2015 UC Outlook - Who's Driving the Bus?

28 Dec 2014

As UCStrategies colleague Blair Pleasant recently wrote, "Change, the Only Thing that's Constant," we are coming to the end of a year where there are more questions than answers in the UC space. If you rewind to the start of 2014, really, could you have envisioned any of the following unfolding?

  • Microsoft abandoning the Lync name in favor of... Skype for Business

  • Cisco partnering with Microsoft to integrate with Exchange so their Collaboration Cloud can support competing UC platforms

  • Avaya partnering with Google to allow contact center agents to use Chromebook and engage with customers from any location

  • Unify rebranding Project Ansible as Circuit - a name that they believe will resonate with Millennials

  • Mitel taking an aggressive, but ultimately unsuccessful run at ShoreTel, mere months after acquiring Aastra

  • Dell, having gone private in late 2013, and via a series of acquisitions to create Dell Software, becomes a UC player via their recent launch of UC Command Suite

Why are any and ALL of these things happening now? What is UC becoming, and does it have a future? These are very legitimate questions, and all of us at UCStrategies will be closely following how things progress in 2015. All of the above are strange bedfellows, and there certainly are others if you care to dig further into the UC milieu. Whether you're a business looking to invest in UC, or a channel partner looking to recommend/sell UC to your customer base, it's really hard right now to know where you should place your bets.

I hate to reduce things to a casino mentality, but that's how things are starting to look with UC. Nobody seems to be in charge, and it's not clear where or how the money will be made. All the vendors seem to be shifting away from the network and IT concerns, and over to the end users, where the experience and engagement outcomes seem to matter most.

The way it looks to me, there are two big trends that you have to choose whether to get behind or ignore, hoping they fizzle as business realities set in.

1. The Millennials have arrived, and it's time for everyone else to leave

We all know how it's different for Millennials, and their ability to adopt new technologies outpaces that of UC vendors to innovate effectively. This gap may well give rise to a new order, but for now, the younger demographic are pretty much just end users. They are relatively new to the workforce, and just as likely to be contract workers as full time staff. Some are moving into the ranks of management, but for the most part they are not decision-makers, and nor are they the economic buyers for UC.

In short, Millennials are ultimately the users of UC, but they are an unknown quantity in terms of being buyers inside the business, or being sellers when working for the vendors. This raises a lot of questions on a business level about where UC is heading. Millennials are rooted in a culture of free and sharing, and if that's their expectation around UC, today's market leaders face some big, existential challenges. We're a few years away yet from Millennials making their mark across all these roles, and until that time, vendors have a window still to figure this out. This largely explains many of the above examples of what vendors have been doing this year, and they all know what's at stake.

The name of the game going into 2015 is to get younger, become more agile, and determine if there is a viable business model for UC, or whether the money is going to be made elsewhere, such as developing custom applications, providing cloud-based services that support UC, or going downstream with Big Data analytics derived from UC applications.

2. The cloud is for real and resistance is futile

Again, we know where this is going - presuming the foundation is solid. Conversely, the ugly breach we just saw with Sony and "The Interview" may be the tip of the iceberg for what's coming, and could prove out as the Achilles heel of the cloud. There still remains a lot of distrust about the cloud among businesses, and even though all UC vendors are betting heavily here, breaches like this only reinforce that view. I think the cloud will win out, but clearly, it still doesn't take much to make life miserable when hackers are on a mission.

Presuming we get past that, it's clear that the cloud will become all-encompassing, and this too, is bad news for the UC status quo. The cloud is all about economics and kills the value proposition around owning anything and having premise-based infrastructure. Once the anchor of the IP PBX is removed from UC, this market becomes a free-for-all where the applications are free or near-free. UC is increasingly becoming embedded in other things, and with voice being just another data application, the telephony-rooted UC vendors lose their natural advantage.

This is why Lync is having so much success, and it opens the door for players outside the voice space to enter the UC market, such as with Dell Software or IBM with Verse. These are big companies on the periphery of the UC space, but think also about new entries that have zero pedigree here. They may be new, but they can hit the ground running with collaboration applications or platforms that are simple downloads and optimized for specific types of endpoints, especially in mobile environments. Popular examples include Slack and Talko, but their ilk are rapidly sprouting up, creating a very fragmented space that exists almost entirely beyond the realm of IT.

When you see how quickly and easily these new offerings are jumping in, it's no wonder to see the majors keep pace with the likes of Cisco's Project Squared and Unify's Circuit. Although Cisco claims to have "earned the right" to enter the nascent persistent collaboration space, it's clear that nobody knows if there's money to be made here. The status quo is under siege from all sides, and these moves are primarily defensive responses to keep the installed base and somehow find a way to develop new revenue streams.

My 2015 Outlook

These trends are distressing on many levels, and if they continue building momentum, it's hard to see how UC as we know it will survive through 2015. The cloud is creating a race to zero for UC, and it's not inconceivable that vendors may need to resort to some form of advertising to subsidize their platforms. I think that's a stretch, but stranger things have happened. As the cloud story gets stronger, Amazon and Google are just as well positioned as the UC incumbents for success, and as we shift further into the social business realm where the user experience is all that matters, the revenues that have built UC to date will become ever harder to come by.

Furthermore, if - or as - IT's grip over managing workplace applications loosens, demonstrating an ROI on UC via productivity gains becomes more challenging. If that happens, IT stands to be a big loser, at which point, UC and collaboration applications will become entirely used and managed by end users. Again, that's an unlikely scenario, but entirely possible. IT doesn't want that, the vendors certainly don't, but really, end users don't care. As long as they're driving the bus, that's the road UC may end up on, with a big curve ahead that nobody has seen the other side of. Are you ready for 2015?


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