Big news in the call center world broke last week: NewVoiceMedia (NVM) was acquired by Vonage for $350M. What does it mean? Well, the obvious take-away is that cloud-based call centers continue to be a hot space and a great way to build value for investors.
Some commentators talk about a “wave of consolidation” as if it’s a time-limited event, but as I look back at the last decade, it seems more like a constant rhythm in the industry. As long as I’ve been following the space, this acquisition pattern has been ticking along reliably. The exits get the headlines but innovative new entrants are continuing to launch.
There are other takeaways, too: Vonage’s big plan, the Salesforce angle, the Twilio angle…
The Salesforce Angle
A big part of NVM’s success is the tight integration with Salesforce. Analyst Sheila McGee-Smith said: “NewVoiceMedia is particularly well-positioned to address larger-scale deployments due to its global scale and strong partnership with Salesforce.com.”
It’s been fascinating to watch Salesforce become more and more dominant in the call center space. Two years ago we wrote “Salesforce Has Many Fingers in the Call Center Pie” and that is even more the case now. The larger pattern is the growing overlap of CRM and call centers (See “Is a Call Center Just a CRM Feature?”).
Call center technology used to be hardware-based, voice-focused, proprietary and cloistered from plain vanilla developers and IT people. That’s all changing. Of all the sectors in enterprise IT, call center resisted the cloud transition the longest. Twilio and others made the once daunting voice-and-telco part of call center just another API call.
The top of Salesforce Tower (the Ohana Floor) is now open. No offices— just seating to enjoy the amazing views. Soon the public will be invited up free of charge. This is a powerful space to be shared/enjoyed by everyone in our city. Thank you to everyone who made this possible. pic.twitter.com/XdLnGXvuwi
— Marc Benioff (@Benioff) September 24, 2018
The other tech giants are deeply worried that Salesforce is becoming the sun around which everything else is revolving. See for example this announcement, surely timed to coincide with Dreamforce week: Microsoft, SAP and Adobe take on Salesforce with their new Open Data Initiative for customer data. Quoting TechCrunch, “… a clear attack against Salesforce … aims to create a single data model for consumer data that is then portable between platforms.”
Villi Iltchev, partner at VC firm August Capital, and former Salesforce VP had some, well, pointed criticism:
This is sure recipe for containing Salesforce! No strategy or vision. Rely on others for execution. Vapor-wear and a good press release will deliver a devastating blow! https://t.co/bKJNGlUCWb
— Villi (@villi) September 25, 2018
The Vonage Big Plan
For Vonage, this acquisition comes on the heels of their TokBox acquisition and, going a bit further back, their Nexmo acquisition.
Alan Quayle, industry observer and friend-of-the-blog, tweeted about the Vonage move, saying it “shows its hard to resell CCaaS UCaaS CPaaS” and “Increasingly [you] need to own the tech for margin.” (I’ll be speaking at Alan’s TADHack summit next month, a global event focusing on the world of programmable telecom and other leading edge tech.)
Vonage has had a long journey. I’m old enough to remember when they were a consumer voice play. In fact, that’s still the first association that pops into my head (stupid non-volatile cerebral RAM) and I have to consciously remind myself that today’s Vonage has nothing to do with that.
Analyst Dave Michels published a great overview of Vonage’s long journey:
This is Vonage 3.0. Vonage 1.0 was a consumer VoIP pioneer known for incessant television advertising. Vonage 2.0 was the BroadSoft aggregator (acquired Telesphere, SimpleSignal, and iCore), and Vonage 3.0 started soon after CEO Alan Masarek arrived in 2014.
The Twilio Angle
Another factor in NVM’s rapid growth was building on Twilio’s CPaaS. It’s not clear how much of Twilio’s stack is in their product. Companies that are built on Twilio, or other platforms, are sometimes reluctant to admit it, thinking it will make their product seem less valuable. (I know I got some flack when I published the diagram below.)
This announcement from 2013 only addresses NVM using Twilio for inbound/outbound routing, but things may have evolved since then. Nexmo is part of Vonage and, as a CPaaS play, also competes with Twilio. I wonder if NVM will be pressured to replace the bits that are running on Twilio with Nexmo equivalents?
The diagram above is from “The Twilio / Amazon ‘Stack’ Will Dominate the Next Call Center Era”, published in March. I will update it in an upcoming blog to reflect the Vonage acquisition and other changes.
This industry is moving fast.