largest employer in the world, was broken up by the government for anticompetitive practices.
Microsoft has done an exceptional job of transitioning from the PC industry to the cloud. There were a lot of PC companies, but Microsoft dominated the PC ecosystem. It provided both the dominant operating system and applications. Both of these fronts were attacked by web and mobile alternatives.
Like IBM before it, Microsoft is no longer the center of computing. FAANG, which is already obsolete, didn’t have an M. PCs, which have expanded to include Macs, are increasingly considered smartphone accessories. Neither Microsoft nor Windows dominates the high-tech narrative anymore, but Teams is dominating communications.
Teams is positioned as Microsoft’s successor to Windows. Microsoft Teams is the connector that ties together the apps in Microsoft 365. Like the browser, Teams is an application, a client to other applications, and a platform. Messaging and meetings are core and free, and calling is an add-on. Windows is still a good business, just not that relevant.
Google 3D Virtual Backgrounds: OK, this one is clever. Virtual backgrounds went from silly to a solution for reasonable privacy during the pandemic. But that doesn’t mean they can’t be amusing. Google made 360-degree virtual backgrounds available for mobile users — announced last month and available now on Android and iOS.
The feature uses the sensors on the mobile phone to create a virtual background that moves with the phone. If you move your phone left or right, different views of the background are revealed. As video has become so popular, a lot of stupid, distracting features are being introduced (emoji reactions). But I like this one, which was made available first by Google (surprising) and released on Android at the same as iOS (even more surprising). This gives users one more reason to upgrade to the new Meet app (which combines features from Duo). Do it soon, before Google rebrands or discontinues its video solutions.
New Teams Client: Windows users are in for a treat when Microsoft releases a new Teams client later this month that promises to significantly decrease usage of system resources. Known as Microsoft Teams 2.0 or 2.1 internally, the app may use 50% less memory, tax the CPU less, and result in better laptop battery life.
The Next Network Is Out of This World: Starlink is far more disruptive than many realize. The satellite network controlled by SpaceX and Musk has created a global communications network far more accessible than previous attempts. Starlink is likely the largest privately owned fleet of satellites in the world, and it has provided a lifeline to Ukrainian forces. Communications are vital in wartime, and the manual says to control them — yet Russia can’t.
China has taken notice and now intends to build its own network of low-orbit satellites. But the Chinese version is more than an alternative; it’s also intended to be a weapon. Code-named “GW,” the constellation of 12,992 satellites will be able to surveil and suppress Starlink satellites. Meanwhile, the Starlink network, now with over 3,000 satellites in orbit, is expected to eventually grow to more than 40,000 satellites, according to SpaceX.
The New Mobile Screen: The new mobile screen isn’t on your phone, it’s in your car. There’s been a rush of announcements about putting meetings apps on car displays. Cisco Webex has partnerships with Ford and Mercedes. Mercedes also announced a partnership with Zoom (and TikTok). There have probably been others as the dashboard has become the latest land grab.
Where to start? I am not going to pick a car based on its supported meeting apps. It does, however, make sense that the car display could be used for meetings and other applications. This will be particularly important in the distant future with self-driving cars.
There are two ways to accomplish meetings on the built-in display: use the display as a (wired or wireless) second screen from a laptop or smartphone, or load apps on the built-in computer. The latter requires some form of app store or library. I think the first approach makes more sense. If we focus on the display/AirPlay model, these alliances are meaningless. I am looking forward to my new Fisker Ocean’s 17” display. It’s in portrait mode when driving, but while parked (charging), it can rotate to landscape for movies (or meetings).
Metaverse is on hold: A year and a half ago, Zuck made a big pivot toward the metaverse, including renaming his company Meta. The new goal was to build a future, privately controlled version of the internet, which he creatively dubbed the “metaverse” (first coined in 1992 by Neal Stephenson in Snow Crash). The company has spent something like $14B developing the metaverse and has little to show for it. So Zuck is pivoting again, this time to AI.
My position on the metaverse is that it is definitely coming, but it will start with highly specialized use cases like distributed product engineering. It can’t be mainstream until the goggles become much cheaper (<$100). The Quest Pro headset from Meta flopped. Even at its new price of $1k, they are too costly for mass adoption. Google also quietly discontinued its enterprise version of Glass. With this new Z-pivot comes another round of layoffs for Meta brands. They cut 11K in November and now intend to cut another 10K employees. That represents about 24% of its workforce in just about half a year. I can’t say I have heard much from its enterprise app Workplace in a while, either.
The metaverse joins other one-time Zuck aspirations such as crypto (Libra) and minting and selling NFTs on Instagram. However, Zuck has been presented with a rare opportunity from Musk. Twitter’s stumbles may allow Meta to pivot into being a replacement for Twitter. “We’re exploring a standalone decentralized social network for sharing text updates. We believe there’s an opportunity for a separate space where creators and public figures can share timely updates about their interests.”
There are two ways to get ahead. The more common approach is hard work (and luck), and the other is to wait for competitors to fail. Microsoft Azure has a similar opening as Jassy appears as competent as Ballmer was at replacing a founder CEO.
RingCentral and AWS: RingCentral struck a GTM agreement with AWS. It is not an agent or reseller agreement but a referral model. AWS staff will refer prospects looking for UCaaS to RingCentral; however, RingCentral reports there is no back-end commission or referral fee.
Of RingCentral’s previous partnerships, this is most like its agreement with Mitel as RingCentral is responsible for the sales (and branding) of the solution. However, unlike Mitel, AWS is not being paid for the referral. Nor is AWS losing a customer.
RingCentral brings telephony to Amazon. Currently, Amazon offers Meetings and Chat (Chime), secure chat (Wickr), CPaaS (Chime SDK), and SIP trunks. The arrangement creates some overlap as RingCentral offers CCaaS and CPaaS services. It’s not clear to me how this commission-free model will hold the interest of AWS sales staff.
The area to watch is if RingCentral accelerates its alliance with AWS. For example, will Amazon become a bigger customer or supplier, and will RingCentral offer more services such as Chime SDK with its UCaaS and CCaaS services? For more, see this partnership conversation I had with Homayoun Razavi of RingCentral.
Conversational AI MQ: Gartner published a new Conversational AI MQ. This year’s report features 19 providers (22 last year). It’s a report I would expect to be dominated by CCaaS providers, but it’s not. The new graphic includes two more leaders, Avaamo and Google, which join the same group of Leaders from last year: Amelia, Cognigy, IBM, Kore, Omilia, and OneReach.
A few points to consider here. None of the Leaders are CCaaS providers (though they have alliances with CCaaS providers). Just this month, 8x8 announced a partnership with Cognigy. Only three providers on the report offer a CCaaS service: AWS and Sprinklr (in the Challenger quadrant) and Google (in the Leader quadrant). Sprinklr was added to the report in 2023. Google has its CCAI solution and now its own CCaaS solution powered by UJET (CCAIP). Six vendors were dropped from the MQ this year, including Verint and Oracle. Presumably, Verint did not meet inclusion criteria this year because it doesn’t have a low-code/no-code solution (but has since acquired Speakeasy AI).
Gartner puts a strong emphasis on platform plays. They expect enterprises to use conversational AI platforms in a variety of use cases, not just the contact center. However, most organizations will start with conversational AI in the contact center. I published a report on the 2022 version of this MQ here.
Gartner “Voice of the Customer” for CCaaS: Gartner Peer Insights is a platform where enterprises rate the vendors (think Yelp for enterprises). These peer reviews are becoming increasingly important to Gartner. As MQs move away from references, Peer Insights are becoming Gartner’s primary mechanism to determine CSAT, and Gartner has elevated Peer Insights into its own standalone report. The Peer Insights “Voice of the Customer” was recently published. This year, the top three “Customer Choice” awards for Contact Center as a Service were Amazon Web Services (Connect), NICE (CXone), and Talkdesk. This is the first time that AWS is being recognized by Gartner as a CCaaS Leader. With the 2023 CCaaS MQ and Critical Capabilities due in August, we might have gotten some early insight into upcoming disruption.
Avaya’s Next Chapter: Avaya received court approval of its pre-packaged plan to exit Chapter 11. This will slash about $2.6B in debt, raise new capital, and change first-lien lenders into shareholders. Avaya expects to exit Chapter 11 in weeks now, and will do so with more than $650M of cash in the bank. The place to watch is the upcoming BoD appointments. Last time the company did Chapter 11, the process took about a year.
Threaded Chats: Google Chat now supports in-line threaded conversations. This was a good move, but I am surprised it only applies to new spaces. Existing spaces will continue to function as they previously did.
ChatGPT Goes To Work: The internet’s favorite plaything is rapidly penetrating the office. Microsoft announced ChatGPT is GA the Azure OpenAI Service. ChatGPT is an iPhone moment in AI. Big steps are exciting but also have unwanted consequences. For example, ChatGPT democratizes writing and coding. Presumably, if everyone can code malware, there will be more of it. Are we ready?
GPT and LLMs are going to impact everything. The low-hanging fruit is CC chatbots, but we are seeing announcements across Microsoft Office and Google Workspace. Microsoft Copilot will be covered more in the next Insider report as its capability set is astonishingly broad yet unclear. Google, too, announced GPT for Docs and Sheets. The integration of GPT models into office suites may improve productivity and reduce repetitive tasks. The use of natural language makes it easier for users to access information and perform tasks without requiring esoteric skills or syntax. I was not expecting a GPT announcement from Slack. The new Slackbot beta promises to help find answers “on any project or topic” as it can summarize channels or threads.
It’s a bit of a race right now. Microsoft’s Dynamics 365 announcement came a day before Salesforce claimed that Einstein GPT is “The World’s First Generative AI for CRM.” Salesforce’s approach spans all of its clouds. The whole Einstein thing looks a lot like Microsoft Copilot. Both, for example, encourage employees to use generative AI to generate “personalized” emails to customers and more efficiently respond to customer questions. Most CCaaS providers are jumping on generative AI too. We have already seen several CCaaS providers announce ChatGPT chatbots, and there will be a lot more at EC.
Beyond the goldrush-like frenzy, there are some really complicated issues to sort out, such as business cases, customization or training of LLM-powered chatbots, trust, security, privacy, and ethics. Some complex issues also arise around patents and trademarks. While a lot of attention is focused on how OpenAI changes the Microsoft vs. Google battles, a more complex question is Microsoft vs. OpenAI. Microsoft is an investor, customer, and channel partner for OpenAI, and as both companies are marketing to the same customers. I expect some complex channel conflicts to arise.
Salesforce, for example, has licensed ChatGPT to better compete against Microsoft Dynamics. Could Salesforce license this tech from Microsoft? How do MS and OpenAI determine pricing? We know that Microsoft gets 75% of OpenAI’s profits until its investment is paid back (then it drops to 49% up to a certain cap). It’s not known how much profit Microsoft returns to OpenAI for the models it sells through Azure OpenAI Service.
Is it Live, or Is it T-Rex? Microsoft is adding a 3D avatar option for Microsoft Teams users starting in May. This can be filed under stupid, or possibly genius. The stupid argument is that we don’t really need cartoon figures in business meetings. The genius argument is that it fills the big gap between audio only and video. Turning off the camera is really the only way to get a little visual privacy, and that could be interpreted as antisocial.
The concept isn’t new: Apple introduced Animojis back in 2017. The Apple version uses the camera to mimic expressions and movements. Zoom implemented a similar trick with Animal Avatars last year. Microsoft’s version uses audio, or vocal cues. That means users without any camera can now participate visually, but it also means the avatar cannot reliably convey expression.
Otter Chrome: Otter introduced a new Chrome extension that simplifies its use in Zoom and Google Meet meetings. Otter will join the meeting and use AI to automatically record audio, write notes, capture slides, and share the notes with attendees. After the meeting, it generates an Automated Summary.
Apple Video Sales: Apple is launching “Shop with a specialist over video.” When viewing the iPhone page, shoppers will be presented with an option to “Connect with an iPhone Specialist,” which will create a one-way video session with a sales assistant. Amazon used one-way video in the early days of supporting Kindle customers.
There’s tremendous resistance to adding video to contact centers today, but it will disappear just as it did when with phone calls vs. video calls. I’ve seen this movie before. The transition is slow until it’s fast. Video-enabled sales and service make sense.
Microsoft Notion: Microsoft Loop is now available in preview, and it looks a lot like Notion. Microsoft describes Loop as a collaboration hub that provides a new way of working across Office apps, tasks, and projects. It includes workspaces and pages where users can organize content. Loop compiles these pages into real-time content blocks that can be pasted into other apps.
Now that the life has been sucked out of Slack, Microsoft needs a new source for ideas. Everything about Loop looks and smells like Notion. “Loop has the same ‘::’ grippy indicator for dragging components on a page up and down to reorder them, and more tellingly, the same ‘just type /’ slash key trigger for shortcuts,” said John Gruber of Daring Fireball. “If you create software that gains traction in work environments, it’s inevitable that Microsoft is going to follow.”
Google/Anthropic: Google invested $300M in AI startup Anthropic. It’s all about GPT now, and the frenzy includes product launches and startup funding. It’s particularly synergistic for cloud-platform providers as these generative services require considerable computing resources. With this investment, Google will have a 10% stake in the startup. Like OpenAI, Anthropic gets cash and the cloud computing resources it needs. According to the New York Times, the Google deal could give Anthropic a valuation of roughly $5B.
Vitally Series B: Customer Success Platform provider Vitally raised $30M in a Series B round led by Next47, with participation from Andreessen Horowitz, HubSpot Ventures, and NewView Capital. Vitally’s total raised stands at $40.6M.
Five9 named Matt McGinnis as its VP of Product, Industry, and Solution Marketing. Matt served as Founder & CEO of illumy. Prior to that, Matt served as head of Product Marketing at companies such as 8x8, RingCentral, and Nuance. Talkdesk named Bill Welch as President and Chief Operating Officer. Td also recently named Andrew Dobrov as Chief Customer Officer.
Crexendo named Jeff Korn as its new CEO. Korn has been with Crexendo for over 20 years and has served as its General Counsel, Executive Vice President, and Chief Legal Officer throughout his tenure. He succeeds founder Steve Mihaylo who retired but will remain as Executive Chairman of the board. Anutthara Bharadwaj was promoted from COO to President of Atlassian. Before joining Atlassian in 2014, “Anu” held various leadership positions at Microsoft. Alice Katwan is no longer the GM and SVP North America at Twilio.
Leadership changes continue at Genesys: Dr. Natalie Petouhoff, Marylou “ML” Maco, and John Hernandez have dis “Mounted.” Natalie and Tony Bates co-authored “Empathy in Action.” She is now an independent Chief Customer Experience Officer. Marylou is no longer the EVP of Worldwide Sales and Field Operations. John became the President and GM of Quest Software.
- Mark Zuckerberg Quietly Buries the Metaverse Finally. Long live AI.
- AI in the Workplace Is Already Here. The First Battleground? Call Centers Charlie answers 11,400 calls a day, routes them to the appropriate departments, processes claims, and schedules repair appointments. She whispers and types helpful hints to the agent.
- ChatGPT will keep ‘hallucinating’ wrong answers for years to come and won’t take off until it’s on your cellphone Accuracy will continue to be a challenge for the next couple of years.
- The stock market has been flipped and investors are taunting the Fed The talk of the town through all of 2022 was how badly stocks were doing, but that’s been reversed over the last seven weeks.
- You’re a sucker if you trust ChatGPT
- How I Broke Into a Bank Account With an AI-Generated Voice “I recommend all organizations leveraging voice ‘authentication’ switch to a secure method of identity verification, like multi-factor authentication, ASAP.”
- The return to the office could be the real reason for the slump in productivity. Here’s the data to prove it US productivity jumped in the second quarter of 2020 as offices closed, and stayed at a heightened level through 2021. Then, when companies started mandating a return to the office in early 2022, productivity dropped sharply.
- The semiautomated social network is coming LinkedIn announced last week it’s using AI to help write posts for users to chat about.
- Meta Looks to Divest Kustomer Amid Efficiency Drive “We are currently exploring strategic alternatives for Kustomer and will continue to support Kustomer’s product and customer base throughout this process.”
- Amazon’s post-Bezos experiment hasn’t gone exactly as planned Jassy's short tenure at the helm has been all too eventful.
- Twitter Used to Make Us Smarter A handful of months into Twitter’s new management, and it’s clear an era has ended.
- The Age of AI has begun Bill Gates believes AI is as revolutionary as the GUI, smartphones, and the internet.
Other Recent Stuff
- The Latest BIG News: Avaya’s Bankruptcy, Activist Investors at Salesforce, and Zoho In UCaaS
- Vonage Flaunts its Ericsson 5G Connection
- UCaaS Licensing Models Add Complexity to UCaaS
- Jon Arnold on Influence Me!
- Bryan Martin 8x8 CTO at NASDAQ
- Alaa Sayeed on Influence Me!
- Celebrating Innovation in Collaboration at #EC23 (NoJitter)
- UCaaS Licensing Models Add Complexity to UCaaS (NoJitter)
- Microsoft Copilot – Smooth AI Operator?
- Microsoft Copilot – Teams Edition
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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! A series of interviews with industry influencers. Five episodes so far (Art, Blair, Zeus, Alaa, and Jon).
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