What does Verizon want to do with BlueJeans?

Source: CRN

Context

“Collaboration and communications have become top of the agenda for businesses of all sizes and in all sectors in recent months. We are excited to combine the power of BlueJeans’ video platform with Verizon Business’ connectivity networks, platforms and solutions to meet our customers’ needs.” Tami Erwin, CEO of Verizon

Rationale: Marco-factors

Verizon has also seen a general surge in usage. The company said late last month that it was handling an average of 800 million wireless calls each weekday — nearly twice the volume of the company a year ago. As wireless service providers, they could diversify their digital offerings by enhancing their value proposition in the videoconferencing industry.

Rationale: 5G Integrations

On the flip side, Verizon is constantly looking for acquisitions for developments in order to execute its 5G product roadmap. Considering BlueJean’s trusted reputation, video-conferencing market growth, and its B2B enterprise distribution model, Verizon sees BlueJeans could fit Verizon’s Unified Communication portfolio perfectly.

Side-note: Verizon’s 5G product roadmap other categories include telemedicine, distancing education, field service work, etc.

Video Conferencing Competitive Landscape

Source: The Mozilla Blog

On the video-conferencing side, the competition is getting more tight as technology companies have witnessed the upsides in the enterprise video-conferencing market opportunities. Zoom Communication has become predominant in the market and tech giants like Microsoft have further advanced its WFH technology and development Microsoft Team, Amazon has teamed up with Slack to provide video-conferencing and workplace tools, Google has made its video communication service free and Facebook launched Workplace with a focus in video-conferencing technology. 2 Questions remained unknown: What is the economics of the market? is it winner takes all, or the market will be distributed to different niches? What are the potential complements of video-conferencing technology? How much does it cost the enterprise to switch their communication software? What other tools do they value?

On the telecommunication side, the competitive landscape of telecom has changed ever since T-Mobile consolidated Sprint in early April. Verizon has faced stronger competitions, especially from T-Mobile. T-Mobile is the sole carrier of all high-, mid-, low-band 5G technology development, whereas Verizon has invested solely towards high-band 5G technology with over 1.6 billion, twice as much as T-Mobile. The value proposition of Verizon is clearly leaning towards enterprise supports through B2B distributions whereas T-Mobiles aims to target retail customers primarily. Verizon is investing a lot in 5G applicable enterprise tools including telemedicine, distancing education, field service work, etc, providing a unique value proposition for Verizon against AT&T and T-Mobile.

Behind the lens #1 — Is 5G Enough?

Some argued that BlueJean is an awkward fit for Verizon, essentially referring to the questionable value creation by integrating 5G into these productivity tools that could increase product differentiation. Main questions including..

  • How likely will existing videoconferencing app customers switch to BlueJean’s enterprise software (Switching Cost, Economic Incentives)
  • What are the measurable benefits would 5G provide to videoconferencing services, current network w/o 5G works perfectly fine as well
  • Will wireless services demand to be permanently affected by the Coronavirus shock? Ericsson, one of Verizon’s biggest suppliers, states most of the worldwide traffic increase is being absorbed by the fixed residential network. In other words, 4G and 5G have become less important since the virus appeared.

Behind the lends #2 — Time Lags

For example, Verizon could easily sell BlueJeans videoconferencing tools to enterprises in New York City where its 5G infrastructure is well-built, however in a city like Nova Scotia in Canada where 5G is not accessible yet BlueJeans cannot be marketed as 5G equipped which loses its marketability. The full impact of its current operation depends on its existing 150,000 customers’ access to the 5G network and Verizon’s ability to roll out their 5G services as much as they could.

Behind the lens #3 — Bundling Effect

Therefore, the implication of it is that the real focus of the acquisition is not growing BlueJeans to scale against other dominant video-conferencing players but to provide additional incentives for customers to purchase its 5G services within the 31 cities that are 5G-powered and counting.

Personally speaking, I think Verizon is making really smart moves against the changing competitive landscape in the Telecomm and tech industries. I had scrutiny about their superficial investment into MMwaves (high band) 5G technology but not low-band and mid-band. Verizon is building a unique value proposition in enterprise services given its large pool of existing customers and branching enterprise-support tools. By diversifying its product offerings on top of developing world-class high-band 5G technology could better differentiate them against others, a lot of its 5G roadmap applications are scalable and have really low variable cost.

In the long-term, if Verizon’s thesis about a permanent increase in 5G demand and enterprise demand in its 5G product roadmap categories holds true, Verizon will be much scalable than its competitors.

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