Earlier this month (July 2021), Zoom announced the acquisition of Five9 for a stock sharing price of approximately $14.7 billion, which represents a 13% premium over the CCaaS leader’s closing price at the time. To date, it is the largest corporate buyout for 2021 and it will create a lasting ripple effect across the unified communications and contact center landscape.
Zoom CEO Eric Yaun justified the buyout by sharing that contact center is a natural synergy with Zoom’s cloud phone and video offerings, allowing them to focus on business and enterprise customers in the coming years. Gaining market share over established rivals like RingCentral, Genesys and Talkdesk will be an uphill battle in the contact center as a service space, but the larger story is the repercussions this merger has across the entire cloud communications industry.
Take Mitel, who recently entered into a contact center partnership with Five9’s after a failed relationship with TalkDesk. For the short term it should be business as usual for Mitel with their new contact center partner, but the Five9’s merger with one of their top rivals leads to a healthy speculation that Mitel can’t see Five9’s as a long-term answer.
That makes the path forward for Mitel much cloudier without a contact center offering that is evolving with the industry. Their legacy ShoreTel ECC (Enterprise Contact Center) is end-of-life and their other offering, MICC, is very limited while relying on third-party Integrations as a makeshift solution. The biggest disadvantage for Mitel is that it's still premise-based despite every major business segment rapidly migrating their internal communications and contact centers to cloud.
However, Mitel isn’t alone in not anticipating a merger of this magnitude. Other Gartner Magic Quadrant Leaders must also feel pressure to react. RingCentral has proven through their partnerships with Avaya, NICE inContact & others that direct competitors can have mutually beneficial relationships. However, the rapid growth of Zoom, RingCentral, 8x8 and Microsoft Teams during the pandemic likely has all the major players second-guessing their strategies for unified enterprise offerings under one brand. That begs the question- are there more acquisitions on the horizon?
While Zoom still has considerable ground to cover in order to become a direct competitor to the industry giants, this acquisition makes it clear that the overarching strategy of 2021 and beyond will be acquiring and developing cloud technologies in-house. The goal is becoming clearer to offer a centralized, unified platform that encompasses calling, video, file sharing, contact center, workforce optimization, AI and more from a single brand. It’s safe to say that future investments for R&D will be in cloud and those with the right portfolio will prevail. This may be the final nail in the coffin for the premise market.
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