Just in the past few months, we saw a blockbuster proposal with Zoom and Five9 completely shake up the industry even though the deal was never finalized. RingCentral and Mitel were soon to follow suit, and shortly thereafter Ericsson announced a surprise acquisition of Vonage. Then news broke of 8x8 announcing a strategic buyout of enterprise contact center FUZE.
While the dust has yet to settle on what these acquisitions and partnerships will mean long-term in the UC and contact center segments, it does signal that the market is consolidating and moving towards inclusive technology platforms that focus on customer experience. Some may say that it also points towards the expanding gap between market leaders and niche players, plus the importance of fresh technologies that can redefine the market.
"There will be more acquisitions ahead, especially in the contact center space as clients shift to a heavy focus of experience and retention, both from a customer and employee perspective," says Joe Rittenhouse, President of Business Development for Converged Technology Professionals.
Why Did 8x8 Purchase FUZE?
On the financial front, 8x8 paid a modest price of $250 million (half cash/half stock) to acquire FUZE, which had been looking to sell for some time. Strategically, it is a smart acquisition for 8x8 as they look to boost their XCaaS (Experience Communications-as-a-Service) platform and pick up market share, both domestically and in Europe.
Here are the primary wins for 8x8:
Market Share - 8x8 acquires FUZE'S enterprise customers, growing their market share in that segment by 33%.
Growth - with a goal of reaching $1 billion in ARR, the buyout adds immediate inorganic growth.
Staffing - 8x8 will add 250 experienced former FUZE R&D team members, helping to shore up their XCaaS portfolio.
Expansion - the deal gives 8x8 an instant expansion into Europe with FUZE'S foothold in the UK and France.
Why Did Ericsson Acquire Vonage?
The Vonage acquisition by Ericcson is also enticing with a $6.2 billion cash offer to acquire the Vonage Communications Platform (VCP) and other technologies. The deal is expected to close in the first quarter of 2022 and enhance Vonage’s strong developer ecosystem with 5G performance, opening the doors for countless enterprise opportunities on a global scale. It will be interesting to watch how they incorporate UCaaS with a cellular focus.
The primary wins for Ericcson are:
Market Share - a seamless transition into wireless enterprise with a unified XCaaS platform that fits well in global markets.
Performance - the Vonage Communications Platform serves over 1 million registered developers globally and make up 80% of Vonage’s total revenues.
Visionary – 5G mobility will begin to play a larger role in the UC/CC segments in 2022 and beyond, so owning everything in-house is a huge advantage.
This Ericsson deal also demonstrates the risk for all of us making platform choices that are not with current market leaders. As the market continues to consolidate, organizations can’t afford to risk constant platform changes when these types of acquisitions occur and priorities are shifted by new leadership.
Where Will Future Growth Come in 2022?
Another common thread within these blockbuster acquisitions is the prominence of the contact center and technologies that focus on elevating the customer experience. XCaaS ensures that customer service becomes a core initiative for these brands and you can expect more of these visionary contact center acquisitions to unfold next year.
To learn more about the recent acquisitions or for personalized guidance on choosing the right UCaaS and cloud contact center for your organization, please feel free to contact us through the banner below. Our signature process helps large organizations assess your unique needs, evaluate leading technologies and guide you throughout every step of the procurement and implementation process.
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