AT&T revives Office@Hand UCaaS deal with RingCentral

AT&T has recommitted to its partnership with RingCentral after telling customers earlier this year that it would soon stop supporting the startup's Office@Hand UCaaS platform.
In an unexpected move, AT&T will continue supporting and reselling RingCentral's unified-communications-as-a-service platform as part of a new partnership targeting the large-enterprise market.
AT&T had informed customers in January 2018 that, within a year, it would no longer support RingCentral's Office@Hand, a cloud-based calling and messaging platform the carrier had been selling to small and midsize businesses.
But, this week, the two companies struck a new deal: AT&T will now start selling the UCaaS product to large enterprises, as well as SMBs. Scott Velting, an associate vice president with AT&T, attributed the about-face to "rapidly changing market dynamics and technological advances."
RingCentral previously purchased AT&T's customer licenses for Office@Hand in an agreement worth up to $26 million. The startup cautioned investors that revenue could be "significantly and adversely affected" if too many of those customers declined to transition from AT&T to RingCentral.
While some of those customers have already migrated, the businesses that have not yet switched will be able to remain on the Office@Hand platform through AT&T, RingCentral said.
Leading up to the earlier decision to end the partnership, Office@Hand sales had stagnated, with an "immaterial" number of new subscriptions sold in all of 2017, according to RingCentral. Sales through the AT&T channel accounted for 11% of RingCentral's revenue that year -- down from 14% in 2016.
With the new deal announced this week, the technology behind Office@Hand is the same, but RingCentral appears to have developed a more robust strategy for working with service-provider partners like AT&T, said Jeremy Duke, founder and chief analyst at Synergy Research Group, based in Reno, Nevada.
RingCentral is "currently growing at more than the average growth rate for the UCaaS market, and they want to continue that growth," Duke said. "And they see the AT&T relationship as very important to continue building that momentum."
RingCentral has more than doubled its revenue over the past three years, from $220 million in 2014 to $501 million last year, according to federal regulatory filings.
"I think this move helps RingCentral in its efforts to move upmarket. We continue to see RingCentral posting strong growth numbers; this expanded partnership should only help," said Irwin Lazar, analyst at Nemertes Research, based in Mokena, Ill.
AT&T partners with several other UCaaS vendors, including Cisco and BroadSoft, which was recently acquired by Cisco. It also has its own cloud communications platform, AT&T Collaborate.
Vendors target large enterprises with UCaaS
While SMBs drove most of the initial growth of the UCaaS market, more and more enterprises are also now buying cloud calling plans.
UCaaS sales in the enterprise market are growing at twice the rate of sales in the SMB market, according to data released last month by Synergy. There are now nearly 8 million UCaaS seats worldwide, a twofold increase since late 2015, the firm said.
As of the second quarter of 2018, RingCentral remains the leader, with an 18% market share, trailed by Mitel at 16%, 8x8 at 13%, Cisco at 7%, and Vonage at 7%, according to Synergy. Mitel recently acquired UCaaS vendor ShoreTel.
Source searchunifiedcommunications

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