As companies adapt to remote and hybrid working models, communication and collaboration tools become even more critical to success. In this environment, Unified Communications as a Service or UCaaS enables employees to communicate from anywhere and on any device. It spans multiple communication methods including voice, video, text, messaging and social media and is designed to be both cost and labor efficient.
RingCentral, which offers enterprise-class cloud communications, video conferencing and contact center solutions, bills itself as the largest and fastest growing pure-play UCaaS provider. This week RingCentral announced two important partnerships – one with AWS, the other with Avaya. Let’s dive into these announcements and examine what they mean for RingCentral.
Amazon Web Services answers the call
RingCentral has entered into a strategic collaboration with Amazon Web Services (AWS) to help companies accelerate their cloud implementations and transform how they communicate with customers and employees. As part of this multi-year partnership, AWS offers its customers access to RingCentral MVP (Message Video Phone) and RingCentral Contact Center – unified communication platforms that integrate team messaging and video conferencing with a powerful cloud-based phone system. AWS also offers customers access to RingCentral’s contact center solution.
“This announcement with AWS marks the beginning of an important collaboration for RingCentral, where we will work together to deliver technologies and innovations that improve business communications for today’s hybrid workforce of knowledge workers and frontliners,” said Mo Katibeh, President and Chief Operating Officer at RingCentral. He went on to say that the partnership will align RingCentral’s business communications service with “AWS’s unmatched security, processing power, data storage and privacy.”
Avaya Cloud Office
Meanwhile, RingCentral and Avaya have extended their multi-year partnership, which now includes minimum seat commitments and a more aligned incentive structure to accelerate migration to Avaya Cloud Office (ACO). The deal benefits RingCentral because Avaya will only be compensated if ACO seats are sold without RingCentral having to pay upfront commissions.
The terms of the enhanced agreement are designed to provide additional opportunities for RingCentral and Avaya to maximize customer value. The partnership has also expanded to include additional go-to-market models, allowing Avaya to sell ACO directly to its installed base.
ACO enables organizations to connect their office, remote, and mobile workers to a single system, allowing them to collaborate from anywhere on any device without having to switch platforms to get work done. 200+ 3rd party apps like Jira, Marketo and PagerDuty are pre-integrated to achieve this.
ACO is available in 15 billing countries and can be expanded to more than 40 countries via the Global Office feature. The system provides an all-in-one solution for calling, meeting and messaging with incoming numbers (local or toll-free) for over 100 different countries. Operationally, this enables cross-border communication with employees and customers, regardless of device and on a single invoice.
The two companies also said they plan to make additional investments to further differentiate ACO and expand its integration with other Avaya products.
Wall Street’s reaction and RingCentral’s optimism
Those two important partnership deals, on top of a quarterly earnings announcement, provided a wild ride for RingCentral this week. Following AWS’ announcement on Wednesday, the stock rallied — up about 7%. However, it then fell about 20% after the company issued guidance for 2023 that missed Wall Street’s growth expectations. Avaya’s Chapter 11 bankruptcy filing this week likely contributed to RingCentral’s mixed results, although the two companies appeared to have found a solid solution despite Avaya’s restructuring.
Vlad Shmunis, Founder, Chairman and CEO of RingCentral explained why he is not concerned: “As part of its recapitalization, Avaya emerges stronger and better positioned to deliver the world’s largest installed base on-premises Avaya Cloud Office from RingCentral, the best , to migrate UCaaS destination for every Avaya Unified Communications customer.”
Shumis was upbeat about this week’s earnings call, stating, “We are in a select category of SaaS companies with over $2 billion in recurring revenue, and our fourth quarter results reflect our ability to to deliver healthy growth and increasing profitability as we continue to scale,” he said. “We’re doing well in the current environment given our product leadership, providing customers with the market-leading UCaaS platform as well as an integrated CCaaS solution.”
Cloudy and mostly sunny forecast ahead
Providing employees with cloud-based communication and collaboration tools will continue to be a priority for many companies. Employees increasingly demand flexibility and are willing to trade jobs for companies that offer them. At the same time, employers benefit from remote work support by accessing a broader talent pool. Ultimately, the reliability and scalability of the cloud enables employees and customers to work together in new ways, supporting a more diverse workforce from almost anywhere with minimal operational overhead.
RingCentral is benefiting from this trend as it is the market leader and continues to grow in the highly fragmented UCaaS space. With the help of channel partnerships, as announced this week, RingCentral continues to expand beyond its initial success in the small and medium business market to serve a growing number of larger businesses.
RingCentral continues to be a leader in this space but needs to remain competitive and transparent with its pricing. This is especially relevant given that the company changed its SMS overage charges last year in response to changes in FCC guidelines. While the video conferencing capabilities are robust, many of the company’s bells and whistles are reserved for higher-paying customers — but that’s not always conveyed clearly. To cite an example, RingCentral needs to clarify its webinar pricing as attendance increases.
The new partnership with AWS and now more favorable relationship with Avaya supports RingCentral’s strong positioning to implement and deliver healthy growth. However, there’s no doubt that 2023 will see many customers, wary of economic conditions, scrambling for better deals as they seek to reduce costs and the number of vendors they deal with. Additionally, per seat pricing models may suffer somewhat in larger companies that have lost significant numbers of employees.
Despite those challenges — and its stock’s bumpy ride this week — RingCentral appears poised to make the most of its new partnerships in 2023 and beyond.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
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