Zoom acquires cloud-based Five9 contact center for $ 14.7 billion

Zoom yesterday announced plans to buy cloud call center service provider Five9 in a $ 14.7 billion deal. Subject to shareholder approval, the acquisition is expected to close in the first half of 2022.

The acquisition could allow it to cover its video bets after 18 months of unprecedented growth, as businesses and individual users turned to the video conferencing platform to stay in touch with colleagues, family and friends. While the need for video conferencing is unlikely to go anywhere, even with the reopening of offices, Zoom appears to be looking to capitalize on its growing customer base by expanding its services.

Steve Blood, vice president analyst at Gartner, raised questions about the move, noting that Five9 and Zoom operate in completely different markets. He sees it as a “disconnect” between the two companies and a potentially risky acquisition.

“We recognize that part of the market that Zoom is targeting is an IT leader in a mid-size or smaller company who has responsibility for all communications,” Blood said. “In this segment, it is very possible that there is a liability for the purchase of contact center technology.

“However, when you look at the business of Five9, they are focused on a smaller end of the market and a lot of their business deals directly with CX leaders who in our experience have nothing to do with the market. corporate collaboration, ”Blood said. “This is where the disconnect is for us. “

Zoom CEO and Zoom founder Eric Yuan, in a statement, underscored the pressure for “hybrid” workplaces, and said Five9 would position Zoom to grow.

“The trend towards a hybrid workforce has accelerated over the past year, advancing the transition from contact centers to the cloud and increasing customer demand for personalized and personalized experiences,” said Yuan. . “Today’s businesses not only need to empower customers to engage through their preferred channel, but they also need to empower their teams to accomplish more – with empathy, purpose and connection. the way they do business and achieve exceptional results. “

Five9 is expected to become a business unit of Zoom after the transaction closes.

Yuan said earlier this year that Zoom would seek to expand its range of communications services. Although video conferencing has remained its mainstay, the company has also launched office collaboration products, including Zoom Phone, a cloud phone system and conferencing software, Zoom Rooms.

In an interview ahead of the announcement of the acquisition of Five9, Magnus Falk, CIO advisor at Zoom, said that Zoom Phone was becoming an increasingly popular offering, with the company having sold 500,000 units in the last quarter. By comparison, it took seven consecutive quarters to sell 1 million units.

Rowan Trollope, CEO of Five9, put it this way in a statement: “Companies dedicate significant resources each year to their contact centers, but still struggle to provide a seamless experience for their customers. Five9’s mission has always been to make it easy for businesses to solve this problem and interact with their customers in a more meaningful and effective way. By partnering with Zoom, Five9’s corporate clients will have access to the best solutions, especially Zoom Phone, which will enable them to generate more value and achieve real results for their business. “

Blood said he would take a close look at several things to see if the acquisition would ultimately work to the benefit of Five9.

“We will seek continuity of leadership, continuity of people in the product development space and ensure that they can continue to deliver the things that [Five9 has] previously delivered, ”Blood said.

He argued that a name change or rebranding effort that moves Five9 to the collaboration space could be a drag for clients. Five9 consistently scores high in customer satisfaction, Blood said, and has been rewarded with good ratings and solid growth.

“If the whole Zoom affair becomes more important, and Rowen [Trollope] is dragged, this loss of momentum could be the real turning point, ”he said.

The contact center-as-a-service space is growing, Blood said; it’s up 38% per year overall, with some vendors growing over 100% – a level of growth it has never seen in 30 years.

“If the Five9 business is able to focus on developing and strengthening their customer experience capabilities, and where there is an opportunity, building something that would allow them to sell to small and medium-sized businesses would be good. If they lose that focus that got them where they are today with the CX leaders, then that won’t be a good thing, ”Blood said.

Copyright © 2021 IDG Communications, Inc.

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