Vonage Walks the Tok
Acquires TokBox to move into programmable video -- a smart move when cloud is converging and video is booming.
Vonage yesterday announced that is has acquired TokBox from Telefόnica for $35 million. While UC analyst Zeus Kerravala covered the acquisition and the components of TokBox's OpenTok platform in a separate No Jitter post, there's more to be said about the value the company will bring to Vonage.
This acquisition brings WebRTC and programmable video capabilities to Vonage, which will compete with other programmable video providers such as Vidyo, Twilio, Ribbon Communications, and Temasys. It's a complementary addition to Vonage, which acquired Nexmo, a communications-platform-as-a-service (CPaaS) provider in 2016.
I like this acquisition for several reasons, but two big ones stand out: Cloud-delivered services are converging, and video is booming.
Vonage temporarily confused many industry watchers when it acquired Nexmo in June 2016. At the time, the UCaaS industry was all about providing software services or applications, not development tools. By contrast, CPaaS offers building-blocks or tools that add pay-as-you-go communications services into applications, websites, and connected Internet of Things (IoT) devices. With the acquisition, Vonage had crossed an imaginary line into an adjacent sector.
Over the following months, the idea didn't seem so radical. By blurring these boundaries, Vonage emerged as a cloud-delivered communications provider that enabled its customers to build, purchase, and customize applications.
For example, Last month Nexmo announced partnerships with artificial intelligence (AI) players including Amazon Lex, Google Cloud Speech and Dialogflow, and Microsoft Azure Cognitive Services Translator, as well as leading bot platforms such as i2x, MuleSoft, OneReach, Over.ai, VoiceBase, and Voicera. While these partnerships can be used by developers to extend any app, Vonage also pre-built integrations into its CXOne (CCaaS) and Vonage Business Cloud (UCaaS). This gives its application customers the ability to customize and extend their applications without custom development.
Vonage Nexmo has already made several open-source contact center modules available, and WebRTC modules will be highly complementary. For example, many organizations are looking to add video capabilities to their contact centers. We can expect Vonage to offer an integrated WebRTC video solution that will align with its open-source skills-based router it published last March.
Going beyond CPaaS, expect Vonage to use TokBox to strengthen its applications as well. In 2017, Vonage added Amazon Chime for audio, Web, and video conferencing to its portfolio. Although Chime filled a conferencing gap, it's not tightly integrated with other Vonage services. I foresee Vonage creating a richer video conferencing service for Vonage Business Cloud (and CXOne).
Video is Booming
According to IDC, the U.S. programmable video market will be a $7.4 billion opportunity by 2022, representing more than a 140% four-year CAGR. Vidyo and TokBox essentially created video optimized services. The video opportunity is large, but often obscured. Most CPaaS providers remain focused on voice and messaging services, and most UCaaS providers don't see use cases beyond video chat and conferencing.
Consider Doorbot, which reimagined the residential doorbell. In 2013, Doorbot introduced the idea of a doorbell that established a cloud-connected video session to a smartphone. Doorbot evolved into Ring, and Amazon acquired it earlier this year for $1 billion. As another example, consider Netgear, which used its networking skills to create IP-connected cameras. Its portfolio has been so successful that Netgear put its video solutions into a separate company called Arlo, which recently filed for an initial public offering.
Cameras are everywhere, and the use of them continues to grow. Logitech just reported that its video unit grew by more than 60% last quarter. A programmable video service provides general tools to leverage these cameras in a variety of uses cases including security, analytics, conferencing, and monitoring. The timing is excellent; the WebRTC wars are over.
With an increase in cameras and connectivity, there's also an increase in programmable options. Last year, Vidyo launched a video-optimized platform service that is building momentum, particularly within healthcare and customer engagement use cases. In 2016, Twilio acquired WebRTC media processing technologies and the team associated with the Kurento open source media server. But even with these moves, most CPaaS providers remain focused on voice and messaging services.
As connectivity and cameras increase, it's inevitable that so will video-enabled applications. There's tremendous growth opportunities. For example, despite a decade of omnichannel, the majority of contact center interactions are still over voice. But the benefit of enhancing voice with images is illustrated by U.K. company Endsleigh Insurance, which allows customers to send photos as part of its process for low-value claims. Considering that most customers are now calling from camera-equipped smartphones, it's inevitable that video-enabled interactions are coming.
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