Vonages Expands from UCaaS into CPaaS

Surprise! Vonage announced its intent to acquire Nexmo. The surprise wasn’t Nexmo, I’ve been expecting someone to acquire them – the surprise was Vonage – at least at first. 

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Nexmo is a CPaaS provider, the new cool thing. Nexmo is in the same space as unicorn Twilio (who is expected to have an IPO this year). REST based APIs are the new lingua franca of development. Communications APIs are still nascent, but growing quickly. The actual API part is not that hard. Most UC vendors already offer libraries of them. The hard part part is the carrier relationships (which is why most UCaaS providers don’t offer global APIs). This is where Nexmo shines.

Nexmo’s core competency is working with carriers around the world. Nexmo uses these carriers for transport services, but also for intelligence. For example, number validation. Nexmo’s most popular service is two-factor authentication services. Nexmo started with messaging services, but added voice in 2013.

I should not be too surprised. Vonage and Mitel are in competition for Best Consolidator. Mitel is more focused on products and technologies and Vonage is going after services and recurring revenues. I mistakenly assumed Microsoft would go after Nexmo to 1) compete with Cisco/Tropo and 2) build out its dev services under Azure. Perhaps Microsoft already feels it has carrier competencies from its rapid expansion into carrier services or maybe even its Skype division. Mitel currently has its hands full with its Polycom acquisition.

If you are interested in this Vonage-Nexmo deal, please download this free 2Pager Research note. All 2Pagers are free (and longer versions do exist).