UCaaS Leadership Scorecard
The UCaaS market in North America is marked by a large and dynamic provider landscape. Mergers and acquisitions continue as providers look to gain scale, new capabilities, and long-term survivability. Additionally, traditional PBX and UC vendors such as Cisco, Mitel, Unify, Microsoft, Alcatel-Lucent Enterprise, and Avaya continue their push into the cloud either directly or through platforms sold to providers.
The top 10 providers have been fairly consistent over the past few years. Compared with our 2018 report, there have been some shifts in the rankings with RingCentral pulling away from the pack in 2018. The other noteworthy change was Windstream coming back into the top ten and Fuze just falling off. The consistency of the top providers indicates that many continue to do the right things, in some cases expanding through acquisitions and growing organically.
In this year's Scorecard, RingCentral led by the largest margin we've had in this report because of its market share position as the largest provider in North America with its Office offering, as well as the strongest financial score. In addition to its market share, RingCentral grew well above the market average, which helped cement its leadership position. RingCentral operates its own platform and is focused on meeting the needs of businesses of all sizes. RingCentral has been aggressive with customer acquisition, and has maintained an edge in service development on the UC front with enhanced meetings and team collaboration.
Mitel made another jump in this year's report because of its UCaaS installed base and solid momentum in growing its user base; it is the second-largest provider in North America. Mitel is the one traditional PBX and UC vendor in the scorecard and has operated more like a traditional equipment vendor than a nimble, pure-play UCaaS provider. Having sold the company to private-equity firm Searchlight Capital in 2018, the UCaaS business was split into its own unit in part to get the company moving in that direction. Mitel has two UCaaS offerings: MiCloud Connect, its multi-tenant-based service for the SMB market, and MiCloud Flex for larger enterprise requirements.
8x8 and Verizon came in together for the second year in a row with only 0.02 points separating them. 8x8 has consistently been near the top of our Scorecard and is a long-standing stalwart of the UCaaS market. The provider has a strong position with small and mid-market businesses and continues to expand up-market to large enterprises directly and through channel partners. This year was about executing on its new X Series of packages, which brought together UCaaS and cloud contact center into combined service packages in an effort to simplify service consumption.
Verizon is the one traditional telco that has successfully made the transition to advanced business voice services, including UCaaS. It is the third-largest UCaaS provider in North America and serves small, mid-market, and large enterprises. Verizon is in a unique position through Verizon Wireless to sell a true mobile first UCaaS service, which it has been successfully selling for well over a year. In 2018, its financial strength gave it an edge over smaller, privately held providers.
Nextiva rounds out the top five UCaaS providers, having made the largest jump in this year's report because of its strong growth, which gave the provider the largest market momentum score. The company utilizes Cisco BroadWorks for call control but has done its own development on UC and enhanced applications, which has given it control over the user experience. Although the company is privately held, it has taken no outside financing and continues to expand and invest through its own resources.
In our February 2019 Unified Communication (UC) Strategies and Leadership North American Enterprise Survey, we asked the respondents who are implementing at least part of their UC solution through UCaaS to rate criteria for selecting providers. The top four criteria, rated very important by the most respondents, are security, financial stability, service and support, and managed service provisioning. This corresponds with informal discussions with enterprises that express concern about going with a provider that is stable, can offer a high- quality service, and can support their needs to grow.
There are a handful of UCaaS providers that just miss the top 10 cutoff for this report but are worth highlighting. These providers include Fuze, GoTo (formerly Jive), NetFortris, CoreDial, Cox, Masergy, CenturyLink, Dialpad, Avaya, Fusion, Intermedia, Digium, CallTower, and TPx. These are all important providers to watch, and many are doing interesting things with applications and go-to-market strategy focused on specific verticals, market segments, and next-generation services .
One important trend in the UCaaS market is the growth of larger enterprise deals in the past five years. As adoption has risen, we see changing requirements around quality, support for hybrid environments, security, and support for SD WAN. These are public and private sector firms ranging all the way up to tens of thousands of endpoints. Many of these larger deals are with organizations that are highly distributed, where the benefits of cloud across many locations is readily apparent. With the rise of these opportunities, many providers are evolving their businesses to chase these deals down. However, not all cloud providers are suited for the rigors of large enterprise deals, and there are risks to chasing and winning them.