Insider Report December 2022
The Most Important Enterprise Communications News from December 2022
Good Riddance 2022: I am quite pleased to see 2022 end. It seems like I’ve been saying something similar for the past several years, but 2022 was tough. As many of you know, I was impacted by the Marshall Fire in Boulder on December 30, 2021. I didn’t make it back home until January 2, 2022. Though my home wasn’t destroyed, it was damaged enough to require moving out for restoration. We decided not to move back in.
So much has changed. We bought a new secondary home in New Jersey while we attempt to downsize our primary home in Colorado. I barely recognize my life a year ago. I can barely recall that we had chickens. We moved six times in 2022. We got rid of probably half our stuff. I think I aged way more than a year, and I’ve learned more than I ever wanted to know about insurance. We did our annual “happy moments” recollections on New Year’s Eve, and I really struggled.
Things are beginning to normalize. We have our health, as they say; we had decent insurance; and we really needed to deal with all that junk we had accumulated over 33 years, anyway. Usually, New Year’s is just another day, but this year, it really does feel like a transition point. Happy New Year!
But it’s not just about me. 2022 sucked for a lot of people. The Russia-Ukraine war is terrible to watch, as are its widespread ramifications. We’ve seen a year of climate-related disasters, and for some reason, the economy turned. All of the major US stock market indexes are down, The crypto economy took a dive, housing prices are falling, inflation is at a 40-year high, and the Fed wants to throw the country into recession.
In terms of our little sector, comms company valuations are down overall. With only a few exceptions, the public companies are revising guidance down. Avaya is on the precipice of Chapter 11, and the loss of Bret and Stewart likely makes Slack a zombie. Good riddance, 2022.
Story of the Month: The story of December 2022 is ChatGPT. This was the month it, and AI in general, crossed into the mainstream. Despite all the attention it has received, ChatGPT was only an incremental improvement over its prior version. It’s a big deal for the following four reasons:
- Writing: ChatGPT is very good at writing. It can write essays, code, poems, eulogies, even songs — all in multiple languages. This is the AI that laughs at the Turing Test. Most AI today offers various forms of predictions, but anyone can predict. Not everyone can write — a truism that opens a new realm of things to automate. And AI writing will presumably get even better.
- Collaborative: Not only can it write, but it’s coachable. It understands how to iterate, daresay collaborate. I’ve used the following definition for collaboration for decades: two or more people working toward a common objective. Even in Trek, we simply ask “computer” to crunch data. Boom: It’s not just about people anymore. ChatGPT marks the end of traditional boundaries between man and machine. This is a new twist on human in the loop, but in this case, it’s a collaborative loop.
- Accessibility: AI is for geeks in white coats, not the masses — or it was. ChatGPT didn’t get to a million users in less than a week by being esoteric and complex. While ChatGPT raises the barriers for competitive entry, it lowers the barriers to usage. We don’t understand AI and, more importantly, don’t know exactly what it can do. ChatGPT opens a new phase of AI: innovation through mass adoption. I like the use case of having ChatGPT negotiate a better rate with Comcast. That’s a great use case discovery.
- The Impending Vendor Shakeout: It’s surprising to me how many conversational AI firms exist — likely over 2,000. The game plan for many of these firms is to build a competitive moat via specialized use cases. ChatGPT is what’s called a Large Language Model (LLM), which uses large datasets, as opposed to fine-tuned AI (cheaper and more accurate within a specific domain of expertise). ChatGPT tips the scales in favor of LLMs, and few vendors will have the resources to compete. An Al shakeup is coming. Fine-tuned AI is still needed, particularly with regard to personal or confidential data.
ChatGPT is not a threat to Google, at least not yet. Though if you are curious about what it could do for internet search, check out Perplexity.ai which combines ChatGPT with Bing. Meh.
A Year of Comms
Eight Big Stories of 2022: These are the stories that stood out.
- The Russia-Ukraine war seemed to come out of nowhere. Its impact has been large and global. Unfortunately, there are no signs of its ending. Both sides appear to have an endless supply of arms. In terms of enterprise comms, it caused a massive exit out of the affected countries. A long list of companies have disengaged from Russia, including Microsoft, Cisco, Avaya, HP, and Dell. We also saw firms such as RingCentral and Five9 offer aid and relocation assistance to Ukraine-based partners and employees.
- While the debate about returning to the office rages, there’s no question that Hybrid Work has arrived. I consider hybrid work largely a transitional stage to broadly distributed work, but it will be a long and slow transition.
The enterprise comms industry was quick to adopt the language and, in some cases, adapt their portfolios. Consider Cisco, which introduced a whole series of “Desk” and personal products, or HP acquiring Poly for $3.3B. “The hybrid office creates a once-in-a-generation opportunity to redefine the way work gets done,” said HP CEO Enrique Lores.
While most of the public focus today is on what’s best for productivity and/or employees, I am confident the endgame involves much smaller offices — it’s cheaper and possible. Among the many issues to address, the tech piece is the easy part. The bigger issues are HR-related. There are questions about how to manage remote staff and combat proximity bias. In addition to basic collaboration, team-building, and productivity, broader complex issues include employee benefits, OSHA, management of confidential information, and payroll taxes.
- I’ve written about Google and Ujet before. While the benefits of the combination were not fully realized in 2022, the disruption is on the wall. All three hyperscalers are heading to CCaaS: AWS is already shaking up the space and has a significant head start. Microsoft launched its digital contact center earlier this year and appears to be playing the long game. It has the pieces and will attract customers long before they put those pieces together. Google was already in the contact center with its CCAI and ChromeOS, and adding UJET will be much faster than a home-grown solution.
- 2022 laid the foundation for UCaaS Mobility 3.0 (UC3). I first took notice of the emerging trend at EC22, when it was featured in the Cisco, Microsoft, and RingCentral keynotes. All three companies have UCaaS Mobility 3.0 solutions in GA now. UC3 is a single, native solution for enterprise UCaaS that spans hard phones, softphones, and smartphones. UC3 solutions typically involve a tight UCaaS/Mobility partnership or an MVNO. Next month I expect the GA of Verizon Mobile for Microsoft Teams — that will increase awareness of UC3 benefits.
Also, RIP 3G. This month, Verizon became the third major US wireless provider this year to shutter its 3G network.
- Video is Mainstream: This occurred early in the pandemic, but its implications are broad. When email transitioned into the mainstream, we saw Microsoft and Google become dominant brands, and a large number of email providers disappeared. Organizations now expect video and increasingly see it as a commodity. HP acquiring Poly shows the shift — the company that exited video a decade ago now wants back in for the incremental revenue. Pexip is shifting toward embedded video.
- Almost every week in 2022, there was an extreme weather event. It wasn’t just me impacted by wildfire. We’ve seen devastating fires, hurricanes, tornadoes, droughts, and floods all year, all around the globe. These disasters are increasing every year. News anchors now talk about climate change instead of dancing around possible explanations.
Widespread panic hasn’t hit (yet), but businesses are beginning to grasp that it’s their problem too. Consider what happened to Southwest Airlines this month. Their routes offered better fleet utilization but were more susceptible to large weather events. In the past, that was an acceptable tradeoff. But this Christmas, 60% of the US population was under some form of winter weather advisory.
Individual corporations can’t do much to prevent extreme weather, but they will have to deal with these events more often. The repercussions include the health and safety of remote employees as well as revised plans for business continuity. For example, expect access to HVAC-controlled facilities to become an important benefit for remote workers. Recall that data centers were closed in the UK last summer due to heat.
- Facebook’s crash: Seems like yesterday we were wrapped up in how Facebook’s dominance and abuse was affecting elections. If someone wanted to take out Facebook, they could not have done as much damage as Zuck himself. He is so wrapped up in the Metaverse that he changed one of the best-known brands in the world to Meta. He has spent $36B on the metaverse. If only we knew what it was or if anyone wanted it. Business Insider politely pointed out that the development of both the iPhone and Android only cost about $200M. Not to mention that Zuck fired 11K employees last month. He’s not even seizing on the opportunity Twitter has created. I haven’t heard a peep from the Workplace brand. I do agree multiple metaverses are coming, but they are likely a decade away. The main barrier is googles need to get super cheap.
- Perhaps the biggest enterprise comms story in 2022 was the Microsoft-Cisco MTR announcement. Most of the narrative I’ve seen on this topic positioned the news as interop improvements for both vendors. The real story is “the enemy of my enemy is my friend.” Microsoft and Cisco’s agreement benefits both vendors and their customers and builds an interesting moat.
If you believe the false narrative that the UCaaS industry will consolidate to two providers, then the contenders for 2 of 2 are Cisco, Google, RingCentral, and Zoom. I’ve heard compelling theories for each. Microsoft has now cast its vote. Microsoft and Cisco have enjoyed a long-term complementary relationship with only a few competitive overlaps. They peacefully coexist in most of their accounts.Conversely, Microsoft doesn’t need or want Google, RingCentral, or Zoom in its accounts.
For the first time, Microsoft granted one Teams partner an exclusive benefit. Cisco got the right to co-exist, or more specifically, Webex got a seat at the MTR table. Microsoft got a broad line of premium equipment for its MTRs — one that also happens to be installed already in many enterprises.
Up until this announcement, every video vendor was playing a zero-sum game. Suddenly, Microsoft and Cisco agree that it’s prudent to have two meetings providers, preferably two that work together and share the same equipment. The agreement is a shot at Zoom, Logi, Poly, and more — but they’ve been shot at before. Pass the popcorn.
Term of 2022: Suiteform. Nice deserves credit for coining a term that spans two important trends: Everything is a platform, and suites matter.
Biggest General Tech Story of the Year: Though only tangential to enterprise comms, the biggest tech story of the year is Musk and Twitter. It’s the biggest story because it involves Elon, who was the richest man in the world at the beginning of this tale, and Twitter, the loudest social media.
I now give Elon more credit for trying to get out of buying Twitter. I thought that whole thing was because the valuation dropped, but more optimistically, he came to his senses. This is a disaster for two key reasons: problem definition and ego.
When Bezos invested in the Washington Post, he brought internet savviness to a firm that needed to transform. Musk believes Twitter was in need of his technical acumen. He wants “diehard engineers” and even said almost all of the code needs to be rewritten. Rumor has it he’s building an impressive tech team.
Any organization can benefit from better tech, but Twitter’s challenge is less technical and more socio-political — and those are not skills in the Musk wheelhouse. Some of the issues bedeviling Twitter are the challenges of global free speech, advertiser safety, policies around verification, and policies about banning and restoring accounts.
Almost everyone loves a technical genius, but Elon has turned Twitter and himself into a circus act. Elon’s stunts are putting his $40B he paid for Twitter at risk, and they also appear to have grounded high-flying Tesla. That will probably cost him $300-$400B as Tesla’s net favorability collapses. This month, Elon became the first person ever to lose $200B from their net worth.
The sad part is that Musk will be successful. Anyone could be if they had near-unlimited resources to throw at it. He’s a cool cat with x financial lives, x <> 9.
The State of Enterprise Comms: As we kick off 2023, let’s acknowledge several key narratives observable in enterprise comms right now — most related to the pandemic. First, like most of tech, EC is going through a pandemic hangover. Several companies have lowered guidance, valuations are down, and we’ve seen many layoffs. All that is unfortunate but doesn’t concern me. Valuations and growth were extremely high during the pandemic, and it wasn’t sustainable. The question is: When will the correction end, or worse, is this the new normal? I’ll let you know in the fall.
The bigger concern is that Microsoft and Google figured out how to do video and team chat during the pandemic. It was inevitable they would eventually nail it. Still, for some time now, there’s been an unwritten agreement that MS and Google would only offer crappy UCaaS for show while allowing the UCaaS industry to serve real solutions.
Now, UCaaS providers need to sell their own solutions AND unsell the solutions their customers already bought or got for “free.” That’s a tough unsell, so industry consolidation is forecasted. For now, CCaaS continues to grow, in part because Microsoft isn’t there yet.
Another pandemic-related mess involves questions about where and when to work. These are not new topics, but many more people are asking them. As stated above, the tech is only a part of the discussion, so this will take some time to sort out.
There’s also some ambiguity about what comes next for UCaaS. The providers have largely been in lockstep as they expanded from voice into messaging and video. There’s less agreement about CCaaS, but if not CCaaS, then what? Several providers think it’s events. GoTo and Enreach think it’s IT services. Zoom thinks it’s email and calendar.
A few trends we know: Certainly, AI isn’t done changing comms. It’s already improved the entire UCaaS suite, and it’s dramatically changing the contact center. Also, UCaaS Mobility 3.0, the convergence of mobility and UCaaS into a single solution, will pop in 2023.
General Industry News
Leadership Changes: Genesys announced that Barbara Holzapfel was named its new CMO. Holzapfel previously was the VP of Education at Microsoft and served as CMO “for two Fintech companies.” Other brands on her CV include SAP and Coca-Cola. Also at Genesys, Olivier Jouve transitioned to Chief Product Officer. Slack’s former CEO, Stewart Butterfield, has left Salesforce. He intends to do some gardening. Ilian Hafouzov has joined 2600Hz as VP of International Sales. Hafouzov headed European sales for Talkdesk and Tata Communications. Rowan Trollope announced he is leaving enterprise communications to become CEO of Redis. It’s coincidental but interesting that Rowan and Stewart depart enterprise comms the same month. They had a similar message-centric vision for enterprise comms at about the same time. Stewart’s Slack sold for $27.7B. Rowan’s Spark was debranded and absorbed as a nameless feature of Webex in a disastrous series of leadership blunders.
Apple E2E Security: Apple is finally enabling end-to-end encryption across most of iCloud. E2E encryption means it’s much harder for eavesdroppers, including Apple itself as well as law enforcement. It’s a bold move that many governments will contest — here and abroad. Seems very unlikely this can be implemented in China.
Over the past 20 years or so, the trend has been one of super apps — namely Facebook, but many others. The problem is that there’s a world trend of regional fragmentation. Various countries have been pushing back against Facebook, Google, Apple, Twitter, and more for a while now — in other words, foreigners are complaining about American dominance and influence over their internet.
The new trend is regional independence. Data sovereignty rules are a good example. A “pot black” example is that the US wants to protect Americans by censoring TikTok. The world is indeed becoming less flat. Uber is the easiest to mimic, and we are seeing regional/national competitors flourish globally. The best strategy for global comms providers is to figure out how to regionalize their services, data, and compliance actions.
Meetings and Messaging
Slack and Salesforce: An improved integration between Sales Cloud and Slack gives teams a single, more comprehensive view of customer data within Slack. That’s nice, but does it matter?
With the departures of both Bret Taylor and Stewart Butterfield, I’m not confident of Slack’s future. Bret was credited with putting together the acquisition. The reasoning became clearer last September with the launch of Slack Canvas — a Slack-Quip combination (see my post: Salesforce, Slack Just Changed Team Messaging).
With Bret gone, Slack lost its champion at Salesforce. With Stewart gone, Slack lost its visionary. I’m sure the innovation pipeline is full for the next few quarters, but I have serious concerns that Slack will find its way in the future Salesforce. Stewart and I discussed on Twitter.
Stewart’s leaving was largely expected, but Bret’s was a surprise, and Bret was Salesforce’s second co-CEO failure. Does Marc Benioff find another? It’s a nice idea, especially for succession planning, but it has to be tough being a co- when the other co- is clearly the boss.
Personally, I am grieving the loss of Stewart and the demise of Slack. They both brought so much energy to enterprise comms. In the wake of their departures, it's unclear if or how Microsoft will come up with new innovations for Teams moving forward.
AWS Connect Updates: AWS appears to be accelerating the development of Connect. Amazon issued 17 press releases in December regarding Connect. The most significant were Contact Lens APIs for managing rules, more granular access controls, Support for Edge browser, Managers can now join calls, DID and TF numbers available in more regions, Chat now indicates message receipt, and Connect Wisdom supports PDF and Word Docs. Some of these were announced at ReInvent earlier in the month.
Five9 Enhancements: Five9 announced the availability of several new features, most of which were previewed at its CX Summit last fall. Five9 now supports rich media for digital and voice channels, multi-modal engagement capabilities, real-time language translation, enhanced developer tools for Five9 IVA Studio users, and integrated analytics to optimize interactions. As usual, Five9 continues to lean into AI and has further embedded it into its core platform.
VCC + Salesforce Shield Security: Vonage announced the availability of Salesforce Shield for VCC + Service Cloud Voice. It offers additional security features for agents while protecting customer privacy. The news is about meeting compliance and/or governance requirements. Vonage is one of the first CCaaS providers to deliver Salesforce Shield to its customers. For bonus points, it also facilitates remote WFH agents.
Nice Elevates via Launch: Nice launched ElevateAI, which the company describes as AIaaS. The goal is to expand its AI and Analytics capabilities to more (every) customer interaction. ElevateAI provides insights across audio, transcripts, and chats to identify and build smart CX applications. Pre-built CX AI models provide the ability to better understand sentiment and behavior on a massive scale.
Nice also launched Enlighten AutoSummary for automatically generating contact center summaries of every customer-agent interaction.
Southwest’s Disastrous Christmas: Southwest Airlines canceled 70% of its flights the day after Christmas due to winter storms. It was a spectacular climax to a record year of cancellations for Southwest. The main story is how Southwest has fallen apart, but there’s a better story in the queue here. Most of us have had to deal with canceled flights and the madness of +100 people in a queue being serviced by two to four agents. The NY Times reported:
“At Austin-Bergstrom International Airport, thousands of stranded and confused passengers massed throughout the terminal in lines that snaked in all directions.
“One line, with no end in sight, stretched to the Southwest ticket counter, where perhaps 10 or 15 agents staffed counters as customers queued up to learn their options — if there were any.”
During the pandemic, we heard how the contact center became the front door. High-volume contact centers have more levers to manage unexpected surges in demand. There’s simply no reason to put this kind of pressure on employees or customers trapped at the scene of the crime. Unfortunately, Southwest was not prepared in its call centers either.
Last month, I wrote about Frontier discontinuing customer service calls. It’s a nice theory until a storm disrupts all your flights. The contact center is the muscle that Southwest and other airlines should be flexing. Already, Southwest has significantly tarnished its good brand. Flights will always be canceled, so it is how an airline handles it that really matters. A contact center can swoop in much faster than the months it will take Southwest to re-sort its routes and schedules to improve reliability. Imagine: “We know we screwed up, and we’re sorry, but at least we answer the phone.” That’s competitive differentiation.
If airlines do move away from in-person service counters in airports to kiosks and apps, there’s a strong argument for introducing video at the same time.
RingCentral E2EE: RingCentral announced that it is expanding its E2EE beyond video to include both phone and messaging within its flagship UCaaS service. This is nice to see as UCaaS providers have been slow to embrace E2EE on telephony and messaging.
E2EE: This newsletter, so far, has two end-to-end encryption snippets: Apple and RingCentral. Last month, it was Gmail. It’s nice to see privacy getting the attention it deserves. There’s a good argument that enterprises require tighter security than consumers, but that’s rarely the case. For the record, E2E encryption can occur in the browser.
Avaya Chapter 11: Based on its stock price, Wall Street is convinced that Avaya is about to declare Chapter 11 again. The company has not indicated this to be the case. The share price had risen for a few months since the company expressed doubt about remaining a “going concern.” CEO Alan Masarek is communicating a turnaround story. He met with me and other industry analysts in December, outlining his five-point strategy (summarized here).
Alan’s story holds water, and I would love to see him be successful. I do have concerns that if the company does go through the “courtroom” (his word for Chapter 11), he may not get the chance to be successful. Chapter 11 may not be compatible with his turnaround. The process would likely result in new shareholders and a new board, and the board will likely have a different opinion on the strategy and the leadership. The next shoe to drop in this tale should be soon as Alan seems ready for step five: Balance Sheet.
Google Voice Goes International (sort of): Previously, Google Voice admins could only assign domestic numbers, but now admins can assign numbers in other in-region countries. Google Voice customers on the Standard subscription in Canada, Europe, and the US can assign phone numbers to any supported country in their region. The newsworthy aspect of this feature is that Google remembered it has UCaaS. There tend to be long periods between enhancements — even silly ones like this in-region expansion, WTF?
CCaaS provider SharpenCX announced it secured investment from TELEO Capital. SharpenCX’s schtick is an agent-first approach to CCaaS (“empowered agents make happy customers”). The CCaaS space has too many providers and some major disparities. I am curious to see the pitch deck on this investment, as SharpenCX is not a name that I hear come up very often.
Alianza committed to spend more than $200M on research and development over the next five years. Alianza offers service providers a cloud-native platform service for service providers. I covered in this post how SPs are at a crossroads — caught between their platform vendors as competitors and OTT players like Teams, they need some new tools and strategies.
At the upcoming CCA conference in January, I will be moderating a panel with Alianza, Cisco, Microsoft, and 2600Hz on how each enables SPs to compete.
This Month’s Goodreads
- ChatGPT: The Future of AI Is Here For decades, AI has been about 20 years away. Then it arrived.
- What’s happening at Salesforce It’s been a pretty rough week for Salesforce: Three talented executives — co-CEO Bret Taylor, Tableau CEO Mark Nelson, and Slack CEO and co-founder Stewart Butterfield — announced their resignations in quick succession.
- EU to Facebook, ‘Drop Dead’ The private right of action is about to do what the Irish regulators wouldn't do: force Facebook to obey the law.
- Elections in Modi’s home state have become a WhatsApp spam war 10,000 volunteers; 50,000 WhatsApp groups; and the intense fight to “control people’s feed” in Gujarat.
- How Google Got Smoked by ChatGPT The most embarrassing part is that the search giant has a chatbot that’s better. The company makes money when people click ads next to search results, and it’s awkward to fit ads into conversational replies.
- ChatGPT’s Fluent BS Is Compelling Because Everything Is Fluent BS ChatGPT was trained on real-world text, and the real world essentially runs on fluent bullshit.
- Google is letting businesses try out client-side encryption for Gmail Users have to give up some features, including emoji, a signature, and Smart Compose. Google says client-side encryption will be added to its Gmail app for Android and iOS “in an upcoming release.”
- ChatGPT Can Negotiate Comcast Bills Down for You “Our DoNotPay ChatGPT bot talks to Comcast Chat to save one of our engineers $120 a year on their internet bill. Will be publicly available soon and work on online forms, chat and email.”
- There are 2 types of companies, Harvard remote work expert says: Embrace work from anywhere, or live in denial The best workers want the freedom to work from anywhere, and they’re more productive when they do so.
- The Work-From-Anywhere War Is Beginning Forget return-to-office mandates. The most sought-after talent want ultimate flexibility. Their bosses need to get on board.
- Slumping revenue, Tesla woes and a ‘resignation’: Musk’s wild reign at Twitter so far
- More than two million users have flocked to Mastodon since Elon Musk took over Twitter The Twitter alternative has skyrocketed in popularity, leaping from 300,000 monthly active users to 2.5 million between October and November.
Changes to the Insider Report in 2023: I am considering moving away from the monthly format to a more frequent and shorter format. It would be more timely though irregular. Thoughts on this approach?
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Two Videos from December:
The Innovation Showcase at Enterprise Connect 2023
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