I thought the same but at first; however you don’t even need a FB account to participate.
Enterprise videoconferencing is somewhere around a $6 billion industry. Zoom is already priced for dominating that industry.
I agree this is the most sobering piece of information in this thread for Zoom holders given the Zoom market cap. Facebook and other more business oriented entrants will only devalue this potentially.
Facebook itself has as a negative image from a privacy perspective. Having unwanted guests crashing parties because users posted public messages on Facebook happened long before Zoombombing. Throw in data privacy concerns (Facebook’s core revenue model is to monetise your data), I can’t see this being used beyond general public of Gen X era. If the solution is anything like the Facebook website/app or messenger then the user experience will be a mess too which is Zoom’s key selling point.
Ant
1 Like
“TMB…I think we are saying the same thing.”
Sorry Harley,
I didn’t explain myself well enough. Yes I am agreeing with you as well. Sorry if that didn’t come across.
TMB
1 Like
I would appreciate hearing from the board regarding the two competing pieces of news that we had today. First, we learn that Zoom is to be added to the Nasdaq 100 before the market opens on April 30th. Second, Facebook announces a competing product. Clearly the market thought the second piece of news was far more important based upon the substantial decrease in share price when the FB news broke, but what about next week when Zoom gets added? Are board users imagining that there will be a substantial purchasing of shares later next week associated with the addition to the Nasdaq 100? Trying to gauge how the stock price is likely to move over the next week. Thanks in advance.
1 Like
Evening all. Long time, first time.
My wife and I work in Manhattan. We headed south to our place in SC once they told us our offices were going to be closed for the foreseeable future. And we’ve both spent a lot of time on Zoom since.
We’ve both been told that we should not expect to be back in the office until September. And even then it’ll be a pseudo job share scenario, coming in a couple days a week, working from home the others.
We’ve proven, as well as many other companies, that the WFH environment can work. In a belt tightening environment CFO’s will be looking at all opportunities to diminish expenses. Once leases expire downsizing footprints and minimizing the numbers that have to come into the city will absolutely be a theme.
Zoom has, and will continue, to play a major roll in how things get done moving forward.
20 Likes
I don’t think there is a moat around this. If someone comes along and does it even better, and cheaper, Zoom would be threatened.
With respect to the often discussed “lack of a moat.”
Sure if you are a basic customer (i.e. free) there is no moat. This is laptop to laptop.
And even the “Pro” user or small business has very small switching costs – no moat.
But that isn’t where the money is. The money is in big enterprises.
This is where companies have many sites and each site has many conference rooms with video conferencing rooms (big TV screens and cameras). These room have to be setup by IT departments to connect in so you can schedule a VC meeting and do one-button connection in the room and the scheduled time. Switching providers is a lot of work.
My medium sized company has ~75 such rooms (from 4-6 people to 25 people per room) at one site. And we have 6 or 8 sites nearly as big or bigger.
Check out the pricing for this on the link below. You need to page down to see the “per room” pricing. This is in addition to the per employee fees.
Mike
8 Likes
I agree that Zoom does not have much of moat.
But Facebook for enterprise communications? That’s got to be a joke if ever there was one. I can’t imagine any business using Facebook for conferencing. Here Zuckerburg, I think we need to share our business information with you and your trustworthy team. Gimme a break.
Facebook might capture a portion of Zoom’s unpaid customers, that would shrink their MAU and total user count. It would also reduce pressure on Zoom to build out more servers and pipelines.
Pity . . .
6 Likes
New Zoom feature that may be a significant differentiator, real-time transcription.
https://www.tomsguide.com/news/zoom-just-got-a-killer-featur…
“Otter.ai, a real-time chat transcription service, now lets Zoom call participants view a live text log of the conversation taking place. The integration also lets users review and search a past meeting’s record at any time, which sounds like it would be helpful for important work conferences.”
Only thing missing is language translations on the live captions.
TrainMaker
7 Likes
I appreciate the insight. I picked up Zoom a week or so ago and I also purchased 2U (Ticker TWOU). I like the niche of bringing major colleges and institutions online. Any experience using this app?
From the posts I’ve read so far, I’m going to take a stab at clarifying the business strategy behind both Zoom and Facebook’s competitive video platform
Because of COVID-19, Zoom finds themselves in the (I believe unenviable) position of playing in two markets at the same time, the consumer market and enterprise market.
Zoom was created for the enterprise market and its feature strengths seem to be most pronounced there (compared to other enterprise solutions, its easier to set-up, understand, use, and has functionality that helps companies do business, like breakout rooms and screen sharing). In the consumer market, Zoom’s strengths are not as pronounced because consumers have different problems that need to be solved. For example, their isn’t a huge problem with functionality or set-up, because the existing competitors (a much larger set of products like FaceTime, Google Hangouts, currently Houseparty, etc) make it really easy to set up and use quickly. They have much less need for breakout rooms in consumer, though occasionally they are helpful (but not as much as they are in enterprise). The painpoints that they’re solving, the “jobs to be done”, are vastly different in enterprise than in consumer. This is why Eric Yuan, CEO of Zoom, stated that he would love to go back to focusing on the enterprise customer, because that’s where they have the best differentiation. Consumer doesn’t make sense for them because the barriers are lower and their product isn’t as special (though I actually do consumer insights and Zoom is super helpful when we want to talk to regular people because its easy to set up for them, again, that’s compared to other enterprise products).
Now let’s talk about Facebook. Facebook isn’t trying to directly make money on this new product. They’re trying to increase site engagement, and therefore advertising $$$. Their product is much better suited for the consumer market because of their huge consumer base that’s already on FB’s platform. For a variety of reasons, Facebook’s new product will most likely reduce the friction of contacting your other friends to get together for a call. This could be close to an ideal consumer product for videoconferencing in terms of frictionless social connections (I have no clue about their technical capabilities). Facebook is NOT going for the enterprise market. It’s clearly not their intention, and never will be. They will not go for universities, they will not go for businesses. They could very well go for your local church groups and such, but they aren’t trying to compete with Zoom in enterprise. I just wanted to point out this difference, for the sake of subsequent discussion.
CloudAtlas
20 Likes
We’ve proven, as well as many other companies, that the WFH environment can work. In a belt tightening environment CFO’s will be looking at all opportunities to diminish expenses. Once leases expire downsizing footprints and minimizing the numbers that have to come into the city will absolutely be a theme.
Long time, first time, while I have been thinking about Zoom as a game changer, I had not thought about specific scenarios. The impact on real estate will be a positive feedback loop: The more you Zoom the less you lease and the less you lease the more you must Zoom! This is as much of a game changer as online trading was 30 years ago. There is no going back.
I was not going to add to this thread but my take on Facebook entering videoconferencing is that it is a non-event for Zoom investors. Of course everyone and his brother will take a whack at Zoom but so did everyone and his brother take a whack at Google search. Building search engines requires no magic. Building spreadsheets takes no magic. Building databases is old hat. Why then are Google, Excel, and Oracle still top dogs? Why didn’t everyone eat their lunch? It’s mostly that invisible moat called the network effect. When 300 million people “zoom” daily, a number almost as large as the population of the USA, a new entrant is not going to change that overnight. Two or three weeks ago there were some serious doubts about Zoom’s response to the security issues. Their response has been magnificent.
“Positioning” is a very powerful marketing concept. The idea is that people have very short ladders in each category. Ask people who was the first to fly nonstop across the Atlantic and most people will get it right. Asked them who was second… Do you know? It works in business, there was a time when xerox was making copies, kleenex was paper tissues, IBM was business computers, and google was (is) search. Now zoom is videoconferencing. How much better do competitors have to be to make them change? What marketers have discovered is that changing a product’s position is a much more powerful weapon. That’s why IBM called Apple a toy, to keep it out of businesses, their stronghold. When Americans were “Keeping up with the Joneses” VolksWagen came up with a novel position since it could not compete with the ever growing tail fins of the era. “Live below your means. Buy a VolksWagen.” It was one of the most fabulous advertising campaigns in advertising history. It carved out a new position in the auto industry.
Of course Facebook will get a videoconferencing following just as there are dozens of databases, search engines, and spreadsheets but in all these businesses, Increasing Returns is at work, the more you sell, the more you sell. Expect Zoom to capture a large portion of the videoconferencing market. If IBM, Google, and others are precedent, well over half the market. My hope is that they take the retail market seriously, maybe some sort of ZoomLite for the masses!
Denny Schlesinger
53 Likes
I agree a thousand percent with Denny’s post. Also, keep in mind, that Facebook has a market cap of $542,000,000,000.
When they go into a new business, it’s because they think the revenue potential is massive.
That should tell you all you need to know about Zoom’s potential. Microsoft Teams, Google Hangouts, Cisco’s “WebEx” (worst name ever) - three titans are all going after this space. And there’s of course many others.
I think that a major problem many Fools have is a kind of magical thinking. They want a company that has massive TAM and no major competition. Remember when Homer Simpson learned that ham, bacon and pork chops all come from the same animal? And he said “Ohhhh right, Lisa, a wonderful, ‘magggggical’ animal.” It’s sort of like that. But whereas a pig that makes those three meats is a real thing, a company that can earns tens of billions without attracting MAJOR competition IS a “maaaaaagical” animal. It doesn’t exist. (Here’s the clip - https://www.youtube.com/watch?v=7BZDZyRaGa8)
Netflix competes for attention vs. all major league sports, video games, Blockbuster, HBO, YouTube, NBC, CBS, countless other websites and now Disney - the biggest behemoth in the history of human entertainment. And despite countless claims of “Netflix killers” being invented, Netflix, so far has won every battle. That’s what our companies have to do - win. Against the very best.
So the way I see it Facebook’s Rooms (Yawn) is great news. It’s a necessary step on the journey. And it reminds me of the UFC Fighter Conor McGregor, who, when at the height of his game bragged about chopping off heads and putting them on his mantle. This is what will happen to Facebook Rooms as far as Zoom is concerned. Its head will wind up on Zoom’s mantle.
Investors need to welcome competition confident we have bet on the winner. Or take up another interest, like knitting. You can knit a great big wooly sweater without competition.
And lastly because so many investors don’t understand the concept of a moat, here’s an interview with Pat Dorsey, who is essentially the Godfather of moats.
https://dorseyasset.com/wp-content/uploads/2016/08/Manual_Id…
This is his answer to the question of which kind of moat offers the most sustainable competitive advantage, and in his answer he defines the concept …
Dorsey: I’m not sure one is better than another. I get this question a lot, and I thought about it quite a bit. I would say that there are weak and strong brands. There are weak and strong switching costs. There are cost advantages that are very durable and some that are a little bit more ephemeral. I’m not sure that I would regard one type of moat as stronger than another, with the possible exception of a network effect, which you see in financial exchanges, credit card processors like Visa [V] and MasterCard [MA], and businesses that tend to get more powerful the more users they have because the way a potential competitor would need to try to articulate their economic profits is essentially by creating a similarly sized network, and that can be a very difficult thing to do. Generally speaking, if you can identify a true network effect and it’s a business that is reasonably priced and has a lot of room for reinvestment of capital at high marginal returns on capital, you’ve probably found a business that’s going to have high returns for some time to come. But that would be the exception more so than anything else.
Obviously there’s room for debate on the strength of Zoom’s moat - but when a company has hundreds, even 1000s of workers using Zoom, and they are happy with the product, and they have used it in their personal lives and know it and trust that it will work without being buggy it’s very hard to get them to switch. And the more people that use it, that invite others to use it, the more data this gives CEO Eric Yuan and his engineers to work with to make it better. This means they will repair things quicker and add the features that people want most, fastest. And let’s face it, Zoom is a fun name. People love the brand. And it’s gotten more media attention - as a connector during a very stressful time - which is worth billions upon billions in advertising. Even Facebook can’t just simply a) tell 100s of millions about Rooms b) get them to try it and c) get people to switch from something they’re happy using. Watch the Motley Fool analysts using Zoom daily these days. I have never been more excited about the Fool and their ability to share key info with multimedia. Good luck getting Tom and Dave to strip Zoom out when they have analysts and users all over it. Saturday Night Live recently did an all Zoom episode. Try to guess what a company would pay to have an entire SNL episode prominently featuring its product. The value of the name recognition alone for Zoom is incalculable. And it is for most people seen as a savior and trusted friend when we are feeling vulnerable. That is as powerful as branding gets.
For me, Zoom has a very strong moat. And it’s likely to get exponentially stronger as more and more and more people use it. Moats are NOT about how physically easy it might be to switch. Netflix has entertained my family for 20 years. It’s a psychological habit. There’s a deep-seated tie. Cancelling would, physically, take tapping a button. But the emotional journey to actually doing that and starting up with another company is a whole different ball game. We are all creatures of habit.
Anyway…
I am long and strong, Zoom.
It’s going to spank Room’s bottom. Hard. Guaranteed.
BroadwayDan
67 Likes
Dan,
What a great post! Thanks!
but when a company has hundreds, even 1000s of workers using Zoom, and they are happy with the product, and they have used it in their personal lives and know it and trust that it will work without being buggy it’s very hard to get them to switch.
Now, the above boils down why Zoom will be successful in both the enterprise market and the free(for now) home use personal market. It just works, people are used to using it, they know how to use it, and they love using it. Use at home creates more pressure to use it at work and use at work creates more use at home. The two are connected. As long as Zoom remains the best in terms of how well it works, people will use it and Zoom should be able to keep a huge fraction of the markets (both enterprise and home). The network effect is also important as more meetings that are scheduled on the platform that the most people use.
Chris
8 Likes
Last night, our church group decided to open a zoom session for social specifically on weekly basis. As more and more people start to use Zoom for daily social, I can imagine how scare Facebook feels now. On the other hand, this is a kill to Facebook’s fundamental ad-support business model, how many people will like to take their free meeting offer but being pushed with more ads? Also, Zoom is probably only “social” and communication tool right now not banned by any countries in the world, a.k.a. China.
3 Likes
Quick question. If a company has WebEx (like mine), is a hardware change necessary to implement Zoom?
Being home for so long I forget the name of the hardware we use, but it’s standard in all the conference rooms in the company. It would be a substantial expense to tear all that out and replace with Zoom-compatible (if there is a distinction) hardware.
I’m not at all familiar with how (in our case) WebEx interfaces with the hardware.
I was reading a review online regarding choosing a video conferencing tool in which they compared Zoom, Microsoft Teams and Google Meet…most likely due to timing there was no FB Rooms. Rather than bore everybody with the Service Descriptions, Features, Supported Devices and Pricing; I will just go directly to the dessert…
"Honestly, Zoom and Google Meet are the quickest and most straightforward ways to start video calls using calendar links, meeting URLs, and phone dial-in numbers. You don’t even need to create an account with Zoom, though Meet requires at least a free Google account. Microsoft Teams, on the other hand, really shines when a team needs to jump on a video call from a chat message thread.
If you really want us to recommend one service to try, go with Zoom. It’s what everyone is using at the moment, and the company has been doubling down on its security efforts, even rolling out a major 5.0 update that groups key settings under a new security icon in the menu bar."
1 Like
Article just published…my sentiments exactly:
https://seekingalpha.com/article/4340054-facebooks-messenger…
Highlights:
A paying subscriber ditching Zoom to use Messenger Rooms, in my opinion, is out of the equation, at least for now. A corporate user, on the other hand, is highly unlikely to use Facebook as a platform for official video conferencing at any point in time in the future. Zooms’ target customers are small and medium enterprises that seek for seamless connectivity platforms. Messenger Rooms, on the other hand, is the perfect solution for Zoom Basic users who never had the intention of paying for a premium plan.
also:
Contrary to the belief and the reaction of many investors, I believe Zoom will benefit from the roll-out of Messenger Rooms as this will take some of the free users out of its platform.
Remaining long ZM
2 Likes
1poorguy wrote:
Quick question. If a company has WebEx (like mine), is a hardware change necessary to implement Zoom?
…
I’ve heard comments from my own company (which has been suffering with Lifesize for many years) that it is possible to use existing hardware. I did a quick search and found this on Zoom’s site (https://zoom.us/zoomrooms):
“Zoom Conference Room Connector lets you join Zoom Meetings directly from existing (SIP or H.323) conference room systems, such as Polycom, Cisco, or Lifesize equipment.”
Of course with everyone working from home, our company isn’t really discussing upgrading physical meeting rooms right now. I bet this is happening all over the world right now. I wonder if this pattern might give a nice fast boost to revenue in the first few months of people returning to the office. Rooms are $50/mo/room. I’m not sure if there are further benefits involved.
The ability to use existing hardware reduces the barrier to entry for Zoom. True, the same is true for competition, but at a time like this it has to be far better for Zoom right now.
Has any other long-term user of Zoom noticed we no longer need to explain what it is when we want to use it? “Are you sending the link?”, is all an old friend replied when I asked him to hop on to say “hi”. Both he and his wife have been using it at work and now use it for everything.
1 Like
Thanks for the answer. And you mentioned the one our company uses: Polycom. I couldn’t pull out the name when I posted before. It’s relatively new stuff (maybe two or three years old?). They seemed to do a rework about that time, and I noticed new equipment in meeting rooms I attended.
If you can use that equipment, then the cost of switching would be fairly low. I have no idea what we pay for the Polycom/WebEx arrangement. I used to sit across the aisle from the guy that would know, and I heard him on the phone negotiating prices, complaining prices were too high, complaining they needed support of one form or another. Not constantly, but frequently over the years that he was within ear-shot of me.
If Zoom is cheaper, and resolves its perceived** issues, he might actually push for a switch. I suspect he gets a lot of brownie points if he saves the company money.
1poorguy
**I say “perceived” because some folks here say the security issues are not really issues. As of about two weeks ago the company reiterated in email that employees were forbidden to use Zoom for company business, or to have it on company hardware. So apparently they still think it’s a problem.