Can NICE be successful in UCaaS? Yes, I think so. It’s easier for a CCaaS provider to set a low price point and disrupt UCaaS than vice versa.
NICE recently held its Interactions user event under the hot and sunny skies of Las Vegas. Over the years, NICE has used Interactions as a platform for big news, and the 2024 edition was no different. At the event, the company announced its new 1CX product which offers customers a full unified communications as a service (UCaaS) suite for the low cost of $5 a month.
The solution is a white-labeled version of the 3CX UCaaS suite. NICE won’t sell the solution independently and requires customers to have a CXone license. With this release, NICE becomes the first contact center as a service (CCaaS) provider to offer its own UCaaS solution. Most CCaaS vendors have UCaaS partnerships. To date, the only other CCaaS with a UCaaS solution is Talkdesk, but that’s currently voice only.
It’s About Who Does the Buying
So why does NICE, the leading CCaaS provider, want to enter the UCaaS industry? At the event, I talked to NICE leadership about this, and there was an admission that down market (small and mid-size companies), there has been customer demand to purchase UCaaS and CCaaS from the same provider. This is why all the UCaaS providers have CCaaS solutions.
Initially, this was done through partnerships, but over the past several years, almost all UCaaS vendors have built or acquired their own CCaaS offerings; the list includes Webex Contact Center, Zoom Contact Center and RingCentral RingCX. Most notably, Microsoft announced its intention to move into CCaaS, although its tie to Dynamics limits the addressable market as Salesforce is the dominant CRM provider.
In enterprise-class companies, the UCaaS and CCaaS decisions are made by different buyers, which is why the CCaaS pure plays tend to dominate customer wins in that segment.
Priced to Disrupt…and Maintain the Moat
Given the competitive landscape, the next question is, can NICE be successful in UCaaS? I believe they can. In my conversation with NICE, they told me they set the price at $5 to disrupt the UCaaS industry. It’s their belief, and I think they are correct, that it’s easier for a CCaaS provider to set a low price point and disrupt UCaaS than vice versa.
Over the years, UCaaS has become highly standardized. I won’t call it commoditized yet, but it’s getting close. Years ago, when Becky Carr was head of marketing at Avaya, she referred to UC as “one big sea of sameness,” and the industry has continued down that path.
Contact centers, however, are highly strategic to almost all companies. Contact center functionality continues to expand, and customer experience (CX) improvement remains a top initiative for business leaders. The low end price of a contact center seat is about the high end of a UCaaS license, which is why all the UCaaS vendors want a piece and why the commoditization curve is likely a long way off.
One argument that works against NICE is that when UCaaS and CCaaS are bought together, it’s often the UCaaS buyer that pulls through CCaaS. However, no CCaaS provider has ever tried in earnest to sell UCaaS. As a company, NICE has tremendous customer loyalty and will likely get some interest in its current install base. Selling outside that base might prove difficult, but that’s not the main focus.
Also, success for NICE doesn’t mean kicking out the incumbent, particularly at $5 a month. I can see a scenario where a customer is using Microsoft Teams and purchases a handful of seats from NICE as a backup for when Teams is having issues. The “win” for NICE is ensuring its CCaaS base stays protected and having the UCaaS offering enables them to do that better than not having it.
Partnership in Peril?
The last point to consider is RingCentral. The two companies have long been partners, and RingCentral’s contact center solution is a NICE under the covers. However, market dynamics changed, and last year, RingCentral rolled out its native contact center.
While the two still have an active partnership, you don’t need to be a psychic to read the tea leaves here. The more robust RingCentral’s product gets, the less it needs NICE, and the partnership will likely end. I haven’t officially asked RingCentral about this announcement, and while I’m sure they’re not doing cartwheels in Belmont, CA, I’m sure they understand why NICE made this move.
NICE to Likely Succeed
For NICE, it’s welcome to the world of UCaaS. While I’m not expecting NICE to move into the number one share position soon, the company has tremendous customer loyalty and a history of making great products. When you combine those two things, that typically leads to success.
