How can CSPs best leverage their core communications assets to stay relevant and add value?
Raul Castanon, Sr. Analyst Workforce Productivity and Collaboration, 451 Research S&P Global Market Intelligence, email@example.com, LinkedIn, Twitter
Summary: The COVID-19 outbreak has accelerated the digitization of the customer and employee experiences, leading to market revenue for communications PaaS (CPaaS) growing by well over 40% in 2020. This trend is expected to continue in the next five years. Our panel discussion at the 2021 SmartCom Summit virtual event with representatives from Kandy, Voxbone (now part of Bandwidth) and iBasis centered on the CPaaS opportunity for communication service providers (CSPs) and how they can leverage their core communications assets to stay relevant and add value in a rapidly evolving segment.
We recently participated in a panel discussion at the 2021 SmartCom Summit virtual event with representatives from CPaaS providers Kandy, Voxbone (now part of Bandwidth) and iBasis. Our discussion centered on the evolution and current state of the CPaaS market and the role for communication service providers (CSPs) in the value chain.
Despite the economic downturn stemming from the COVID-19 outbreak, overall demand for CPaaS has not slowed down. Rather, the crisis has accelerated the digitization of the customer and employee experiences, leading to market revenue increasing by well over 40% in 2020, according to 451 Research’s CPaaS Market Monitor. We have also seen a surge of M&A activity in this segment – including 15 related transactions in 2020 and eight so far this year – with vendors looking to expand their market share and bolster capabilities.
These factors signal an important opportunity for the CPaaS segment and the different players in the value chain, including CSPs. Companies such as Twilio, MessageBird and Vonage (Nexmo) have positioned as market leaders in this segment, placing a spotlight on CPaaS as a key component for digital transformation initiatives. While these vendors have experienced significant growth, we believe the opportunity for the overall market is significantly larger.
The figure below shows our view of the market, based on the different role that vendors will play. CPaaS was initially defined in terms of developer-focused vendors providing access to the global telephone network (API layer). Vendors like Twilio have expanded into SaaS solutions with products such as Twilio Flex, while vendors such as Tata Communications and Syniverse have positioned a CPaaS play based on the network layer, and companies such as AT&T have entered the space partnering with CPaaS enablement vendors such as Kandy and Telestax and a strategy centered on an API marketplace.
This points to a number of options for CSPs to develop a strategy at different levels to address market requirements for embedded communications. While it’s not an easy challenge, our panelists highlight key arguments for CSPs to consider CPaaS as an option to remain relevant and add value. We also discuss their views on the key challenges and opportunities for CSPs with an API-driven approach and provide examples of CSPs that have been successful with CPaaS initiatives.
Figure 1: Programmable communications for business continuity and digital transformation
Source: 451 Research’s Communications Platforms as a Service Market Guide 2021
About the author
Raúl Castañón-Martínez is a Senior Research Analyst at 451 Research, a part of S&P Global Market Intelligence, based in Boston. He focuses on business communications and collaboration technologies such as enterprise messaging, voice, bots and intelligent assistants, speech recognition and cloud communications.
Before joining 451 Research, he was a product manager at EMOSpeech, analyzing emotion recognition technology. At Comverse Network Systems, he gained significant experience in product marketing working with tier one mobile operators to define strategy, pricing and business models for voice and data products.
Raúl is widely quoted in the top tier press, including publications such as Business Insider, CIO, Computerworld, Fortune and Wired.