Skip to main content

Together, Zoom and Five9 shape a new market


The News

On July 18, 2021, Zoom Video Communications, Inc. announced the acquisition of Five9, Inc. in an all-shares transaction. The transaction values Five9 at around $14.7 billion.

According to the press release “the acquisition is expected to help enhance Zoom’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the $24 billion contact center market.”

According to Eric S. Yuan, CEO and founder of Zoom, the company is “continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers”. He continues with “enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers”.

Rowan Trollope, CEO of Five9 adds that “businesses spend significant resources annually on their contact centers, but still struggle to deliver a seamless experience for their customers”. Trollope will become a president of Zoom and continue as CEO of Five9.

Zoom expects the acquisition of Five9 to be “complementary to the growing popularity of its Zoom Phone offering [...] The combination of both firms also offers both companies significant cross-selling opportunities to each other’s respective customer bases”.

As especially Rowan Trollope emphasizes upon repeatedly in the acquisition briefing, this acquisition is about accelerating growth by combining the respective assets, software as well as customers.

The bigger picture

The trend towards call centers in the cloud has been there before and it has been amplified with the Covid pandemic. Connecting phone lines from diverse and independent locations into one telephony system gets greatly simplified with a cloud-based infrastructure and the required upfront investments are far lower.

At the same time, the desire and need for unifying personal as well as corporate communication have increased tremendously, for the same reason.

Last, but not least, it can be assumed that workforces will stay in a hybrid mode, with people having the ability to work from anywhere.

Zoom profited from the Covid pandemic in a phenomenal way and was probably one of the biggest winners. However, since October 2020, its stock price went down from a peak of nearly $560 to around $360 (July 22, 2021). This can be largely attributed to businesses having invested into communications tools and strong competition. Especially Microsoft has upped the ante considerably and invested heavily into its Teams software.

From an economy point of view, we are looking at the conversion of some markets in the ongoing platform game. We have the call center software landscape and the communications and collaboration software landscape – usually referred to Call Center as a Service and Unified Communications as a Service. 

My Analysis and PoV

Zoom itself has evolved a lot from its beginnings. 

Looking at the Communications as a Service landscape, one can see that most of the major vendors have messaging, telephony, and meetings in their portfolio. A small number, e.g. Fuze or 8x8 also offer call center functionality. Microsoft Teams offers collaboration and Cisco’s Webex supports collaboration and call center. 

Zoom, without Five9, offers neither of these functionalities, which makes it vulnerable, especially in direct competition with a software that is as ubiquitously available as Microsoft Teams. The vulnerability is the risk of being pushed into a niche instead of staying the top dog that Zoom still is at least in the videoconferencing/video meeting market. Zooms reduced, yet still impressive, growth, is indicating this vulnerability. 

On the other hand, the company is awash in cash and can draw off its still high valuation, which it did to acquire Five9.

Zoom is a top dog when it comes to meeting solutions, with its additional solutions it plays pretty strong, but not decisively so, in the market of communications solutions. Five9 is a serious player in the cloud call center software space. 

With these areas merging, both players have lots of parts that the respective other does not have. Think video call centers, or video assisted support and remote control. Combining this is a strong value proposition in the short- to midterm.

I do not fully buy in to the story of the proposed “omnichannel engagement platform” as I do think that some crucial aspects, like the ability to identify and profile a customer and her complete context, are missing. I rather see an omnichannel engagement execution platform. Add the profiling part, as Twilio did with acquiring Segment, and we have a really compelling story, especially if Zoom Phone takes off. Having access to the call center, consented customer profiles, and the access to the consumer customers’ devices via Zoom Phone could totally change the game. 

Until this happens, I do not see much that hasn’t been done before, although the respective offerings of Zoom and Five9 may well be better than the ones offered by the companies I mentioned earlier.

Still, a good, yet expensive, move that raises the appetite for more.


Last Year's Top 5 Popular Posts

SAP CRM and SAP Jam - News from CRM evolution

During CRM Evolution 2017 I had the chance of talking with Volker Hildebrand and Anthony Leaper from SAP. Volker is SAP’s Global Vice President SAP Hybris and Anthony is Senior Vice President and Sales GM - Enterprise Social Software at SAP. Topics that we covered were things CRM and collaboration, how and where SAP’s solutions are moving and, of course, the impact that the recent reshuffling in the executive board has. Starting with the latter, there is common agreement, that if at all it is positive as likely to streamline reporting lines and hence decision processes. First things first – after all I am a CRM guy. Having the distinct impression that the SAP Hybris set of solutions is going a good way I was most interested in learning from Volker about how there is going to be a CRM for S4/HANA. SAP’s new generation ERP system is growing at a good clip, and according to the Q1/2017 earnings call, now has 5,800 customers with 400 new customers in the last quarter alone. Many

SugarCRM explains how the third wave of CRM adds value

The news On October 4 and 5, 2023, SugarCRM held its Connected event followed by an analyst summit in London. The first day – Connected – was targeted mostly at customers while the second day focused on analysts.  The event started off with an intense speech by Katherine Grainger, DBE , a British rowing champion. Her core messages were about team bonding, the importance of communication, continuous improvement, and perseverance (well, at least that’s my take). This was followed by information about what is new in the software and, more importantly, a customer panel.  The main sponsor, Mobileforce , placed some words about the partnership. In addition, the analysts had 1:1s with customers, partners, and Sugar executives. The second day was filled with information targeted at analysts. CEO Craig Charlton and his executive team shared about financial status, strategy and more in-depth product news. Sugar being a privately held, VC backed company, the financials are of course under NDA, s

How to play the long game Zoho style

The news On February 7 and 8 2024, Zoho held its annual ZohoDay conference, along with a pre-conference get together and an optional visit to SpacX’s not-too-far-away Starbase. Our guide, who went by Chief, and is probably best described as a SpaceX-paparazzi was full of facts and anecdotes, which made the visit very interesting although we couldn’t enter Starbase itself. The event was jam-packed with 125 analysts, 17 customer speakers, and of course Zoho staff for us analysts to talk to. This was a chance we took up eagerly. This time, the event took place in MacAllen, TX, instead of Austin, TX. The reason behind this is once more Zoho’s ruralization strategy, transnational localism.  Which gives also one of the main themes of the event. It was more about understanding Zoho than about individual products, although Zoho disclosed some roadmaps. More about understanding Zoho in a second.  The second main theme was customer success and testimonials. Instead of bombarding us with presenta

Relevance, reliability, responsibility are key for AI – the SAP way

The News A lot is going on in the SAPverse during October and the early days of November 2023. First, SAP conducted its CXLive event with CX-related announcements, then the company reported good Q3/2023 figures, a new version of its CX software that includes new generative AI capabilities got released and lastly, it executed its SAP TechEd event with a good number of AI-, BTP-, and ERP related announcements. As this is quite a lot, I covered the CX world in a previous post and will cover the TechEd related news in this post.  So, what is new at SAP TechEd ? For one, it is enough to fill a 17-page pre-event news guide that SAP sent out. SAP certainly is able to stack up the news for major events. I took the liberty to ask ChatGPT for a summary of the document, which I slightly edited afterwards. Here we are: AI and Development Environments: ·       SAP introduces SAP Build Code with generative AI, improving application development and testing, while new AI capabilities are integrate

The Generative AI Game of Thrones - Is OpenAI toast?

The News This has been an exciting weekend for the generative AI industry. On Friday November 17, OpenAI announced that the company fired its figurehead CEO Sam Altmann and appointed Chief Technology Officer Mira Murati as interims CEO in a surprise move. The press release states that Altmann “ was not consistently candid in his communications with the board .” Surprised was apparently not only Sam Altmann, but also the till then chairman of the board Greg Brockman who first stepped down from this position and subsequently quit OpenAI. Investors, notably Microsoft, found themselves blindsided, too – or flat footed depending on the individual point of view. Satya Nadella was compelled to state that Microsoft stays committed to the partnership with OpenAI in a blog post that got updated on November 19, 11:55 pm. All hell broke loose. Microsoft shares took a significant hit. A number of additional senior OpenAI personnel quit. Both, Altman and Brockman, voiced the idea of founding anoth