Last week, 8x8 CEO Samuel Wilson called out NICE and RingCentral during the vendor's latest earnings call.
During his opening comments, Wilson described NICE’s recent entry into the UCaaS market with a disruptive $5-a-month offering as a “marketing splash”.
Later, during the Q&A, when asked a follow-up question about NICE’s customer overlap with 8×8, Wilson alluded to NICE’s go-to-market partner, RingCentral, as a “certain company in Belmont, California, that starts with an ‘R’ and ends with ‘Central'(…) who suddenly decided they want to go in a different direction.”
Wilson also highlighted “vendors with subpar products that they like to talk about a lot using price” when answering a separate question about the impact of NICE’s new solution on 8×8’s sales.
"These are subpar products," Wilson said. "I’d go so far as one customer called them crappy products. But it just slows down the sales cycle because they’re going to run a PoC, or they’re going to do whatever. I get what they’re doing; they’re just trying to use price to disrupt the market, and it just takes time to work our way through that. That’s what we see. We just see bad products at low prices, and you have to sell through it.”
Is NICE's offering causing such a "splash" that it's impacting sales across the market?
The UCaaS/CCaaS Combo
"When NICE launched its service, they were pretty vocal about being able to disrupt it at $5 a month," Zeus Kerravala, Founder and Principal Analyst at ZK Research, said to UC Today. "RingCentral's native UCaaS offering is still pretty new where I know 8x8 has spent a lot of time and a lot of years building its out."
"So I'm guessing (Wilson) is trying to validate the fact that you just can't jump into the UCaaS or the CCaaS business overnight and be as competitive as somebody who's had their offering for a while. I think (Wilson's) point is, 'Yeah, the vision's right. But we've been doing it longer than both of them.' You can't just jump into it and have a mature product."
Kerravala highlighted that, in some ways, NICE and RingCentral have taken the same approach to the same problem: customers want an integrated UCaaS and CCaaS stack. "NICE did it with CCaaS first and then added what they're considering a commodity UCaaS service. Then Ring, by all accounts, one of the leaders in UCaaS, added its own CCaaS product."
"If you look at the Ring strategy, it was having OEM (original equipment manufacturer) NICE for a long time, but that eventually hit some limits. That's why it had to go build its own. NICE has taken the same approach with an OEM of 3CX. I think if NICE was to ever really want to lead with that product, it'd have to build its own. But right now, NICE is just selling that product to its install base. You've got to be a CX1 customer to buy it."
For Dave Michels, an industry analyst and expert with TalkingPointz, two simultaneous narratives are at play, including the "combo play of UC and CC" that Kerravala alluded to.
"The way it's been for some time is that the smaller vendors offered the combo play, and the big CCaaS providers didn't," Michels explained to UC Today. "Genesys, NICE, and Five9 were all CCaaS specialists. UCaaS was beneath them. RingCentral resold NICE and targeted these smaller prospects as NICE was focused on the larger opportunities."
Michels noted that most UCaaS providers have now expanded into CCaaS, but the big CCaaS companies were largely unphased. Then, NICE launched in UCaaS.
"That's a big change," Michels said. "It's more like the ININ model, a simple offering that won't meet everyone's needs and will only be sold as a bundle."
"Interactive Intelligence (ININ) had a simple UCaaS/voice offer that always showed up weakly in the (Gartner) Magic Quadrant, but they didn't care. Customers who didn't need extensive features were happy with a limited offer. For ININ, it was practically incremental, free revenue as the effort to deliver it was simple. Genesys killed that offer after it acquired ININ."
"(NICE) launched it at what appears to be a disruptive price, but as it's bundled, it's hard to determine the real price. 8x8 (and others) had a simple differentiation from NICE (and others). It had UC/CC and competitive prices. NICE complicated that, but there's still decent differentiation."
UCaaS as a Commodity
As well as differentiation and UC/CC combinations, another key narrative both analysts cite is UCaaS's potential commodification — a possible market trajectory Kerravala has been worried about for a while. If everyone has the same feature set, then "it's really just the vendor with the lowest price that wins".
"I think the fact that Microsoft's been able to sell Copilot for $30 a month pretty successfully shows that there is still room for innovation, and customers will pay for it," Kerravala expanded. "But you've got to be able to keep that innovation. I've long felt that there isn't really any industry, except for maybe PCs, even there, that's actually fully been commoditised."
