Zoom Competition

Streaming TV this evening on Roku. I’ve seen maybe half dozen commercials for the all new, made for video, simple to use, one button Webex. Hmmm


Oh yeah, forgot to mention, sign up for free trial.

The company I work for is creating a quick video conferencing product for the health care industry using Twillio.

Care providers want to transition to video conferencing appointments and thanks to new billing codes, they be compensated by private and public insurance companies for an online conference with a patient. Many hospitals are using Zoom, but it’s expensive.

Twillio offers a video-conferencing API, and we think we can do it for less than half the price.

I am on the board of a local non-profit, and we used Zoom for a bit for our monthly meetings, but it was annoying. Meetings can only be scheduled on the half-hour (basic version at least), they can only go for 40 minutes (more than two people), so you have to have overlapping meetings.

I switched us to Jitsi - more secure, quality was great, and you can host the servers yourselves.

I suspect Zoom is doing well at the corporate level - companies are scrambling to get video conferencing in place, and Zoom is easy. Will they stick with Zoom once they have time to consider other options?

Where is their moat, post pandemic?

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Yesterday I posted that disruptors are rarely disrupted. I was challenged by other board members. The discussion has forced me to try and look at this from the opposite angle. It’s easy to hold one’s own biases. It’s prudent to try and poke holes in your own arguments.

You asked, “Where is their moat, post pandemic?” Let’s look at that.

How about network effect? This is the argument I had asserted for Zoom earlier. Does it have merit? Zoom has gone from a virtual unknown to over 40M users in an incredibly short period of time. How is that possible? Mostly ease of use. It’s a simple. Download, install and you’re a Zoomer. But that same ease of use is also a competitive weakness. It’s interesting to note that Eric Juan (Zoom CEO) was a former Webex engineer at Cisco. Now Cisco has apparently either rebuilt Webex (or just wants us to believe it has) to address the weaknesses that Mr. Juan recognized. Easy self on-boarding and ease of use is not a competitive advantage if it is not somewhat unique.

How about feature set? I can’t address this as I’m ignorant about it. I’ve read that Zoom really covers the waterfront when it comes to functionality. That’s an advantage to a degree. But, from my own experience with high functionality s/w is that many users (myself included) never use a lot of the available functions. It’s not a competitive advantage if you don’t use it. That’s on a gradient of course. It’s not about my utilization, but in general if some features are rarely used by the majority of users, it’s not much protection from competitors. But again, I’m not well informed in this area, so I can’t assess how great a strength that might be or how difficult it might be for a competitor to emulate it. It appears that you, HiTechGuy are better informed about this than I.

Obviously, the enterprise market is quite different from the consumer market. Zoom appeals to both, but originally their focus (like Webex) was the enterprise market. In fact, at least some of Zoom’s security “flaws” weren’t really flaws at all. They were the result of certain default settings for enterprise customers. Consumers generally plug and play. As a rule, they seldom review the defaults and maybe wouldn’t have recognize a needed change even if they had. This is easy to address by changing some of the defaults before the product “ships”.

How about the competition? Webex was one of the big dogs of remote conferencing. It was the standard at the company I worked at over ten years ago. It was not truly a video conferencing tool. It allowed meeting attendees to share desktops. Audio was provided via a separate conference phone call. Zoom does it all. Video, sharing, audio, recording, chat and more. Does the new, improved Webex cover the waterfront as well? I don’t know, but I would be surprised if it didn’t. And remember, Cisco has a long history of enterprise relationships. They have more than a foot in the door with a lot of corporate customers. Cisco sales reps and CIOs, CTOs and other C level officers have likely played a lot of golf together.

The same things that made Zoom so popular so quickly are the same things that make the whole area a target of commoditization. There’s nothing about Zoom that marries it to a line of business process. It has no database, no memory. You can transition to Zoom literally (almost) overnight. There’s nothing to convert from a legacy system to a new one. You can’t swap out an ERP or PDM or any number of enterprise applications so easily. Those types of systems require a significant data conversion undertaking. They demand a lot of user training. They usually require business processes to be redesigned. None of that applies to video conferencing. In fact, you cited an alternative I’d never heard of (Jitsi). Other people on this board have related that in their work they use a variety of tools as their customers use different tools. There’s simply no barrier that inhibits transitioning to a different tool other than the feature set. Remove that as a competitive advantage and it pretty much boils down to price as the discriminator.

All that being said, I’m not going to sell my recently acquired shares, not right away anyway. But this one should be watched very, very closely. If we see customer erosion (ignoring churn among free users) or a significant drop in retention rate it’s probably time to abandon ship.


they can only go for 40 minutes

In our usage, we have been getting a reminder at 40 minutes that the 40 minutes is not being enforced. This is three locations and like once a week usage.

Webex was one of the big dogs of remote conferencing. It was the standard at the company I worked at over ten years ago. It was not truly a video conferencing tool. It allowed meeting attendees to share desktops. Audio was provided via a separate conference phone call.

My employer (big tech co) uses Webex. They do provide video now, not just desktop sharing. I don’t particularly like it, but I am not the meeting organizer. We also have Teams. That seems to work pretty well. I have been invited to Zoom meetings in non-workplace settings. Like that too. ZM seems like it SHOULD take off because it is a stand-alone product uninvolved with anything else. Teams is part of a larger Microsoft package. That is glue for Microsoft-using companies, but not for Joe and Mary Beercan who want to call their grandchildren. Zoom is their choice.

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I gotta do a better job of verifying numbers before I post something. Zoom has recently passed 300M users and reports apx 13M MAU. Sorry about that. I’ll do better in the future.

I’m cautious towards Zoom because I don’t see any sort of moat around video conferencing solutions. In recent weeks I’ve done friendly group chats through both Zoom and Google Duo (virtual happy hours). At work, we use Google Meet for meetings, with desktop sharing. There are many other options out there, and I’m not convinced any one of them is significantly different or better than the others.


Competitor Pexip will IPO in Norway this quarter: https://www.ft.com/content/cd04731f-87ea-421b-b9de-3b4d238b4…
It is quite remarkable that they target a 10x ARR multiple despite 50% revenue growth in Q1. I believe Zoom’s ARR multiple is probably in the 30-40x range but revenue growth will be significantly higher.

Norwegian Zoom rival Pexip seeks Scandinavia’s biggest tech IPO
Video-conferencing firm’s clients include the US government, Amnesty International and Spotify

A Norwegian videoconferencing company whose technology is used by the US government, Amnesty International, Spotify and PayPal is seeking to raise $200m in what could be the largest software IPO in Scandinavia.

Pexip has experienced a seven-fold surge in usage in recent weeks as the coronavirus pandemic has forced millions of people to work from home, while concerns over the security of the dominant player in the sector — Zoom — have led companies to seek more secure alternatives.

The Norwegian company will announce on Monday that it is seeking to raise about $100m in fresh capital on the Oslo stock exchange, with existing shareholders selling a similar amount of shares with a targeted post-money valuation of about NKr6bn ($570m).

Pexip has already secured the backing of four cornerstone investors for about NKr1bn including Capital Group and Wasatch Global Investors of the US, DNB Asset Management in Norway, and TIN Fonder from Sweden.

“The joke in the industry always was that this is the year of video and it will be different this year. What’s really different this time is societal change. Everybody has to use video today in some shape or form. Our main competitor is not another company in the industry, it’s non-use,” Michel Sagen, executive chairman and co-founder of Pexip, told the Financial Times.

Pexip, which offers a video meeting platform either as a cloud-based service or for companies to host themselves, experienced a 50 per cent jump in annual recurring revenues to $57m in the first quarter of this year compared with the same period in 2019. Its reported revenues last year were NKr370m, up from NKr215m in 2018, while its earnings before interest, tax, depreciation and amortisation more than doubled to NKr76m, giving an ebitda margin of 21 per cent. About 97 per cent of its revenues are subscription-based.

The company’s software is used by Irish courts to conduct hearings, as well as the US Department of Veterans Affairs for patient-doctor meetings and 70 of the Fortune 500 companies. Other organisations using Pexip include Vodafone, Accenture, the US Air Force, the Environmental Protection Agency, Intel, General Mills and the Nordic region’s largest lender Nordea.

Asked about the security concerns that have dogged Zoom recently, with meetings interrupted by a range of troublemakers, Pexip’s chief executive Odd Sverre Ostlie said that customers were increasingly concerned by security and privacy. “Some customers really want to take control of this themselves,” he added. Since Pexip allows organisations to host the software themselves, in some cases they can use video meetings without being connected to the internet.

Mr Sagen said of military customers: “They don’t trust anybody. Instead of going into a ‘hey, trust us’ discussion, they can host it themselves.”

Pexip, which is aiming to complete its listing this quarter after an entirely virtual roadshow with more than 50 video meetings with an investor, is planning to use the proceeds from the IPO to boost its growth. It is aiming for $300m in annual recurring revenues by 2025 and an ebitda margin of 25 per cent.