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  • Writer's pictureElliot Mulley-Goodbarne

Zoom's head start not enough to avoid defeat

No business has gained more from the coronavirus than Zoom.

At the start of the year the video conferencing platform was enjoying success as "the nice guys" of collaboration, boasting forth quarter profits of over $180 million and profits on the year of $622.7 million, a 78% and 88% respective increase on the same period last year.

My Instagram feed, television viewing and even podcast content is now dominated by Zoom and it's ability to connected and, perhaps a little hypocritically, I myself have participated in quizzes and catch ups with friends and family.

But an occasional usage doesn't ensure the long term support, and I certainly have my questions for Zoom; starting with it's business model.

In the business to business (B2B) communications world, Zoom has marketed itself as the high quality and cheaper option for both those who frequently need to meet with colleagues or clients in different locations or want to broadcast a speech to a lot of people.

The reason for it's success is that it's natural competition, namely Microsoft, Facebook and Google, had not prioritised video conferencing; Microsoft being a prime example, focusing on its rival to Slack until it's 2018 launch.

In the face of the much maligned Skype for Business, the exclusive Cisco WebEx and the potentially expensive alternatives of BlueJeans, Lifesize and go to meeting, Zoom has come as an easy to use, high quality solution that is potentially free.

That's certainly proved to be an enticing initial business model but longevity is based on relationships and the value that your product or service brings to you. Zoom's rise came at a time when video conferencing was complicated, expensive and fragmented, and Zoom can be credited with the simplification of the sector.

But now that Teams has become widely available for close to two years, Facebook Workplace now contains the ability to broadcast a message live to your company (potentially nullifying the need to hire a room for a mass broadcast), and Google has opened up it's video conferencing for anybody, Zoom's appeal both in a professional and personal light may start to wear away.

We live in a era of eco-systems. You're an Android or iPhone person, prefer Windows or Mac, a G Suite, iCloud, or Office user. Zoom has integrations with Teams, Slack, and the G Suite professional applications but all these platforms have the ability to escalate a chat to a voice or video call on the platform and even on an open platform like Slack, Zoom has to compete with BlueJeans, Google Hangouts, Teams and Cisco WebEx.

For businesses, if they are using Office, will they pay for Zoom or just use the video conferencing that Teams offer within it's Office subscription for no added charge? Same goes for Slack, Workplace and the Google Alternative. It's great to be low cost and easy to use but in a world where businesses are driving revenues through cost cutting rather than sales, Zoom strikes me as an expensive nice to have.

Pricing also brings up it's own difficulties. Zoom may have hit headlines with record active users and revenues this year however with rock bottom prices comes the temptation to cut corners to reduce expenditures and improving margins.

Headlines that you may also be familiar with are those that embellish the truth when it comes to security and daily active users. Even today, a former FT journalist has been accused of 'Zoombombing' a sensitive conference of a rival newspaper.

When I was covering the GDPR rush a lot of the scaremongering was about the power of bad publicity. So far Zoom has grown a lot due to it's ease of use but it has also taken a barrage of bad publicity due to shortcuts, spare of the moment decisions to manage traffic and, frankly, shady software 'bugs' exemplified in 'malware' being left on MacOS devices after uninstalling Zoom.

Now the vast majority of the people using these platforms may not care, if Houseparty and TickTok demonstrate anything it's that FOMO will drive a lot of users to sign up for a service and ask questions later. But there is a majority out there that will care, especially for businesses.

I don't buy the hype over Zoom. Like Nokia and the mobile phone, initial success doesn't ensure unending profits. Competition will catch up and bring better products to the floor (some might say this has already happened) and a new normal will be set.

Even in the private settings of the household, the coronavirus has taken Apple, Facebook and Google off guard but they will catch up. WhatsApp's inadequacy were eased last week, upping the possible participants in a video chat to eight, and more improvements will come that allow consumers to video call whoever they want within the walled garden of their ecosystem of choice, eliminating the need to download yet another application and sign up to another service.

As I mentioned before, the longevity of businesses are based on the relationship you have and the value you bring. If questionable headlines about Zoom persist and established messaging providers can produce a comparable service for free I question where Zoom will hold, let alone increase it's market share.

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