UC in Europe; It’s Complicated

UC in EuropeUC in Europe is complicated. When I use the acronym UC (Unified Communications) I’m taking a broad definition encompassing vPBX, hosted UC, UCaaS, and all the IVR, contact center, and web widget features that are used. The reason for such a broad definition is because enterprises use UC is so many ways, there’s a laundry list of features and capabilities from using regular phones (green button) with classic hunt groups through to multi-device clients using an array of collaboration tools. Yep, the definition includes collab features. As well as the user/enterprise portal, and the APIs to integrate the UC features into the enterprise.

Analysts and vendor marketing people will be facepalming in disgust given their definitions of ‘true UC’. Definitions generally set by what their product delivers, or major clients (everything looks like hosted VoIP when that’s your focus). In practice enterprises have a vast array of use cases, and enterprises are slowly learning that its all programmable so can be integrated into their IT systems and create their own workflows.

Between the US and Europe there are some obvious differences in UC such as contract length (US tends to be longer) and all the US tax calling codes means the billing engine for the US UC service provider is a significant undertaking. But those are quite small differences, compared to the differences with individual European countries and the diversity between those countries. The focus here is SMB (Small and Medium Business), 95% of enterprises and 60-70% of employment in most countries. Large/international/global enterprise have a different trajectory, some are more like countries these days. You can see some of those trajectories in the TADSummit 2017 presentation by Patrice Crutel from Cap Gemini.

Here is a quick whistle-stop tour of a few European countries:

  • UK, the largest and most mature UC market in Europe (even after Brexit), with a well-developed channel delivery model. Enterprises generally do not buy directly from telcos, they have a local reseller who bundles together a range of telecom and in some cases IT services, e.g. Aerial Communications, Gamma. Broadsoft and Genband (old Nortel enterprise business) are well entrenched thanks to history, and have set channel expectations on compensation.
  • Germany, the second largest market has a rich diversity of local VoIP/UC providers like Sipwise, Swyx, PlaceTel (owned by Cisco/Broadsoft), Nfor, Vio Networks (where Dennis Kersten works, who runs TADHack Berlin and a regular at TADSummit). The German telcos made a mistake common to many European carriers in thinking Cisco HCX can scale down to <1000 seats, it did not, Broadsoft did; however, its all Cisco now. When an analyst talks about the complementary products of Cisco and Broadsoft is OK to laugh at them, they overlap, its just Broadsoft won most of the SMB business in carriers at Cisco’s expense.
  • France, the telcos with their “DSL boxes” have won the small business segment, its a competitively priced ICT bundle. What’s interesting in France are web hosters like OVH have moved into the UC market quite successfully, with a broad ICT bundle. There is also a range of channels, as you would expect in France, its complicated, even for Europe 😉
  • Netherlands is a diverse market similar in some ways to the UK, but with local champions like Voiceworks. The local telcos who have bought up SMB focused providers like RoutIT.
  • Spain, developing UC market, generally dominated by telcos’ bundled UC offers. With quite low pricing for UC. But as mentioned at the start, UC is a broad term, you have to look closely at what is in the package.
  • Italy, developing UC market, with a well-developed channel model with high compensation expectations.
  • Poland, an interesting emerging UC market, where the incumbent telcos have a strong position thanks to bundling UC with the SIM and creating a defensible position. But where some enterprise now have integration / customization needs telcos can not support, creating the ‘in’ for new providers.
  • Nordics, mature mobile PBX market evolving to UCaaS. Markets like these are generally too small to have well-developed channels. So telcos and national champions have played a stronger role.
  • Ireland, again market size limited the use of channels, but there are a few well-entrenched suppliers across the telcos and national champions like Blueface – who recently merged with Star2star in the US. I think this deal heralds a wave of consolidation for 2018/2019 as the tentative forays into Europe become serious drives for sustained revenue growth.
  • Greece has a web-based aggregator in the UC business, viva.gr. An interesting model for a developing UC market, though I’ve not yet seen such a model pop up in other market.
  • As we look across Belgium, Hungary, Czech Republic, Portugal, Romania, etc.; history of the past 30 years has a significant impact on how small and medium enterprises buy telecoms / IT, the features / bundles they require, and the relationships they expect and rely upon. Relationships with people you know and trust matter when you’re increasingly running your business on those ICT platforms and your workflows are baked into them. If there’s a problem you need to have trust in someone to fixed that problem ASAP, not an anonymous IVR that stubbornly refuses to let you talk to a real person, only for the creation of a trouble ticket with no clear path to resolution.

Put simply, coming to Europe with a direct to enterprise UCaaS model will work for a niche, however, beyond that niche the go-to-market is likely on a country-by-country basis. UC in Europe; it’s complicated. At TADSummit 2018 (website coming soon) we’re going to be delving into this and sharing case studies from local champions on their recipes for success.

There are exceptions to the above statement. Let’s take Dialpad as an example. Their current strategy is targeting early adopters around the world with their “Kill the Desk Phone” tag-line. In some markets most early adopters already have a UC service, adoption has moved onto the early majority. Dialpad’s Kill The Phone Bill, once it moves beyond the Bay Area, will resonate well in some European markets, e.g. in France, as the competitive bundles mean businesses consider telephony as “free”.

But Dailpad’s home-run in Europe will happen on the back of G-Suite when Google buys them, you know its going to happen. G-Suite has broad based adoption across large, medium, and small businesses in Europe; and is in many telco and channel bundles. So Telcos, while you think your SMB telephony revenues are safe as G-Suite doesn’t do voice and Hangouts sucks, you’ll find those billions of Euro in SMB telephony eroding as DialPad is integrated regardless of what version of the G-Suite bundle you offer locally. Being bought by Google as a telecom focused company is a rather rare situation, Dialpad is an exception, for the rest understanding the complexity of UC in Europe is critical to success.

Thanks to everyone who chatted with me over the past month on UC in Europe :)

5 thoughts on “UC in Europe; It’s Complicated

  1. Patrice Crutel

    Hello Alan,
    Continuing to exchange with you…

    Looking at big groups being present in several countries, one of the key requirement is that an employee from country A point to an office in Country B, the employee must benefit from billing of the Country B. That means that its SIM card must be able to be reprogrammed. It’s a feature that can be only provider by international operators or MVNO/E. Otherwise this is also the capability provided by eSIM natively. Personally I do think that ESIM is THE SOLUTION relevant for UC. It also allow easily a Big Group to be independant from the operators. I do see souci requirement today when discussing about UC.

  2. Patrice Crutel

    Additional relevant feature is the usage of wifi or Private LTE for employees of a Group from different subsidiaries discussing together: can allow a full internal discussion within subsidiaries of a Group without any operator invocation.

  3. Dominic Black

    Hi Alan,

    Interesting analysis here, we’ve been conducting research on the Western European UC market for the last 3 years and broadly agree with some of your statements on the individual markets. What you touched on regarding the wave of consolidation is going to be a key factor for development of these markets as larger established US providers enter European marketplaces. 8×8, Ringcentral and Fuze have all entered (albeit with different strategies) and the last year has seen EvolveIP (bought Mtel) and Star2Star (Blueface merger) acquire to gain European market presence as well as European providers expand out of their territories. Would be keen to continue to have a conversation around this further if you are interested?

  4. Adam Macgill

    Slack should also be considered and how it fits in the channel eco-system. If google don’t get slack then they might like to look at discord – currently a consumer platform but has the right engineering to work well with g-suite.

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