As far back as in 2018, Tencent had set its eyes on the business customer, starting a Cloud and Smart Industries business group (CSIG). Since then it has not lost focus on what businesses need and has continued to evolve its offerings. Late last year, Tencent Meeting , a video-conferencing app for its enterprise business was launched. This was a savvy move, as it came right after Zoom was blocked from the China market forcing local users to search for in-country alternatives.
Tencent’s Go-to-Market Strategy
Talking about Tencent’s go-to-market strategy, Ecosystm Principal Advisor, Niloy Mukherjee says, “The current leader in the video-conferencing space, Zoom is not available in China so that market alone can sustain an offering like Tencent Meeting. With the popularity of WeChat, Tencent has a huge opportunity to combine conferencing on the desktop and the mobile and I see that as an advantage for Tencent when compared to other players in the market.”
In another savvy move, as enterprises grapple with remote employees and video-conferencing solution grow in importance, Tencent rolled out its video-conferencing solution for the global market. VooV Meeting, the global version of the domestic app Tencent Meeting, was launched in over 100 countries including the larger Asia Pacific markets such as Malaysia, Hong Kong, Singapore and Japan.
Mukherjee says, “At this particular moment in time, the COVID-19 crisis has suddenly brought video-conferencing front and centre. While people are now resorting to it out of compulsion, they are likely to discover that this is a great way to work. As bandwidths and connectivity improve across countries, video-conferencing emerges as a really viable solution. Organisations will soon realise that this technology can help save tremendous amounts of travel and facility rental costs. So, usage is likely to grow exponentially – and it is not a bad time at all for Tencent to enter this market.”
The Video-Conferencing Market is Heating up
The video-conferencing market continues to grow and providers such as Zoom, Microsoft, Google, and Slack have made many of their offerings free. In the current milieu industries such as healthcare, education and professional services are using unprecedented video collaboration tools, both internally and for customer interactions.
Zoom is gaining global popularity with stock prices rising 28% in the last month in an otherwise under-performing global market. Zoom continues to evolve user-friendly features such as the virtual background, forcing other conferencing providers such as Microsoft to emulate them. Microsoft Teams has also seen a steep rise in popularity, with the company reporting over 50% rise in chat volume in the last month.
Ecosystm Principal Advisor, Audrey William says, “Expanding the capabilities beyond video will be critical for a larger market share. Zoom is now expanding its offering to include calling capabilities with Zoom phone. Beyond video, collaboration platforms are growing in importance and Microsoft Teams, as an example, has made the platform feature-rich across voice, video and collaboration capabilities. Users will want features that will make chat, video, voice and collaboration sessions rich and intuitive. If the experience is not good, they will find another platform to use. It will all come down to user experience!”
Tencent is by no means the only tech organisation from China that is eyeing the global market. Recently, Alibaba launched a free international collaboration platform based on their productivity app Dingtalk for medical professionals to share information and advice on prevention and treatment of COVID-19. In a boost to Tencent however, the United Nations (UN) announced that they will be using VooV Meeting to host their online conversations, especially for their initiatives to mark their 75th anniversary – UN75. Not only will the UN use Tencent’s video-conferencing capabilities, they will also leverage other Tencent offerings such as WeChat Work, and Tencent AI SI.
William thinks that the market might be crowded and Tencent will face some challenges. “Tencent’s challenge is that it is entering an established market. To make a mark, it will have to continue to innovate on features, focus on platform security and ensure that the experience is seamless. Tencent announced in January that the solution can support 300 attendees simultaneously. To sustain this and make a bigger push internationally, it will need to work with local partners to help take this product to market.”
“With all the options around, people will not use VooV Meeting just because it is free – they will if they find the features to be unique and the experience brilliant.”
Mukherjee adds, “Tencent is one of the most admired companies in China – it is a top pick for most graduates as their preferred employer and is seen as a better company to work for than other big players in China. This is a reflection of its strong corporate culture and continuing success. Tencent has, so far, had a good track record of competing with the likes of Alibaba and I believe that they will move quickly to muscle in and take a leadership space in the global video-conferencing market.”
Zoom is no stranger in today’s world of video and collaboration. Organisations would have heard of Zoom, trialled the product or are now users of the product for video collaboration. Zoom’s success is built on the simplicity of their technology and the ability of the solution to be deeply embedded within workflows. They have put some serious thoughts into user design and how that experience through the app or when launching the solution from the PC/ laptop allows for a smooth integration to email, calendars as well as other popular collaboration applications (including Slack). The market for cloud videoconferencing is growing rapidly. As the market shifts towards new and more agile ways of working and as co-working spaces rise globally, the need to collaborate and communicate instantaneously without too much hassle and interruptions will be critical. We are living in an era where it will be all about the experience.
Zoom’s share value has risen more than 120% from the $36 IPO debut price. Zoom has been focusing on building a base of high-value customers (those that spend more than USD 100,000 per year for services). In the last quarter alone the number of high-value customers went up by over 17%.
Rapid expansion outside of the ANZ region
Zoom has witnessed rapid growth in the ANZ region in recent years. Demand for the solution continues to come from both medium and large enterprises. Japan will be an important market for Zoom and they are starting to work with some big names in the market such as Rakuten and are expanding on growing their partner network. With a good data centre footprint which is critical for video and collaboration, other key markets for Zoom in Asia include India, South East Asia, Hong Kong and China. Their wins in these markets are from some of the biggest brands and conglomerates. Zoom’s growth in Asia is demonstrating how their cloud-based video solution is becoming the preferred platform, even if IT has already invested in other cloud video offerings. Demand is coming from the lines of business and not necessarily through IT. That is a big differentiator – Zoom being used by lines of business changes the entire sales process. It is now driven by word of mouth and individual user experience and LOBs which then becomes a companywide opportunity for Zoom. When you put that into context, the sheer numbers in terms of users within an organisation becomes large.
The launch of Zoom Phone
Zoom launched their Zoom Phone cloud phone service in Australia, supporting local phone numbers and PSTN access with new metered and unlimited call plans. Customers have the option of using their own carrier or using a Zoom number. The launch of Zoom phone should not be taken lightly by their competitors as they have so far succeeded in pulling customers to their app and impressing them with the user experience. Once the customer is locked into Zoom, the user experience has somehow led them to want to use it even more. With the launch of voice, they are now pushing themselves deeper into an account by creating upsell opportunities in workplace video, collaboration and voice technologies. This allows them to take on UC players across the stack of video, voice and collaboration.
Accelerating deep partnerships with leading cloud innovators
Zoom has strong partnerships with leading cloud platforms. Zoom’s partnership with Dropbox allows customers of both services to start a Zoom Meeting while viewing or working on shared files via shortcuts built into Dropbox’s viewer tool. The Atlassian partnership, for instance, allows Jira Ops to be integrated with Zoom. Users will be able to start a meeting directly from a Jira Ops ticket with anyone associated with the ticket. These are some of the partnerships and it demonstrates how Zoom has thought about other critical cloud apps that are important for day-to-day work and collaboration and the ability that can make Zoom the app that can provide that in-between integration for collaboration.
Ecosystm Comments
Zoom’s architecture is video-first, cloud-native and optimised to process and deliver high-quality video across devices. They reported recently that their approach to video has been uniquely different from that taken by others who have attempted to add a video to an aging, pre-existing conference call or chat tool. Zoom developed a proprietary multimedia router optimised for the cloud that separates content processing from the transporting and mixing of streams.
With the launch of Zoom Phone and the adoption they are witnessing of their video platform, Zoom is set to be a leading provider in video and voice collaboration. We can expect Zoom to further build on the office collaboration stack in the near future. As organisations start deploying solutions from cloud innovators such as AWS, Slack, Microsoft, Google and others, Zoom stands out from that standpoint. They are a cloud innovator that has thought about the issues of the past and the pain points of those using video. The thinking behind user design and simplicity and the integration to workflows has paved the way for the success they are seeing today.
As they grow their presence with some of the largest brands and Fortune 500 companies in the Asia Pacific region, they will also start attracting partners who will want to be part of that journey with them so it’s a win-win for both parties. These partnerships will include a range – from the existing players in the video to other workplace collaboration vendors.
For the fiscal year ended January 31, 2019, Zoom reported that 55% of their 344 high-end customers started with at least one free host prior to subscribing. These 344 customers also contributed to 30% of revenue in that fiscal year.
The journey has just started for Zoom in Asia Pacific and we can expect the next 12 months to be good for them as they expand rapidly across the region.