How Amazon's Connect Could Impact Twilio, Zendesk, RingCentral
William Blair’s Bhavan Suri believes “cloudbased communication vendors are poised to take advantage of the ongoing shift to the cloud” and that companies are more open to adopting cloud application, which is a meaningful change in tone as compared to 2016.
The analyst maintains an Outperform rating on Amazon.com, Inc. (NASDAQ: AMZN), Twilio Inc (NYSE: TWLO), Zendesk Inc (NYSE: ZEN) and RingCentral Inc (NYSE: RNG).
Amazon Connect
Following the release of Amazon Connect, a virtual contact center, Suri mentioned that “collaboration appears to be the name of the game, with many communication vendors showcasing their collaboration tools” at the Enterprise Connect Expo in Orlando.
The analyst explained that Amazon Connect is a self-service contact center solution that aims to get call center up and running quickly, regardless of the center’s size.
Also, since it is a cloud-based solution, users can choose to scale their usage up or down, according to their needs, which Suri believes would be especially helpful for firms that have seasonality in their business. The price is also usage based.
The analyst believes that Amazon is “is leveraging Twilio along with other communication platform vendors to deliver voice capabilities,” while stating that “the entrance of larger players, such as Amazon, only validates the large market opportunity in the UCaaS (Unified Communications as a Service) market.”
In fact, Suri believes the usage-based business model for Amazon Connect is “compelling from a total cost of ownership perspective,” particularly as compared to on-premises systems.
Benefits For Twilio
“We suspect Amazon is leveraging Twilio’s platform (along with other communication platform vendors) to deliver its contact center telephony services, which should expand Twilio’s relationship with Amazon further,” the analyst said.
Twilio already supports Amazon’s Simple Notification Service, while being an AWS (Amazon Web Services) customer.
Suri expects Twilio to incorporate intelligence into phone calls to offer a more personalized service, while also sending post-call SMS messages for feedback.
“Overall, we view this expanded relationship positively and it further solidifies our view that Twilio will continue to be used if and when Amazon rolls out additional UCaaS features/functionality in the future,” the analyst went on to say.
Benefits for Zendesk
Amazon is partnering with Zendesk to provide customer service software, along with its call center solution.
While Amazon Connect is a competitor for Zendesk’s Talk, Suri believes the partnership between the two companies could help Zendesk penetrate the larger call center market.
“Currently, Zendesk is targeting small to midsize companies within the 500- to 2,000-seat range. We believe traction of Amazon Connect will help Zendesk move into larger deals with over 2,000 seats,” the analyst explained.
What’s In Store For RingCentral
Noting that RingCentral has been benefiting from market tailwinds, Suri continues to believe the company is “well-positioned in the UCaaS market given the ongoing shift in preference for more integrated, innovative cloud solutions spanning the entire UCaaS capabilities.”
In addition, RingCentral continues to differentiate its offerings with its open API platform, Global Office offering, carrier partnerships and integrated collaboration capabilities.
“RingCentral has been actively working on connecting and tightening its products and integrations, proving an easy-to-use user interface that seamlessly integrates its different products as well as other software systems — which is not something to be underestimated, in our opinion,” the analyst added.
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Latest Ratings for AMZN
Mar 2017 | Loop Capital | Initiates Coverage On | Buy | |
Mar 2017 | Barclays | Initiates Coverage On | Overweight | |
Jan 2017 | Aegis Capital | Initiates Coverage On | Buy |
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