Zoom zooms in on contact centers and capitalizes on its momentum in the enterprise

Last week, in the largest acquisition deal in the contact center industry, Zoom announced its intent to acquire Five9 for $14.7 billion -- a solid move.
Written by Forrester Research, Contributor

Zoom went big and didn't go home. Last week, in the largest acquisition deal in the contact center industry, Zoom announced its intent to acquire Five9 (a cloud contact center provider) for $14.7 billion -- a solid move by the most recent tech vendor to have become a verb in our vernacular (Google, Uber, Venmo, etc., being others). Zoom likely evaluated several smaller and less expensive contact-center-as-a-service (CCaaS) providers (of which there are many), but it ultimately chose to leverage its stock value to "go big" with Five9. 

Zoom's intent to acquire Five9 comes at an interesting time for the company. In 2020, Zoom more than tripled its revenue, and while the company continues to grow in 2021, its core market of videoconferencing has shown signs of commoditization, with increased competition from Cisco, Google, Microsoft, and others and as offices reopen and in-person events resume. Moving into an adjacent market such as contact centers adds value to Zoom's portfolio and builds on its momentum in the enterprise as: 

  • Cloud migration will continue to be a growth area. While the pandemic accelerated the migration of contact center systems from legacy, complex, on-premises software to CCaaS, Forrester estimates there is still over 60% of the market remaining to transition to cloud. 

  • UCaaS and CCaaS are complementary solutions. Zoom has expanded into other adjacent markets from videoconferencing, including unified communications as a service (UCaaS) with Zoom Phone and virtual events with Zoom Events. As CCaaS is often sold with UCaaS, this is a natural category for Zoom to jump into, as attach rates in double-digit percentages have been seen among other vendors providing both. 

  • Established partners are needed to win the larger contact center deals. As the CCaaS market has now penetrated higher-end customers (5,000-plus seats), Five9 has nurtured leading partners such as AT&T and Deloitte to boost its abilities to pursue these complex opportunities. 

What This Means For Five9 And Zoom Enterprise Customers 

As in any acquisition, the potential for disruption exists. Five9 customers will benefit from increased investment and access to consumers already using Zoom, yet Five9 customers will need to monitor the progress of the integration and its impact on support teams, customer success programs, and product roadmaps. For Zoom customers, there could be bundling benefits if they are looking at CCaaS, but that will not occur until the merger is completed and the two firms figure out combined licensing plans. 

While Zoom is a leader in videoconferencing, Forrester doesn't see this leading to mass adoption of video in the contact center -- as face-to-face video in customer service will remain a niche area. Zoom's ubiquity among consumers and easy-to-use meeting experience, however, could provide an advantage for brands looking to drive deeper customer engagement with video in some use cases but overall a sharpened focus on making experiences for customers, knowledge workers, and agents more "frictionless" -- what seems to be the mantra for Zoom. 

This post was written by Vice President and Principal Analyst Art Schoeller, and it originally appeared here

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