The future of cloud communications took centre stage at Cavell Enable 2024, and it was clear the game is changing for service providers. The stakes are rising, and the battle lines have been drawn around artificial intelligence, customer experience, and the evolving dynamics of BYOC (Bring Your Own Carrier) enablement.
In an insightful keynote packed with market statistics, Cavell’s Head of Research, Patrick Watson, laid bare the challenges and opportunities that lie ahead for ‘the big three’ in the cloud communications space—Microsoft, Cisco, and Zoom—who are leading the charge on enablement marketplaces.
The AI Avalanche
With 92% of end-customer organisations trialling or deploying artificial intelligence, service providers are staring at an innovation arms race. The question isn’t whether AI will shape communications but how it can drive tangible business outcomes for customers. Enterprises are desperate for efficiency gains, improved productivity, and cost reductions. Yet, Cavell’s research reveals many businesses are still groping in the dark, unsure of AI’s full potential.
The opportunity for service providers? Become the guiding light. Building AI-powered solutions that genuinely enhance end-user experiences could be the wedge needed to gain loyalty in an increasingly crowded market.
The CX Goldmine
It’s no longer just about dial tones and video calls—customer experience (CX) is the new battleground. Enterprises are pivoting towards CX as a strategic priority, driven by the promise of better margins and stickier customer relationships. Contact centres and informal CX solutions now overshadow traditional unified communications, creating fertile ground for providers to add value.
BYOC Enablement: Opportunity or Trap?
The rise of BYOC enablement marketplaces—like Microsoft Operator Connect, Zoom Provider Exchange, and Cisco Cloud Connect—offers providers unprecedented access to global customers. But these platforms come with a caveat: how do you differentiate when the product is the same?
Watson’s data paints a stark picture of the service provider conundrum:
- Competition: The landscape is cutthroat, and price degradation is rampant.
- Customer Retention & Acquisition: Keeping hold of customers while finding new ones is no easy feat.
- Product Differentiation: When everyone sells the same UC platform, where’s the edge?
Providers are flocking to enablement platforms not just for enterprise demand—service provider demand for multi-UC strategies now outstrips enterprise appetite. Providers need the flexibility to offer Microsoft here, Zoom there, and Cisco where it fits best. Why? The more platforms they offer, the greater their access to customers across sectors and sizes.
Cost: The Elephant in the Room
For enterprises, cost reduction is the unrelenting top challenge. Every pound spent on communications tech is scrutinised, and enablement marketplaces must deliver on their promise of simplicity and competitive pricing. Service providers who can streamline administration and reduce costs for their clients will stand out.
The Big Three Growth Surge
The numbers don’t lie: BYOC adoption is accelerating across the board. Cavell’s proprietary research shows:
- Microsoft PSTN-enabled users top 20 million,
- Webex Calling users surpass 16 million,
- Zoom Provider Exchange nears 8 million users.
This growth reflects not just enterprise appetite but also the relentless service provider scramble for market share.
The Margin Dilemma
Matt Townend, Executive Director of Cavell, tackled the critical challenge facing service providers: the margin dilemma. With traditional products offering diminishing returns, service providers must navigate shrinking margins and increased complexity in customer demands. “Growth isn’t the issue,” Matt explained, “but the products driving that growth often come with lower core margins.” He highlighted how services like Microsoft Teams Operator Connect, sold at a fraction of the price of legacy offerings, are forcing providers to rethink their value proposition and revenue strategies.
The path forward, according to Townend, lies in value-added services and professional expertise. Service providers must move beyond reselling core platforms to offer tailored solutions that increase average revenue per user (ARPU). This includes building microservices, vertical integrations, and mobile-first capabilities that enhance the customer experience. Pro services and verticalisation, such as industry-specific integrations, were identified as major growth areas, particularly as private equity investors favour businesses with a sticky, specialised focus. Townend also emphasised the importance of making the migration process seamless, a critical factor in retaining and growing enterprise customer bases.
Looking ahead, Townend urged service providers to think globally. Leveraging platforms like Microsoft Teams, Cisco Webex and Zoom to offer global services is no longer the Herculean task it once was. Today’s enablement platforms allow service providers to compete on a global scale, serving multinational customers with ease. By aligning with platform capabilities and embracing professional services, service providers have an opportunity to not only recover margin but also create sustainable growth in the evolving cloud communications landscape. “The opportunity is there,” he concluded, “but it demands a broader, more strategic approach.”
Looking Ahead
As Patrick put it,
“The case for enablement markets is stronger for enterprises, but providers are chasing a seat at the table.”
Multi-vendor strategies, AI innovation, and CX-first thinking are no longer optional—they’re survival tactics.
For service providers willing to rethink their portfolios, embrace global platforms, and laser-focus on differentiation, 2025 promises opportunities to outmanoeuvre the competition. For those who don’t, the future looks far less certain.
The year ahead will test the grit and creativity of every player in the cloud communications space.
Ready or not, the enablement revolution is here.
Want to Learn More About Microsoft’s Agentic Vision?
Dive deeper into the Microsoft Future of Work session and uncover how AI is transforming productivity and collaboration. From Copilot Facilitator to real-time language translation, Microsoft’s groundbreaking innovations are reshaping the workplace as we know it.
Key Insights Await You:
- What does “We’re leaving behind the world of apps” really mean?
- How Copilot is set to become the ultimate AI collaborator.
- Why service providers must embrace the agentic revolution to thrive.
Don’t miss out—read the full round-up here: Microsoft Ushers in the Agentic Era
