Recently Zoom Video Communications Inc. held its annual industry analyst event, Perspectives, at its headquarters in San Jose, and it revealed much about the ongoing evolution of the videoconferencing company.
The company’s first act was built on video and given a massive steroid shot during the COVID era, which turned a company few had heard of into a household name. Since then, the company has added a boatload of new features, added enterprise clients, reduced the churn in its online business, and moved into adjacent markets, most notably contact center.
Despite this, the stock is about the same price it was pre-pandemic, which is partially because the communications industry is out of favor with investors. A bigger factor is that Zoom’s strategy is somewhat misunderstood, and I went to Perspectives to clarify in my mind what its next act will look like. Here are my top five takeaways from Zoom Perspectives.
Zoom is attempting to disrupt work, not communications
Zoom’s rise from startup to market leader was accomplished by disrupting the status quo. In a crowded market, Zoom created a product that disrupted on ease of use (the fact that ease of use was a differentiator is another story). Many industry watchers believe Zoom is trying to disrupt communications with an integrated unified communications/contact center offering but that’s not the focus.
During his keynote, Chief Executive Eric Yuan (pictured) talked about how “work is broken” and he’s right. My research has found that 40% of a worker’s time is spent managing work instead of doing the job. This comes from having to flip constantly among documents, e-mail, chat and other applications. Communications is part of this, but Zoom is aiming to use AI and its suite of products to fix all the problems created by more and more applications.
Zoom apps are about the data, not the apps
When Zoom launched Docs and Mail, there was a large amount of skepticism, since it’s tough to out-Doc and out-Mail Microsoft when its incremental cost of adding the products is zero because of the way it licenses its products. However, Zoom didn’t set out to build a better mail client or Word document. In fact, in both cases, the user interface is OK but nothing that will wow a user. What is valuable, though, is having all the data in a single location.
As an example, prior to the event, the analyst relations team at Zoom sent me a document. If I can’t remember if it was sent through Zoom Chat or E-mail, I would need to search both. Because it’s unified, one search looks across both.
Now extend this to all forms of collaboration and then apply AI. Zoom will be unique in its ability to leverage its AI Companion across back office and front office workflows. Unseating Microsoft is a significant challenge as those workloads are “free,” but Microsoft’s apps are siloed and could be an Achilles heel in the AI era.
Industry specialization is a differentiator for Zoom
At the event, one of the more compelling sessions is when Randy Maestre, head of industry marketing, walked me around some of the vertical-specific solutions Zoom has. I found the solutions for front-line workers particularly compelling as it enabled this class of user easily tap into Zoom Chat, Video, Calling and the like through the apps they are already.
It’s easy to give clinicians access to Zoom, but it’s difficult to get them to use it if they must flip between Epic and the Zoom client. Zoom has integrations with more than 1,000 apps, many of them focused on a user other than the knowledge worker. According to AI4SP, the number of front-line workers is four time the total of knowledge workers, leaving this a massively untapped market for the UC industry.
The channel is now Zoom’s friend
At one time Zoom and its channel partners were heading down a divergent path. Zoom had a reputation of paying partners late, stealing deals out from under them and other activities that caused partners to look elsewhere. Two critical hires for Zoom were Mike Conlon as head of Americas channel and Nick Tidd, head of global channel, both of whom are longtime channel vets with experience at companies such as HP, Poly, Mitel and Cisco systems that remain the gold standard for channel programs.
Tidd walked the analysts through a bunch of data, such as quote-to-cash times being reduced, channel volumes going up and other data points that indicate a reverse in channel sentiment. For me, the truth lies in channel feedback where partners large and small have unanimously told me Zoom’s interactions with them have significantly improved and they’re bringing the company into more deals. It has been a long, winding road for Zoom’s channel program, but it looks like it’s heading in the right direction.
Zoom’s 2.0 story has yet to be told
Under former Chief Marketing Officer Janine Pelosi, Zoom came to market with a simple story – “Meet Happy” — which resonated with millions of people who were forced to work from home and then extended the happiness into their personal lives. Zoom is more than a videoconferencing company now and it can’t rely on that for its mission.
In fact, shifting the focus off video is the right thing to do as video has now become a feature, rather than a product. At Perspectives, I asked newly appointed CMO Kim Storin what should we expect from Zoom marketing in the future. Will we see a continuation of Meet Happy or perhaps a pivot to something new? The question might have been a bit unfair given she’s only been in the role a couple of months. She said she’s currently working on that, but there would be a bridge to the past, as that’s what’s always made Zoom successful.
If Zoom believes work is fundamentally broken, I’d like to see Zoom pivot from that company and be significantly more aggressive in calling out the companies that have broken work – most notably Microsoft and to a lesser extent, Google. The artificial intelligence era is not for the bashful, and Zoom can use this market transition to get people to think of it in entirely new way.
The points I’ve laid out certainly aren’t without their challenges. Though I agree with Yuan’s premise that work needs a rethink, taking share from Microsoft in its core areas of documents and e-mail won’t be easy. However, Microsoft itself did this years ago when its Windows-based products and bundled licenses took share from the likes of WordPerfect and cc:Mail. Others have tried, most notably Google, but Google continues to fumble around with its apps suite.
For Zoom, AI cracked the door open. Time will tell if it has the aggressiveness to step through and be the work disruptor. One final note: The company is sitting on almost $8 billion in cash, giving it a massive war chest to acquire companies to accelerate its journey.
