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Zoom eyes up European opportunities

Zoom boasts a range of communications and collaboration products, and this portfolio is evolving into a broader-based business platform of interest to the enterprise market, with Europe set to be centre stage in this evolution

Artificial intelligence (AI) will play an important role in helping Zoom to achieve its aim of becoming a key workplace communications and collaboration platform provider for organisations that either do not use or do not like Microsoft products.

This is the view of Frederik Maris, the company’s head of Europe, the Middle East and Africa (EMEA). Based in the Netherlands, he took on the newly created post at the supplier in March. Prior to his appointment, Maris was vice-president of EMEA at AI lifecycle system supplier, DataRobot.

Although he is still in the process of devising a strategy for the region, Maris indicates the creation of his current role is an acknowledgement of the potential Europe offers in terms of revenue growth.

“If as a company we want to be successful, international as a whole is important – and Europe is the biggest international market, so we need to be successful there,” he says. “It’s the reason why I’m here – I think the organisation understands that to drive growth, we have to have someone who oversees the different functions in Europe and builds a coherent, comprehensive plan.”

This plan is intended to result in distribution partners playing a larger role in generating sales. It will also see a tighter focus on product localisation, security and data sovereignty. But the emphasis on boosting European sales is an important one for Zoom at a time when revenues appear to be in decline in the region.

While in the supplier’s domestic US market turnover rose by 10% year on year (YoY) for fiscal 2023, it fell by 9% over the same period in EMEA. This was due to a strong dollar, “macroeconomic headwinds” such as the energy crisis fuelled by Russia’s invasion of Ukraine, and poorer sales at its online (consumer) business. Turnover in the Asia-Pacific region likewise fell by 5%.

But the EMEA-related drop also continued into the first quarter of fiscal 2024, when revenues dipped again by 8% YoY. The fall this time was attributed to the “outsized impact” of local regulations slowing the firm’s desired headcount reduction (of 15% or 1,300 employees globally) combined with the impact of the Ukraine war and a stronger dollar.

Transitioning from a product to a platform company

Whatever the reasons though, it would appear Maris has work to do if he is to help turn the company around to the satisfaction of the markets. According to Investor’s Business Daily, for instance, his employer is facing both intensified competition and slowing growth.

As a result, it says, any future success will depend on the vendor’s ability to morph its current tool into a broader-based business communications and collaboration platform that is of sustained interest to the lucrative corporate market. While Maris points out that corporate (enterprise) revenues are on the rise – up 13% YoY in the first quarter, accounting for 57% of total revenues compared with 52% a year ago – he also acknowledges that boosting the organisation’s appeal in this market is vital.

“We need to get away from only selling meetings, and nine out of 10 people know us for that…so the aim is to transition from being a single product company to selling a complete collaboration platform, which is why we acquired Workvivo to focus on employee communication and engagement.”

The vision here, Eric Yuan, the supplier’s founder and chief executive said in its first quarter financial conference call, is to “help transform work” by rolling Workvivo into “our all-in-one collaboration solution”. Yuan describes the acquisition as combining a “social intranet and employee app into one central hub” that forms the “heart of a company’s digital ecosystem”.

The move is important, Maris believes, because: “The question is how to keep people engaged and productive if they’re working in different locations, and how to make whole experiences as seamless as possible. It’s a major focus for us and it’s what our strategy as a company is directed towards – our Workvivo employee experience acquisition was a direct result of that, and I’d argue it won’t be the last.”

Simplifying the portfolio with product bundles

Meanwhile, to simplify its apparently disparate product set and align it “with all the ways your work is evolving”, in the words of president Greg Tomb, the company has also created a “framework” of five integrated, horizontal product bundles:

  1. Zoom One – this contains online messaging, whiteboard and meeting functionality. A voice-over-IP phone service is also incorporated into the firm’s Business Plus and Enterprise subscription plans.
  2. Events –previously known as OnZoom, this bundle enables customers to create, host and make money from their events. It also provides Meetings and Webinars functionality, which includes dedicated event hubs, customisable registration and ticketing options.
  3. Spaces – this bundle enables users to book an in-office workspace or room to hold meetings and share content with hybrid working teams. It also includes Rooms audio and video conferencing software, digital signage and scheduling display technology.
  4. Contact Center – this is a video-based omnichannel contact centre system, which includes the firm’s Solvvy acquisition (conversational AI and automation software to enable customer support).
  5. Developers – this bundle consists of tools enabling third party developers to build applications and integrations with the vendor’s platform. It includes the Marketplace portal, application programming interfaces and software development kits as well as developer tools.

In addition, the organisation has put together various vertical market offerings, such as Zoom for Healthcare, a telehealth bundle for providers.

The pivotal role of AI

Increasingly underpinning these bundles though will be different forms of AI functionality. As Yuan laid out in the firm’s first quarter results call, his vision is to “see generative AI permeate and elevate productivity across our portfolio”, making its products more “flexible and customisable” in the process. For instance, the supplier invested in Anthropic in May 2023, with the intention of integrating the Claude chatbot across its entire platform, starting with its Contact Center bundle.

Zoom Meetings is another example where AI functionality is growing in importance. AI-enabled features currently include gesture recognition, background noise suppression and smart recording functionality. Smart recording enables business subscribers to quickly navigate recordings of those parts of meetings they are interested in. It also summarises and extracts key information, including highlights and next steps.

But in the future, users will be able to generate summaries and next steps, even if the event was not recorded, for inclusion in workflows. These will, in turn, generate prompts and reminders to ensure calls to action are followed up. Other offerings under development, meanwhile, include an AI-enabled training environment in Zoom IQ for Sales, which is an add-on to Meetings that enables sales teams to receive actionable insights based on customer interactions to boost individual performance. The product will also incorporate functionality that keeps track of agendas and meeting notes.

“AI is massively important but it’s still only in its infancy stages in terms of impact,” Maris says. “It’s a work in progress, but there’s already real functionality that customers can use today.”

Although boosting staff efficiency is an important aim in going down this route, the ultimate goal is to support a second big trend shaping the company’s strategy – hybrid working. In this context, it is attempting to answer two questions: how to ensure staff are productive and engaged if geographically dispersed and spending less time together, and how to make the employee experience as seamless as possible.

“It’s about building limitless collaboration going forward across one integrated platform,” Maris says. “You’ll be able to make meeting room reservations from home or in the office, access your workspace from a handheld device if you want to walk outside, get summaries and translations, and automatic news feeds from the intranet, all from one central point.”

Becoming a key player on the desktop

The company’s aim here is to become a “key desktop player”. Potential customers include “companies that don’t use or like Microsoft”, “those that aren’t on the full Microsoft platform” and those that would find Zoom useful as a “backup solution to Microsoft”.

But Maris acknowledges it has a delicate balancing act in terms of its relationship with the vendor. “Microsoft is formidable competition - there are definitely some areas we’d go head-to-head with them and it’s not easy to change a real Microsoft user house into a Zoom one due to their power on the desktop,” he explains. “But many companies also work with a range of different products, so it’s about finding the balance between competing and coexisting.”

Maris indicates that there are several areas where the supplier offers products and Microsoft does not, including its Contact Center bundle or IQ for Sales add-on. But he accepts that a big challenge it faces is simply “how people perceive us – even though the perception isn’t reality”.

As a result, a key focus in his new role will be “getting the message across and the marketing right to show how we can help our customers. We have one app where people can do lots of things such as chat, scheduling or making a phone call, so it’s a very powerful, intuitive workspace for them, no matter where they’re located.”

To ensure everything the company does aligns with how it wants to be perceived and to tackle a very different situation from the exponential growth scenario experienced at the height of the pandemic, it is undertaking much internal “transformation” work. This includes aligning “resources and the mindset of our people”, Maris says.

“It’s a very different set of circumstances than it was, but it’s something that we’re going for. We’re probably at best about 50% there – there’s still a lot of work to be done,” he concludes.

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