Insider Report December 2023

Curated Enterprise Communications News and Insights from December 2023

Kind of a light month for news, but a good time to reflect. What a year! 

It was the best of times (for profitable companies) and the worst of times (for unprofitable companies). For the past several December newsletters, I concluded that it was a bad year. Good riddance! 2023 didn’t seem so bad. I won’t go so far as saying it was good. Transitions take time, and I am hopeful that 2023 is a transition to good times. 

This past May, more than three years since COVID-19 was designated as a pandemic, the World Health Organization (WHO) declared an end to the global Public Health Emergency. Soon after, the U.S. Department of Health and Human Services (HHS) followed suit. Don’t confuse that with the end of COVID-19; it’s likely here forever. The “new normal” includes COVID-19. It also includes: 

1. WeWork: Currently in Chapter 11, but the time now just might be right for hotel/office/co-working place.
2. NVIDIA is the new king of chips. It is amazing how well Microsoft has done compared to its siblings, Intel and HP. 
3. Twitter is gone: It was beautiful while it lasted. 
4. New rules for fundraising. More down rounds. More time between rounds. 
5. RTO mandates are here, but only temporarily. People love highlighting that even Zoom implemented RTO mandates, as if it had some obligation to keep its employees at home. The new normal includes hybrid offices. BTW, Zoom has an answer for hybrid offices. 

Other notables about 2023:

1. Acquisitions slowed. 
2. IPOs experienced a drought.
3. Headlines about tech layoffs abounded. TechCrunch estimates that U.S. tech companies laid off 190,000 employees. Sucks, but a lot of new hires means the numbers were not as bad as the headlines implied.
4. Generative AI generated more hype than disruption. But inflated expectations shape our industry. 
5. The war in Ukraine is perhaps the first major conflict in world history to become a war of drone engineering. 
6. Bitcoin had an exceptional year. Don’t confuse SBF with crypto. SBF was a fraud similar to Bernie. Bitcoin has never been hacked. 

Throughout 2023, we operated with a new set of economic rules. Profits and profitability remain more important than growth (unless you are in generative AI). Throughout the year, it wasn’t clear if we were in recession or not. We endured 11 interest rate increases and a few bank failures, but there’s optimism that those days are now behind us. 

The DJIA increased by 13.74% in 2023. The S&P 500 finished the year up 25%. The Nasdaq composite rose a staggering 44.5%. Gold was a roller coaster ride all year and ended up 13.73%. “Hold My Beer” Bitcoin outperformed them all with its increase of 144% (and I expect it will do well in 2024). 

General

The big news in 2023 was generative AI. Overall, generative AI has not (yet?) lived up to its hype. It’s more of a tool (and new way of working) than a replacement for humans. It’s darn good at summarization, but as important as that is, it’s more of an incremental than disruptive improvement. And while AI is very good at generating plausible content, its hallucinations remain a severe limitation.  

That said, it’s also had a huge impact on communications. Nearly every comms provider has included some form of generative AI in its solution. Providers and customers are mostly intrigued out of FOMO. The jury is out regarding how customers will value the tech and how providers will pay for it. Realistically, we barely understand generative AI, and while the tech could peter out, many expect future iterations will knock our socks off. The question is whether that future takes months, years, or decades. 

Google Gemini: Google unveiled Gemini, the company’s most powerful AI. It was made accessible via Bard and Pixel 8 Pro smartphones (cheesy stunt) and, more importantly, via Google’s services, including Chrome, Search, Ads, and more. To show how natural, quick, and intuitive Gemini is, Google released a fake video. Google claims the video was inspired by actual Gemini results, but Gemini’s real experience is less intuitive, natural, and quick. 

Gemini is Google’s response to OpenAI. Actually, that was Bard. Gemini Pro is comparable to what OpenAI released a year ago. The real G sizzle will come from Gemini Ultra, which is expected soon but will still be behind whatever OpenAI announces first.  

Elon’s Twitter a Year Later: It’s been fascinating (and sad) to watch the demise of Twitter. Musk offered to buy the company back in April 2022, but then he tried to get out of it, so it wasn’t until October 2022 that his tenure started. As you may recall, he showed up on his first day carrying a sink — perhaps a metaphor for what was to happen to its advertising revenue and social influence. Here are some of my takeaways: 

• Musk is brilliant. He’s a self-made richest man in the world. However, we all have our strengths and weaknesses. Musk is good at engineering and business. Twitter has always had problems, but they weren’t necessarily technical. Twitter was primarily an advertising platform. 
• Twitter cannot be replicated or replaced quickly. Twitter was founded on the power of networks, and networks are not portable — they have to be rebuilt, which can take years.
• Some rules matter. There’s really nothing wrong with giving paid users more benefits or even publicly distinguishing paid and free users. But the Verified checkmark cannot simply become a receipt.  
• The likely winners of Twitter’s demise are Meta’s Threads and LinkedIn — possibly both of them (consumer and business). I want to see Bluesky do better, but it’s moving very slowly. 
• Musk and Trump both wanted a less-censored mouthpiece but took different paths. Musk acquired Twitter; Trump assisted with creating Truth, a new social network. The outcomes will likely be the same. But Musk destroyed an important and beloved piece of our culture, put a lot of people out of work, and may be subject to billions in FTC fines.

Meetings and Messaging

We nailed remote meetings, but the sector has some work to do regarding the new normal. Everyone at the office, check. Everyone remote, check. Now, we need to accommodate a percentage of distributed team members. Though the percentage varies, the problems are clear. 

The most notable challenges are serendipitous communications and hybrid office design. For the former, we see new forms of social networking in the workplace. Zoom’s Workvivo looks very interesting. The hybrid office also requires an effective way of managing space. Several vendors are circling this opportunity, but it doesn’t take a lot of imagination to stretch a meeting room reservation solution to include desktops. Zoom and Cisco have strong solutions with Zoom Workspace Reservations and Cisco Spaces. Microsoft has hinted at a new solution called Places back in 2022, but didn’t hint much more in 2023.  

In addition to solving these problems, an emerging growth area is Hybrid Events. It seems reasonable that the webinar and physical events sectors may converge. This means online events will need to master things like badge printing, and on-prem solutions will need to master streaming scalable video. I figure odds favor the UCaaS providers, and the providers already on it include Cisco, GoTo, RingCentral, and Zoom. 

There does appear to be an opportunity for improved interop of messaging. The EU Digital Markets Act may force this. In the meantime there’s Mio. 

Customer Engagement

There is tremendous interest and excitement in CCaaS but no new entrants this year. The whole sector is enamored with — you guessed it — generative AI. There are lots of applications, but the big three are self-service bots, Agent Assist (for guidance), and agent support (summarization). The bots aren’t coming for your agents — they are coming for your cash (and CSAT). 

The sector is moving toward “CX” and dropping “CC” or “CCaaS.” This was covered in a TalkingPointz Research Note: Does CCaaS Matter? (TL/DR: No. All that matters now is digital and AI.) The trick to AI is not to talk about AI but to talk about (leveraging existing and creating new) data. Like CCaaS, CX will continue to expand in scope, and since all that matters is digital and AI, expect new entrants from unexpected sectors. 

 

NICE and Five9 are pulling ahead of the pack. NICE has an impressive portfolio and partners, but its real strength is its (stable, tested, proven) leadership team. Talkdesk and Genesys have done well at cost-cutting. 

Genesys ending development of Engage left a mark. Financially, it allowed Genesys to cut significant costs with little near-term impact to revenue, but it was costly in that it angered customers and partners and disrupted the natural pipeline for Genesys Cloud. The move was also a life preserver for Avaya. While Genesys and some 30 other providers quarrel over 30-40% of the CC market (CCaaS), Avaya, Cisco, and Mitel get to divvy up the remainder. Cisco is particularly well positioned as it has premises-based CC solutions and a strong CCaaS AI and digital story. 

The big question mark is how Avaya will move forward. It’s hard to validate numbers, but it still boasts one of the largest customer bases, if not the largest. Presumably, Mr. Masarek and team are searching for a rabbit to pull out of a hat in 2024? 

2023 was about generative AI hype. 2024 will be about success stories … can’t wait.  

Sprinklr Conversational AI+: Sprinklr launched Conversational AI+ in Sprinklr Service. A bit confusing since this conversational AI solution is actually a generative AI-powered solution. It is built on Google Vertex AI and leverages Google Gemini LLM, Open AI’s GPT, customer-provided models, and, of course, the obligatory vendor proprietary AI, too. 

NICE CXone Fall: NICE’s newest release offers enhancements to Enlighten AI Routing and Enlighten AutoSummary, improved sentiment, next-gen WFM, and availability for Azure (alongside AWS). NICE has also announced the ability for CXone to work with any ACD. This will likely appeal to customers with premises-based or private cloud solutions looking for new options. NICE’s new “True to Interval” (TTI) provides improved forecasting and planning of digital channels. 

Vyopta QoS on Zoom: Vyopta announced the integration of Zoom’s Quality of Service Subscription (QSS) support for Zoom Phones. Vyopta and Zoom collaborated on the QSS feature.

Unified Communications

UC 2023: Microsoft won the pandemic. The virus propelled Teams from a premature replacement for SfB to a mainstream solution. In many ways, Microsoft Teams is the new Bell, but without the standards, regulation on profits, and requirement to interop. Direct Routing, Operator Connect for Teams, and Teams Mobile are the designated ways that providers can ride its coattails, though without customer visibility or differentiation. 

Cisco is the only provider with a differentiated Teams coexistence opportunity. And while Microsoft may have been victorious, Cisco changed more than any other provider during the pandemic. The entire leadership team changed, it expanded into desktop devices, and it pivoted from Teams competitor to complementor (devices, calling, and CC). 

UCaaS lost its luster — at least telephony did. With the decline of telephony as softphones and cell phones continue to displace hard phones, it’s now difficult for providers to differentiate with calling features. Instead, UCaaS providers are generally leading with one or more of the following strategies: 

• Lead with CCaaS (8x8, Dialpad, RingCentral).
• Sell the Suite (Cisco, RingCentral, Zoom). Amazon, Cisco, Microsoft, and Google are also championing broader suites. 
• Lead with Devices (Cisco).

Providers are also looking to expand the UCaaS suite. After its beginnings in telephony, UCaaS expanded into messaging and meetings. The next two expansion areas are events (Cisco, GoTo, RingCentral, Zoom) and — the most interesting thing in UCaaS — mobility (Cisco, Microsoft, Vonage?, and RingCentral), UCaaS as a native number on a cell phone. Cisco and Microsoft have two models (partner-led and MVNO). RingCentral has partnerships with AT&T and Vodafone. 

Meanwhile, vendor consolidation continued with Mitel/Atos. That leaves four great premises-based providers: ALE, Avaya, Cisco, and Mitel. ALE and Avaya are already working together. Neither Avaya nor Cisco has been clear regarding its commitment to premises-based UC solutions.  

2023 was the end of Slack and Twitter as meaningful companies. Musk found out that free speech is hard. And Salesforce found out retention is a bitch. Logitech had a bad year. I’m not impressed with its new docks or cameras, and it lost its proven leadership. That whole MTR space will be under a lot of pressure due to the Cisco/MS alliance. Logi might be first out. 

An area of UCaaS that is getting renewed interest is the Communications Service Provider play. In addition to Ooma acquiring 2600Hz, we have seen Cisco re-awaken, Alianza cozy up with AWS, and Crexendo announce it has 4M subscribers. Intermedia, Enreach, Ericsson/Vonage, and more are targeting SPs. The Metaswitch and Genband bases have been abandoned. 

Intermedia AI: Intermedia launched its generative AI assistant for its Unite communications and collaboration platform to enhance business productivity. The solution is embedded within the chat interface of the Unite mobile and desktop apps. Unite AI Assistant can help draft emails, memos, or other content, summarize data, or assist with research. This is possibly the first generative AI assistant designed to be rebranded. 

Coincidentally, NEC introduced its UNIVERGE BLUE PULSE AI Assistant. It can automate repetitive tasks, such as answering frequently asked questions, writing code, translating text, summarizing information and more; users can access the AI Assistant through CONNECT. The new productivity tool is included in all paid BLUE subscriptions. 

Extensible Comms

CPaaS 2023: There is good news and bad news for CPaaS. The concept and demand have never been clearer, but competition is fierce, and it’s difficult to differentiate. Twilio invented the category, likely saw the writing on the wall, and took action to move up the stack first with Flex and then with Segment. Those two initiatives caused double trouble. The provider had three major layoffs and has been dismembering its portfolio to reduce costs. Just recently, Twilio announced it would terminate its video APIs. 

It seems in 2024 that everyone is a CPaaS provider, even if they won’t admit it. The term CPaaS is acceptable and meaningful but not brandable. It took Gartner 15 years to create an MQ for this category, and it’s unclear whether customers care. CPaaS is a platform play, but so is everything else these days, and CPaaS tends to be more interchangeable than others. 

The Business Section

Anthropic, the OpenAI rival, is rumored to be in talks to raise a $750M funding round led by Menlo Ventures. The round would value Anthropic up to $18.4B — nearly 4.5 times the startup’s $4.1 billion valuation earlier this year. Founded in 2021, it was funded by companies including Google, Salesforce, and Zoom. 

Leadership Changes

Vlad Shmunis, founder of RingCentral, returned as CEO. Last August, RingCentral announced that Tarek Robbiati would be CEO, and Shmunis would become Executive Chairman, with a focus on driving the Company’s strategic product vision and innovation. 

I had the opportunity to meet with both of them in September at the company’s 10-year anniversary of its IPO at the NYSE. I was curious just how much Shmunis had passed the baton and if he would even be attending the event. Not only was he present, he was the host, made a speech, and rang the closing bell. It was clear to me then that Shmunis never left, but only delegated the (public-facing) financial responsibilities to Tarek. Eventually, Shmunis will be replaced at RingCentral, but he isn’t going to be easy to replace while he’s there. 

Sometimes, companies outgrow their founders. It’s not clear to me that this is the case at RingCentral. The provider is still a startup with the recent launches of RingCX and Events. I understand Shmunis personally drove the deal with Hopin for RingCentral to expand into Events. No tears were shed for Robbiati. He departed on good terms, possibly related to a $9M payout for a quarter’s work. Shmunis remains Chairman of the Board. All eyes are now on CFO Sonalee Parekh as she followed Robbiati from HPE.

Charanya “CK” Kannan, Chief Product and Engineering Officer, Customer Officer, and Head of AI departs Talkdesk. CK was there for six years. Her departure seems premature (ahead of an IPO). 

Channel Surfing: Steve Infante was named Vice President of Channel Sales, CX Americas for NICE. 8x8 announced Michelle Paitich as its Global Vice President of Channel Sales. Mike Conlon moved from RingCentral to Zoom to be Head of Americas Channel.

Journey promoted Robert Tarr to CTO. Stuart Mitchell was named SVP of Strategy at eSIM Go.HPE announced Marie Myers as its EVP and Chief Financial Officer. Myers served as CFO of HP Inc. 

Goodreads

1. Why is Elon Musk’s Grok chatbot so unfunny? Humor is much harder than the other AI tricks. 
2. UK class-action targets mobile phone operators £3.3bn damages claim against Vodafone, EE, Three, and O2 for “loyalty penalties” on customers. 
3. E.U. Agrees on Landmark Artificial Intelligence Rules The agreement over the A.I. Act solidifies one of the world’s first comprehensive attempts to limit the use of artificial intelligence. 
4. A US Politician Is Robocalling Voters With an AI Chatbot Named ‘Ashley’ Pennsylvania Democrat Shemaine Daniels’ campaign for the House is the first to use AI to seek a Congressional seat. 
5. Microsoft Tops the List of Best-Managed Companies of 2023 Technology giants led the way, with Apple, Nvidia, Alphabet, and IBM rounding out the top 5. IBM? 
6. Microsoft’s AI Chatbot Replies to Election Questions With Conspiracies, Fake Scandals, and Lies Wired Research shows that Copilot, Microsoft’s AI chatbot, often responds to questions about elections with lies and conspiracy theories.
7. Meta/Threads Interoperating in the Fediverse Data Dialogue Meeting yesterday Discussion of Meta’s decision to link Threads to the open, distributed ‘fediverse’ architecture.
8. Agile has failed. Officially. It lasted longer than I expected. 
9. The GOP Is Very Mad Because The FCC Wants To Ban Shitty Cable Early Termination Fees “The telecom industry, once again in perfect lockstep with the GOP, is having a conniption fit about a regulatory agency attempting to do the absolute bare minimum to protect U.S. consumers.”
10. How Not to Be Stupid About AI It’ll take over the world. It won’t subjugate humans. For Meta’s chief AI scientist, both things are true.
11. What We Leave Behind The full scope of how the Covid pandemic changed our world may not be clear for another generation.

Other Recent Stuff

• Generative AI Not Likely to Increase Customer Satisfaction 
• The Most Significant Comms Acquisitions in 2023 
• Cisco Room Kit EQX and Campfire Blueprint Offer Flexible Meeting Configurations 
• #WebexOne CCaaS with Jono (video)
• Assessing the 2023 Gartner Magic Quadrant for CPaaS (Video)
• UCX Show Floor Walk-about (video)
• GITEX Show Floor Walk-about (video)
• What is ALE doing in the Avaya Booth @ GITEX? 
• A conversation with Jeff Pulver (video)
• Real-Time Recorded, Dave and Zeus on Zoomtopia (video)

 

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2023 Insider Reports (only new Insider Reports are behind the paywall) 

1. Insider Jan 2023
2. Jan Insider Lite 2023
3. Insider Feb 2023
4. Insider Feb Insider Lite 
5. Insider March 2023 
6. Insider April 2023
7. Insider Lite April
8. Insider May 2023
9. Insider June 2023
10. Insider July 2023
11. Insider Lite August 2023
12. Insider August 2023
13. Insider September 2023
14. Insider October 2023
15. Insider November 2023

 

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