RingCentral and the Elephant in the Room

RingCentral and the Elephant in the Room

By Phil Edholm August 25, 2015 1 Comments
Phil Edholm PNG
RingCentral and the Elephant in the Room by Phil Edholm

In the Unified Communications and Collaboration space, and even in the VoIP and telephony markets, there is a huge elephant in the room…Microsoft. All signs are pointing to Microsoft being a major player in the space. Collaboration is one of three pillars for Microsoft strategy as envisioned by the new CEO, Satya Nadella. And it is clear that Microsoft is winning a lot of converts. Surveys by Infonetics and Nemertes show that 60-70% of North American organizations have some form of Skype for Business (Skype4B, the product formerly known as Lync) deployed in their environment. And Office 365 (O365) is exploding, with estimates of 50-70 million subscribers by the end of 2015, many of whom get the advanced Skype4B features of the “Enterprise CAL” as part of their offer (everything except for voice features and PSTN calling). And Microsoft has clearly positioned that Skype4B will be a viable enterprise PBX replacement at some point, even discussing a cloud PSTN access and telephony feature offer for O365 customer later this year. So, in many ways, Microsoft looks like a major competitor for any UC, cloud, or telephony vendor.

However, today RingCentral announced a new partnership with Microsoft to enable O365 users to integrate their O365 environment to the RingCentral VoIP cloud telephony system. The integration is at the Office level, not with Skype4B. So users can now activate calls using RingCentral from within an email or an Office document. Contacts are linked between the two systems and RingCentral communications events are integrated to the Outlook calendar. For O365 users this is an easy-to-understand integration. And it is important to many cloud telephony users as I believe there is a high degree of correlation between O365 users and cloud telephony users. The underlying characteristics for adoption of each are very similar: a large number of desktops with PCs and therefore network connections, a high speed Internet access connection (ISP), and a desire to use cloud-based subscription purchase versus licensing for technology acquisition. In fact, I estimate that, in the SMB space, there is a 50% or higher correlation between the cloud telephony and O365 adopters.

While it is clear that integrating to O365 is mandatory for RingCentral to accommodate their customer, the elephant is now in the room. Both the strategy and the market leave a number of questions unanswered. If it is critical for a large percentage of cloud telephony adopters to integrate their telecomm solution with O365, what happens when Microsoft announces their capability to offer the PSTN access/voice features as an extension of O365? Essentially RingCentral has endorsed that integration between the VoIP cloud telephony platform and the personal productivity software that is in O365 is essential for many users and organizations. The result is that many organizations will see buying those together. How will this impact cloud offers going forward? How will an O365 integration offer from RingCentral or another cloud VoIP vendor be differentiated from a Microsoft O365 telephony offer? Will users have both Skype4B and RingCentral in their Office apps? Which communications will they choose to use? While the majority of workers, even in the US, are not the Knowledge workers that use the personal productivity tools of O365, there are Knowledge workers in all organizations and this will drive the procurement process to some extent (for more information about Knowledge, Information and Service workers and the relationship between personal productivity software and role, read the PKE Consulting White Paper).

It would seem that the real Elephant in the Room is how to differentiate between a cloud telephony offer and a Microsoft extension of O365 through Skype4B and the emerging PSTN capabilities that Microsoft will offer. Clearly, RingCentral is taking the first step of O365 integration, however that is clearly only part of the solution as Microsoft will do an excellent job of integrating Skype4B and O365 together, probably in ways that are not available to partners though an API. It will be interesting to see how cloud telephony vendors like RingCentral position themselves as the elephant gets bigger. As we all know, the challenge of living with an elephant is how to make friends with it, but not to have it sit on you.


1 Responses to "RingCentral and the Elephant in the Room" - Add Yours

Art Rosenberg 8/27/2015 12:41:29 PM

As premise telephony gets subsumed by mobility, UC and IP connectivity, it is really only a matter of time before all the PSTN technologies get replaced by cloud-based, applications that will provide context for all forms of person-to-person interactions. Needless to say, it won't happen overnight, so next-gen cloud VoIP providers like RingCentral will be making the most of providing organizations and service providers with migration technologies that integrate the old and the new.

Someday, there will only be the "new!"

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