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8×8 made headlines this week with its plans to enter the global CPaaS market by acquiring Wavecell, a Singapore-based CPaaS provider, for about $125 million in cash and stock.

Wavecell‘s CPaaS is a large-scale, well-recognized platform for providing text, messaging, voice and video APIs globally to both enterprises and developers. 8×8 already is a top provider of UCaaS and CCaaS.

451 Research's Raul Castanon-Martinez

451 Research’s Raul Castanon-Martinez

So can 8×8 make a big splash among CPaaS providers? We turned to Raul Castanon-Martinez, 451 Research’s senior analyst of workforce collaboration, and Jon Arnold, principal analyst at J Arnold & Associates, for their perspectives.

This is 8×8’s largest acquisition to date and Castanon-Martinez expects it will have a significant impact in the market.

“While other players anticipated this trend earlier, this is a significant transaction that should help 8×8 close the gap with key rivals Vonage and RingCentral, who already provide similar capabilities,” he said. “It should also allow 8×8 to accelerate its CPaaS road map, incorporating programmable communications into its existing portfolio.”

However, Arnold isn’t expecting 8×8 to make a big splash in CPaaS, at least in North America.

Jon Arnold

J Arnold & Associates’ Jon Arnold

“Among CPaaS pureplays, Twilio still dominates, and when added on like 8×8 is doing, it will likely be more of a complement to other offerings,” he said. “In that scenario, it will be harder for 8×8 to move the needle with CPaaS, but as the offering becomes more established in-house, 8×8 will be able to leverage its brand to make a stronger play here.”

CPaaS is a very competitive market with the likes of Twilio and Nexmo, Vonage‘s API platform, leading the space, but it’s also growing fast and expanding into different directions, Castanon-Martinez said.

“For example, Twilio is aggressively targeting marketing and customer engagement,” he said. “Vonage is targeting customer engagement, but is also adding CPaaS capabilities into its UCaaS offering. Incumbent providers like Alcatel-Lucent Enterprise (ALE), Avaya and Mitel also have CPaaS in their product portfolio. It’s very competitive, but I think 8×8 can leverage its leadership in cloud communications to become a leading CPaaS vendor.”

Twilio likely will remain dominant, however, there are limits to their developer-centric model, and it remains to be seen how successful they will be with large enterprises, which is where the big money is, Arnold said.

“As players like 8×8 add CPaaS, there’s less pressure on that piece to carry the business, but also great upside by having a more complete portfolio,” he said. “8×8 is still growing rapidly, so there’s a solid built-in base of customers to drive CPaaS revenues. If that continues, 8×8 could become a major CPaaS player, especially with the new AsiaPac footprint that Wavecell brings them. Now they have direct access to the largest region globally, and one that seems well-suited to the kind of applications that CPaaS enables.”

There are two vectors to consider here, Arnold said. First is …

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One comment

  1. Avatar Peter Radizeski July 24, 2019 @ 10:19 am

    8×8 is just playing catch-up with this purchase (which was a steal actually). Vonage, 8×8, RingCentral, and Nextiva are all platform providers at this point. They are thinking ecosystem. Get people on the platform any way they can. The platforms contain CRM, UC, Contact Center, SIP trunking, CPaaS, AI and analytics. It is a package of stuff – none of it best of breed but good enough for some businesses. And with an expected upside of being sticky and able to increase ARPU.

    CPaaS is more utility than UCaaS that’s why providers like Intelepeer (a huge SIP trunk shop), Bandwidth (a large DID house) and VoIP Innovations have all rolled out a CPaaS platform in the last year with AI, chatbots, etc. Some might say it was modeled after kandy.

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