Can Cisco Respond To Zoom's Challenge In $20B Videoconferencing Market?
An entrepreneur starts a company, sells it to a big company, sticks around and watches the acquirer dismantle what worked so well.
The entrepreneur gets so frustrated that he leaves to start a new company that will solve all the customer problems that the acquirer has caused -- and strives to win back those customers with a better value proposition.
Can the acquirer learn from its mistakes and get back in the game?
This comes to mind in considering Zoom's efforts to take market share from Cisco Systems in the video conferencing market which is expected to grow at a 14% annual rate to $20 billion by 2024, according to Global Market Insights.
After interviewing people on both sides of this battle, there seems to be room enough for both companies in this market. Yet Zoom strikes me as being more responsive to what customers want than Cisco.
(I have no financial interest in the companies mentioned in this post).
Before getting into this, let's take a look at how Cisco is doing.
In the 1990s I was very impressed by its ability to keep growing at over 40% a year -- abetted by its aggressive strategy of acquiring companies that were attracting budget dollars from its enterprise customers.
Cisco is doing pretty well but its shares still trade at 38% below their March 2000 high of $82. Its revenue growth over the last five years has barely budged -- up at a 0.3% average rate to $49.3 billion in 2018 while its net income has been declining at a 59.4% average rate to nearly $6.4 billion, according to Morningstar.
One of the companies that Cisco acquired was WebEx.
As Zoom CEO Eric Yuan explained in a September 2017 interview, he left Beijing in 1997 to be the founding engineer of WebEx. Cisco Systems bought the video conferencing company in 2007 for $3.2 billion and Yuan stuck around Cisco as a VP in its Collaborative Systems group.
In 2011, Yuan left to start Zoom which was then growing faster than the industry. FORBES reported that Zoom grew 300% in 2016 after raising $100 million in January 2017 at a $1 billion valuation.
Yuan was not happy with the way Cisco was managing WebEx when he left in 2011. As he said, "I was paid very well as a VP at Cisco. But WebEx was my baby. In 2010 and 2011, I did not see happy customers. I was very embarrassed that I spent so much time on the technology. Why are the customers not happy?"
He could not convince Cisco management to fix the problems. As Yuan explained, "Cisco would not change its collaboration strategy. I said I had a different view and left Cisco. 35 to 40 WebEx engineers left with me. Six years later we are doing well with 750,000 customers [up 67% from 450,000 in January 2017]. We are growing thanks to our simplicity, quality, features and price and we have a very high net promoter score of 69."
IDC reported that Cisco was the dominant player with Polycom and Huawei taking second and third place. In the third quarter of 2016, Cisco's revenues grew 6.4% and it controlled 46% of the worldwide video conferencing equipment.
More recently, Gartner placed Cisco and Zoom in the Leader quadrant of the 2018 Meeting Solutions Magic Quadrant. And by October 2018, Zoom had experienced "triple-digit YoY user and revenue growth and 110% growth in employee headcount," according to Digital Transformation.
While Zoom is growing faster, Cisco is not worried. As Aruna Ravichandran, VP of Marketing for Cisco Collaboration, said in a March 7 interview...
"We do not comment on competitors' case studies. In the meetings business customers switch vendors all the time. Our webex.com online e-commerce business is growing rapidly, and I can share with you that last quarter alone Cisco collaboration took 50,000 seats away from Zoom. This is in large part due to the fact that customers are looking for a complete solution [which includes] world-class endpoints, meetings, team collaboration, contact center solutions and more...Our group within Cisco grew 24% last quarter, and 18% in Q1."
I spoke with a former Cisco customer who switched to Zoom and he revealed what look to me to be Zoom's considerable competitive advantages -- Zoom understands what this customer wants and its technology and customer service satisfy them better than competitors' do. (I elaborate on how to create competitive advantage in Chapter Two of my latest book, Scaling Your Startup)
How so? BAYADA Home Healthcare -- a 28,000 employee, 32,000 client in-home health care service provider switched to Zoom from Cisco and Skype. As BAYADA application manager Dennis Vallone explained in a February 11 interview,
"[Cisco and Skype] have been relentlessly trying to win us back since we switched to Zoom five years ago. We use video and collaboration tools for remote physician check-ins. We need high quality, reliable video in all locations -- not just the ones with high bandwidth. Zoom was the only one that could deliver that. Zoom was easier to use, cloud-based, did not require a hardware investment, and its pricing model -- a freemium pricing model when we signed on -- made it convenient to try without an investment. We reconsider our videoconferencing needs every year -- but we stay with Zoom because they listen to what we ask for and unlike the others, they actually provide it. For example, we asked for digital signage and room scheduling and they delivered."
Vallone does not know why it is so difficult for other providers to respond to its needs. As he said, "Sometimes when a company gets too big it becomes too political. It is hard to push change through. Eric Yuan has a culture of really listening to customers and responding."
Zoom does not always add the features that customers want -- but it does listen and execute when it sees a significant market opportunity. As Jim Mercer, Zoom's head of customer success, explained in a February 22 interview,
"Before Zoom I spent 16 years at Citrix and I have seen [market share change hands] based on how well customers are treated. Here execution for the customer is our true north. We have a consultative approach to building our service -- working with our customers and our product development teams. We listen and implement features if enough customers request them. We have a customer advisory board for our up-market customers and use AI and automated tools to boost engagement with our product for down-market customers. When it comes to the onboarding process for new customers, some of our competitors merely provide video tutorials and a one page PDF."
Another Zoom customer, Autodesk, started working with Zoom beginning with an April 2017 pilot. According to a March 7 interview with Prakash Kota, CIO, Autodesk, "We enjoy working with Zoom due to high employee adoption and satisfaction rates. [Zoom best met our requirements for] a secure, modern global solution that was platform agnostic, 30 frames per second content share, and the ability for external participants to easily join and collaborate."
Zoom is growing at over 100% a year while Cisco's video conferencing revenues rose 18%. If Cisco can surpass Zoom's competitive advantages, it will be in a better position to sustain its market share lead.
Source: forbes
Industry: Unified Communication news
Latest Jobs
-
- Azure Identity Consultant
- Netherlands
- discussed on applications
-
Are you a cybersecurity expert passionate about identity and access management? We are seeking a talented IAM Technical Specialist to join our Sec Ops team. In this role, you will play a pivotal part in developing and maintaining our IAM infrastructure, ensuring the highest levels of security and compliance. What you'll do: Design, implement, and maintain IAM solutions for both on-premise and cloud environments. Collaborate with cross-functional teams to integrate IAM systems into various applications and processes. Conduct security assessments and risk analysis to identify and mitigate vulnerabilities. Stay up-to-date with the latest IAM technologies and industry best practices. What we're looking for: Experience: experience as a technical specialist with expertise in AD management. IGA concepts: Experience with Identity Governance and Administration (IGA) concepts such as RBAC, PAM, SIEM, SSO, segregation of duties (SoD), data classification, and recertification. Azure Identity Management: Minimum 2 years of demonstrable experience with Azure identity management, specifically within complex organizations. IT knowledge: Good general knowledge of IT environments such as Active Directory, Azure Cloud, Office 365, SharePoint Online, etc. Protocol knowledge: Familiar with SAML, OIDC, OAuth, and SCIM. Programming languages: Minimum 3 years of experience with development languages such as PowerShell; knowledge of Java or C# is a plus.
-
- Cloud Architect- German Speaker
- Hungary
- Upto €48000 per year + bonus + benefits
-
As a Senior Pre-Sales Solutions Architect, you will play a pivotal role in driving our sales success by translating complex technical solutions into compelling proposals that resonate with our clients. You will collaborate closely with our sales teams to understand customer needs, design tailored solutions, and negotiate successful deals. Responsibilities: Solution Design: Develop comprehensive technical solutions that align with customer business objectives and industry best practices. Proposal Development: Create compelling proposals, including requirements gathering questionnaires, presentation materials, and Statements of Work (SOWs). Customer Engagement: Build strong relationships with clients, understanding their technical, business, and commercial requirements. Collaboration: Work closely with sales teams, delivery teams, and third-party partners to ensure successful project execution. Pricing Strategy: Define and deliver pricing strategies that align with customer needs and company objectives. Requirements: Experience in technical pre-sales or sales support roles. Proven track record in designing and delivering successful customer solutions. Strong technical foundation in areas such as VMware, Azure, AWS, cloud computing, and data center technologies. Excellent understanding of sales principles, account management, and negotiation techniques. Ability to explain complex technical concepts clearly and concisely. Experience working in international teams and supporting clients across multiple regions. Fluency in German and English is essential. Benefits: Competitive salary and benefits package Opportunity to work on challenging and rewarding projects Collaborative and supportive work environment Potential for career growth and advancement Please note that this role is focused on supporting German clients, but will also involve global client support as needed.
-
- Microsoft Sentinel Architect
- United Kingdom
- discussed on applications
-
Microsoft Sentinel Architect We're seeking a talented and experienced Microsoft Sentinel Architect to be responsible for the design, deploy of a new Sentinel solution into an expanding Services business. As a key member of our team, you'll play a vital role in driving security operations and protecting clients' assets. Responsibilities: Solution Design: Develop comprehensive Microsoft Sentinel architectures aligned with our clients' specific needs and industry best practices. Deployment and Configuration: Oversee the deployment and configuration of Sentinel components, including data connectors, analytics rules, and playbooks. Integration: Integrate Sentinel with other security tools and platforms within our MSSP ecosystem. Tuning and Optimization: Continuously monitor and optimize Sentinel performance to ensure maximum effectiveness and efficiency. Training and Mentoring: Mentor junior team members and provide training on Sentinel technologies and best practices. Required Skills and Experience: Proven experience as a Microsoft Sentinel Architect with a deep understanding of its capabilities and limitations. Strong technical skills in Azure, security operations, and data analytics. Experience designing and implementing complex security solutions, into a services environment Knowledge of threat intelligence, incident response, and compliance frameworks. Excellent communication and problem-solving skills.
-
- Network & Security Consultant
- Romania
- €54000 plus benefits
-
Senior Network & Security Engineer to join a Managed Network & Security Team in Europe. In this critical role, you will: Play a pivotal role in managing and securing network infrastructure across datacenters, customer connections, and on-premise deployments. Proactively monitor network and security devices, analyse incidents, and implement solutions to ensure optimal performance and security. Collaborate with colleagues and customers to troubleshoot issues, troubleshoot outages, and implement effective resolutions. Lead and participate in network system installations for new facilities and expansions. Develop and maintain network infrastructure procedures, recommend technical strategies, and propose improvements to enhance network capabilities. Stay up-to-date on the latest network and security technologies and trends. Work as part of a collaborative international team, contributing to team presentations and knowledge sharing. To be successful, you'll need: Proven expertise in Cisco network solutions (CCNP R&S/Sec/Wireless preferred) for both BAU and project work. In-depth knowledge of network security principles and experience with Fortinet firewalls. Experience deploying and managing large, complex network infrastructure (routing, switching, wireless, security). Solid understanding of ITIL v3 framework for incident, change, and problem management. Excellent troubleshooting skills with experience using Wireshark or similar protocol analysers. Strong communication and teamwork skills, with the ability to work independently and collaborate effectively.