Zoom hopes to continue its growth by expanding into more product categories and capitalizing on more cloud migrations to come.
Zoomtopia 2022 is now in the books, and it was nice to see the event run in a hybrid format with an in-person component after two years of being virtual only. Beyond the return of an in-person event, it’s hard to overstate just how much has changed with Zoom since 2019, the date of the last in-person Zoomtopia. The company closed its fiscal 2019 with $540 million in revenue and was a video-only company. Today, its revenue is a shade over $4 billion, and it has expanded its products to include phone, contact center, events, webinars, and more services.
Obviously, massive change isn’t limited to Zoom. The pandemic, hybrid work, social justice, digital transformation, the great resignation, a war, and a possible recession have completely reshaped the business landscape, leaving IT and business leaders scratching their heads as to how to proceed. While the future of work (and the world) has many uncertainties, one thing is known — communication and collaboration tools like Zoom will play a critical role.
Because of this, I’ve been eagerly anticipating this year’s Zoomtopia to see how Zoom is positioning itself, what innovations it’s made and what the future might look like, and here are my top five thoughts.
1. Zoom’s Pace of Innovation is Accelerating
I read Dave Michel’s post where he stated that “not much” innovation was announced at Zoomtopia. That’s completely incorrect. In fact, equity analyst Catherine Trebnick of MKM Partners titled her investor note, “Zoom Investor Day – More Like Product Innovation Day.” The big news was obviously its entry into the email/calendar market, which I’ll discuss in a bit, but in addition to that, the company also announced several new features, including:
- Live captioning and multi-language support for Zoom Meetings
- Its eCDN, Zoom Mesh for webinars and virtual events
- Zoom Spots, which enables better co-working and team building
- Zoom Contact Center Virtual Agent
- Zoom Clips, its asynchronous video feature
- Zoom IQ for sales personalizes speech and provides analytics
- Enhancements to Zoom Team Chat
- Intelligent director improves virtual meeting participation
- Digital experience monitoring with Palo Alto Networks and Zscaler
- Zoom Avatars and more
Some of these features are market-leading, some catch-up, and others are enhancements, but that’s to be expected. The point is Zoom is continuing to add in both adjacent markets (phone, contact center, email, and calendar) and in features that strengthen the product, and they’re doing it faster today than in the past.
For further insight into Zoom Spots, make sure to check out this No Jitter Shorts video:
2. Zoom has Plenty of Room for Growth
The bear case on Zoom (and its peers) is that Microsoft Teams is eating the world, and there isn’t much room for growth. However, the industry is at the start of the cycle of moving collaboration to the cloud, and years of growth are left. If one takes Zoom, RingCentral, Webex, and Microsoft at face value as to the cloud-phone seats that they claim to have that totals around 20 million or so. There are over 400 million business desktops with phones, meaning the market is about 5% taken. This isn’t a matter of Zoom versus Ring or Webex versus Teams. It’s more about getting that massive legacy base to move, and that will create a rising tide for everyone — and that’s just calling. The overall cloud collaboration market is much bigger.
At Zoomtopia, Zoom held an investors event, and I had a chance to talk to a few of the financial analysts that were there. Zoom management highlighted that it expects its total addressable market (TAM) to reach $125 billion by 2026, which is just under four times its pre-pandemic TAM. Zoom gave details on this, as in 2026 cloud contact center would reach $21 billion, webinars/events $4 billion, cloud calling $37 billion, UCaaS $45 billion, and conversational AI $14 billion. One can argue the exact numbers, but the point is the market opportunity for companies like Zoom is massive, and there is plenty of market share to go around. The question is how much of the pie each vendor can grab.
3. Zoom’s End User Appeal is a Differentiator
Competing in a market with so many other vendors can be quite daunting, particularly when the market has two 800-pound gorillas. Of all the vendors, Zoom is the one with the strongest end-user pull. I’ve talked to businesses that decided to use a competitive vendor, but the employees make a strong push for Zoom, and that eventually outweighed the original decision by the IT organization.
Historically, few tech companies have had meaningful consumer and corporate revenue streams, but Zoom has managed to dance that line. Its brand preference with the worker can create back doors into companies where the corporate standard may be Teams, but Zoom is brought in for something like business-to-consumer interactions. This gives Zoom an excellent opportunity to land in a company departmentally and expand from there.
4. Zoom is No Longer a Video-only Company
Coming into the pandemic, everything about Zoom was video. In fact, the legal name is still Zoom Video Communications, and it rode that and “Meet Happy” through the pandemic as people had a thirst to maintain digital proximity, even when physically distant. Many of its new product names also leverage its video heritage. For example, Zoom Webinars was originally called Zoom Video Webinars.
At Zoomtopia, I discussed this shift for Zoom with CMO, Janine Pelosi, and she told me that Zoom’s association with video is both a curse and a blessing. When everyone needed video, Zoom was there, but now she and her team are working hard to change the perception. The new Zoom “slinky” branding (see below image) is part of that, as it shows the breadth of what Zoom does. Pelosi is looking at this as part of Zoom growing up, and the company is well positioned.
“It’s amazing to think that at our age, we are just getting started. It’s so rare to have a company that started from an enterprise business use case to have the consumer scale that we do as well as the consumer love and adoption,” Pelosi said. “Now, we need to bring those two aspects together and be explicit about it. That’s the idea behind the slinky as you cannot look at it and see there’s more to Zoom than video.”
I consider Pelosi one of the best CMOs in the industry and look forward to seeing what she does next.
5. Zoom is Not a Platform Company Yet
Platform, platform, platform — as analysts, we hear every UCaaS and CCaaS vendor call themselves that. From my perspective, this is the most overused word in communications, as none of the vendors are platforms yet, but becoming one is important to growth. Every software or SaaS vendor that’s become big has made the shift.
Think of Microsoft (ironically, Teams is not a platform), Salesforce, Oracle, and others of that ilk. What those companies have done is create a platform that enables others to build apps and services on top of the underlying service. If done correctly, the ecosystem partners create economic value and pulls through the underlying platform, and Zoom and its peers are not there yet. I do believe this is a key area of focus for Zoom, and the company has a strong set of APIs and developer tools to build on.
When I go to vendor events, I walk around the expo halls to see what kind of ecosystem the company has. Zoom had device manufacturers, monitoring companies, and network providers but did not have any application providers that run on Zoom and treat it like a communications operating system. From my discussion with the company, they are aware of the importance of this, and I expect to see more investment and activity in the Zoom platform, which should equate to a bigger and more diverse ecosystem and future Zoomtopias.
For Zoom, this Zoomtopia can be considered its debutante ball. In 2019, the company was still relatively young and trying to prove its value as a business tool. As the old adage goes, “right place at the right time,” and Zoom jumped on the opportunity it was given and aggressively expanded its product line. Looking ahead, I would expect to see the pace of innovation accelerate setting up an even bigger Zoomtopia 2023.
