2024 Enterprise Comms Annual Report
The new Insider Lite
This annual report took up 4 of the 10-page TalkingPointz December 2024 Insider Report. Insider Reports require a paid subscription. TalkingPointz is including it here to launch this new free email service. Both bulletins have separate subscriber lists.
Annual Report
2024 was a year of resets for the enterprise communications industry, marked by significant leadership changes and continued readjustment to a post-pandemic world. The “new normal” industry also includes increased financial pressure, shorter timelines, and less innovation.
Let’s start with resets. In 2024, we saw leadership changes at Avaya, Cisco Webex, GoTo, NICE, Twilio, and Vonage. There was a run-up in 2023, too, including 8x8, Calabrio, Five9, RingCentral, and Sangoma. Microsoft changed several titles as staff became more visibly connected to AI. It will be interesting to see how fresh perspectives impact UCaaS and CCaaS.
It has become harder to make money in enterprise comms. Valuations are low. Five9 was one of the performing stocks in 2024. Dialpad, Genesys, and Talkdesk are on track for IPOs in a fiercely competitive environment with some of the world’s largest tech companies.
AI
The sector has gone all-in on AI, and it was the dominant theme at every event with a UCaaS or CCaaS keynote. Despite the frenzy, AI’s impact has been somewhat muted, mostly geared around summarization. The vendor landscape remains unaffected by AI (so far). The excitement and fear about AI are mostly about reducing staff. AI will impact most sectors, including customer service, agent staff, software developers, and comms vendors.
AI is something the providers can’t ignore, but it’s going to be tricky. It threatens the sector because AI is necessary, expensive, and likely impossible to differentiate. It relies on outsourced expertise, which may become a significant and unpredictable cost.
There was so much excitement about AI in 2024 that many forgot the dire warnings in 2023. The US State Department reported that AI poses an extinction-level threat to humans. Last year, more than 1,000 technology leaders and researchers (including signatories such as Elon Musk, Steve Wozniak, and Rachel Bronson) urged a pause on AI. Science fiction has provided plenty of warnings (for centuries) that hard programming bots with human-friendly priorities are difficult to do. Asimov’s Robot series gave many examples of how his Three Laws of Robotics can backfire.
The year was filled with impressive technological leaps, endless hype, and frequent misfires. It’s been nearly a three-year ride, but it’s finally becoming clearer what this tech can and can’t do. It started with the power of the internet, became the power of the database, and now is the power of automation through integrations. None has yet delivered on the automation promise.
Throughout the year, AI expanded and morphed. The big use cases are summarization, insights, and Agent Assist and CX self-service. The solution stack is growing and is expected to eventually enable better automation. There were many more announcements of agentic solutions than GA releases because a gap still exists between expectation and reality. Still, we are beginning the shift from gee-wow to outcomes.
Post-Pandemic Normal Emerges
It’s remarkable how things changed during the pandemic. Because the end of the pandemic was gradual, the actual new normal became clearer in 2024. Enterprise comms have always promised a rosy, optimistic future. Recent promises have included the ability to work from anywhere, meetings in a browser, and live transcription. We used to talk about the “future of work.” Suddenly, everything became table stakes as the future arrived. The dog caught the car, and (temporarily) the innovation sector starved.
One big change is the emergence of Microsoft Teams as a dominant force. It was a nascent product pre-pandemic, but Microsoft iterated rapidly, and Teams became the defacto standard. It became so dominant that the EU has raised antitrust concerns. We have not seen such a dominant communications vendor in the US since the Bell System. See: UCaaS is a Teams Sport.
Microsoft’s big push on Teams is likely behind us. It has secured a strong position with no close share competitors. (The EU’s antitrust claims likely sent shivers across Redmond.) Microsoft seems to have shifted its focus and priority to AI and Copilot. If Microsoft gets its way, subscribers will have many Copilots (more than SaaS apps) helping customers. TalkingPointz predicts the start of a long-term shift toward other UCaaS providers, including SP-branded voice offerings.
Social media shifted toward tribes during the past few years. Social networks provide so many alternative realities that they exacerbate our inability to agree on the problems to solve. There is serious doubt over many topics, such as vaccinations and planet roundness. It’s hard to believe AI can solve the big problems that its fans expect, such as climate change, when half the US doesn’t believe the climate is changing.
Zoom is very different post-pandemic. It was a video star at the pandemic's start and has shifted toward workflows. Also, its alliances with Avaya and Mitel have bridged the divide between legacy systems and cloud-delivered solutions.
CX: Here We Go Again
There are two ways to solve the dog-catching-the-car problem. One is to re-spark the innovation engine. This will presumably happen in UCaaS soon. The convergence of UCaaS and mobility (UCaaS Mobility 3.0) is a good contender. The other way is to chase a different car, and that’s what’s occurring in CCaaS.
During the pandemic, the contact center did become the front door and worked well. Yet the entire CC sector has agreed to become CX. This change, combined with reimagining the entire solution with AI, sets up the sector for significant changes moving forward.
CC vendors have always enjoyed significant barriers to entry, but suddenly, all that glitters is AI. The problem here is twofold: there are a lot more AI companies than CC companies, and most of the CC providers are not AI companies. The bigCos are coming: Google, Microsoft, and Salesforce aim to join Amazon in the CX space. This could be another “be careful what you wish for” scenario as it invites many more adjacencies to compete.
RTO-Debate
Where to work is a fascinating post-pandemic debate topic. The pandemic provided us an It’s-a-Wonderful-Life-like opportunity to see an alternative reality that worked better than most expected. Note that this was done indiscriminately (impacting all but essential roles) and without planning. We now know, beyond doubt, that remote, distributed teams do work.
Yet the debate persists. There’s tremendous RTO pressure. Nearly 20% of all outstanding US commercial mortgage loans will need refinancing in 2025, which means that keeping employees at home just might cause a financial crisis. Last October, Bloomberg reported that buyers of top-rated commercial mortgage-backed securities are suffering losses for the first time since the 2008 financial crisis. “Of all the hot spots across global finance that were upended by the pandemic, few remain as fragile as the commercial mortgage-backed securities market.”
In April of 2020, Julio Vincent Gambuto predicted: “the greatest campaign ever created . . . an all-out blitz to make you believe you never saw what you saw.” During the pandemic, our planet got healthier. Carless highways and a huge reduction in carbon and pollution helped restore our planet. We saw fish return to the canals in Venice and coyotes on the Golden Gate Bridge.
The pandemic was extreme, but clearly, some positions and some activities within positions can be done (better) remotely — especially with some planning.
RTO and Climate
While the pros and cons of in-person collaboration make for an interesting debate, we must also consider the pros and cons of reducing carbon and pollution. For decades, climate scientists warned us we might pass a tipping point. But the “ifs” turned into “whens” in 2024. The signs of collapse don’t require a meteorologist or data scientist — continuous “unprecedented” weather-related calamities bring them home.
2024 was the hottest year on record. The UN Secretary-General António Guterres said, “We must exit this road to ruin.” He also observed that the 10 hottest years on record had happened in the past decade, including 2024. This year, we saw floods in Southern Brazil and Dubai. The last glacier in Venezuela vanished, taking a piece of history with it. Coral reefs continue to die from warmer-temperature bleaching. See: The Climate is Right for Industry Change.
Amazon’s RTO mandate of five days a week in the office was delayed because the giant didn’t have enough office space for all of its employees. Amazon, like many other tech companies, made significant commitments to reduce carbon emissions. Now, these goals are being threatened by the allure of AI — which brings its own environmental challenges.
We have simultaneous yet contradictory narratives playing out: that WFH is over and that a financial crisis is upon us. We must embrace the inevitable reality of distributed and remote work. RTO and WFH are not absolutes. Some positions and activities within positions can best be performed remotely. The question is the right mix. See: Hybrid Office Space Management.
Meetings
2024 was the year when the video interoperability wars all but ended, but not as expected. Many Microsoft CVI vendors exited the space. Alternatives like Direct Guest Join, which addressed basic interop, fell short of delivering the premium experience many users expected, lacking advanced features and seamless integration. Instead of the vendors agreeing on video interop protocols, many just agreed to use Pexip (for now).
2024 (finally) teed up Microsoft’s Device Ecosystem Platform (MDEP). MDEP will shake up collaboration by standardizing Microsoft’s Android-based devices for meeting rooms. While it promises streamlined updates, enhanced security, and consistent user experiences, the platform has also sparked division among manufacturers. Some have fully embraced MDEP to simplify development and Microsoft’s ecosystem. Others hesitate over concerns about losing their early-mover (sunk cost) advantage with Android. Either way, we will see MDEP-based solutions in the market in Q1-25. As MDEP evolves, the drama will expand from meeting rooms to wherever else Microsoft intends to deploy its mobile-ready operating system. The upcoming Enterprise Connect conference in March will feature a TalkingPointz-led session exploring the pros and cons of MDEP and how the various industry players are expected to react. See: Make Android Great Again.
2024 also saw machine learning revolutionizing meeting room environments by redefining traditional microphone and camera requirements. Advanced AI-driven systems can now automatically adjust audio capture and camera angles in real-time, enhancing participant visibility and sound quality without requiring manual configurations. This shift is leading to the replacement of costly-to-install hardware with software-driven solutions, resulting in improved room performance and reduced costs. These technologies will evolve rapidly, further transforming meeting and collaboration spaces. Enterprise Connect will also feature a TalkingPointz-led session titled “AI-Driven Meeting Rooms: Are We Cutting Costs and Boosting Performance — Or Losing Quality?” This session, which opens Enterprise Connect on Monday, will specifically examine these issues.
Several “big tech wobbles,” like Meta’s quiet retreat from the metaverse and Google Search being declared a monopoly, underscore industry giants’ challenges. Cisco devices for Microsoft Teams Rooms reshaped the MTR landscape. Google’s handoff of its Starline video project to HP likely ends the grand Starline vision with a whimper.
Messaging
Another big reset is RCS. SMS 2.0 is much bigger than SMS or iPhone-Android interop. OTT messaging apps became popular because SMS was so limited, but SMS fragmented communications with each OTT app island. Even SMS is an island because it requires a mobile phone number. RCS offers a brave new world for messaging. There are now approximately 1B RCS users.
Despite Apple’s 2023 announcement that it would (and did) support RCS in 2024, no major UCaaS or CCaaS provider has natively enabled RCS yet. Some UCaaS services never enabled SMS.
Webex joined Teams and Zoom, so now all three have Team Chat video messaging in the client.
Financial Pressure
Wall Street has imposed much shorter timelines. Investors want their returns, which evidently required significant changes at Twilio and a new board seat at Five9. It also appears Avaya’s inventors wanted faster results. Shorter timelines have eliminated moonshots in enterprise comms (like Microsoft Teams and Cisco Spark once were). Starlink is (literally) a moonshot. What other vendors (will) see opportunities in comms?
Cisco Webex, RingCentral, and Zoom have excellent platforms for digital events, but they are likely relying on word-of-mouth for awareness. These solutions can significantly improve physical events with their hybrid and digital solutions. It’s a logical expansion of UCaaS but a heavy lift for education and awareness. See notes above on Climate. See: Digital Events.
Financial pressure and no moonshots put more pressure on staffing. We saw a lot of layoffs in 2024. The good news is that 2024 layoffs were fewer than in 2023 (Layoffs.fyi). The tech sector eliminated 150k jobs in 2024 (down from 264k in 2023). Intel was the biggest loser, and Cisco came in second with 10.5K cuts.
However, it’s not like telecom is a major employer anyway. When the Bell System was split in 1980, it was the largest employer on Earth with 1 million employees — almost all focused on US communications. Today’s comms leader is arguably Microsoft, employing only 228K people. The numbers are not directly comparable: Microsoft doesn’t have employees stringing poles, and Teams is global. Also, note that Teams is only a small sliver of Microsoft’s total employee count. The world’s largest private employer today is Walmart, with 2.1M “associates,” ironically followed by Amazon.
The industry can get by with so few employees due to efficiency gains in tech. Layoffs occur when tech promises to give employees more time (careful what you wish for). If generative AI does half of what many expect, there will be more time for many more tasks (such as trainspotting). Prior to AI, innovative tools helped us do work. Agentic AI combines creation with execution and will do the work without us. Watch and listen to Dave and David’s Year In Review.
Upcoming
Danto returned to CES. Dave and David will attend Integrated Systems Europe (ISE) and intend to publicize the best of the event. Danto will be at IMCCA’s Collaboration Week New York at the end of February, and Michels will attend Mobile World Congress and maybe CCW Berlin (need assistance). Both will be at Enterprise Connect in March, and we’ll definitely cover that and InfoComm in June.
Innovation Showcase EC25
Michels continues to chair the Innovation Showcase at Enterprise Connect. The judges have been announced, and the theme is innovation with text-based communications. Watch NoJitter for more details. The deadline to apply is Feb 24. More details here.
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