What the On-Premise Unified Communications Fade Means for the Channel

Cloud-based UC is becoming more popular. Here's why and what that means for a channel poised to benefit.

Moshe Beauford, Contributing Editor

April 30, 2024

5 Min Read
On-premise unified communications going away
Net Vector/Shutterstock

Global unified communications firm NEC recently announced it would exit from its on-premise unified communications business outside Japan over the next few years.

"This change applies to all of our on-premise UC products," the company said. "Our NEC BLUE UCaaS (unified-communications-as-a-service) offerings will not be affected by the exit process, where such products are currently available," it wrote in a customer statement.

Conceding that the decision to exit on-premise unified communications in most of the world would impact a notable share of its customers, NEC said it would honor existing contractual agreements. 

"We will not accept any new purchase orders received after Dec. 31, 2024, nor will we enter into any new commitments/renewals/extensions after that date. We will not accept any new purchase orders with a scheduled or expected delivery date after March 31, 2025; and we will also not provide any hardware and/or software support services beyond March 31, 2026, except for any existing contractual obligations," the company said.

NEC additionally conveyed that, come March 31, 2025, it would complete the last shipment of products relating to any accepted purchase orders received and/or any new commitments/renewals/extensions agreed between April 15, 2024, and Dec. 31, 2024.

This could have significant ramification for NEC partners outside Japan, something John Pillow, president of Business Phone Systems, said was not a "complete shock" as the trend shifts toward hosted voice systems.

"Except for a few legacy vendors like Avaya and Mitel, most everyone has made a similar move," he told Channel Futures.

J Braun, president of Enterprise Governance Systems Corp., believes that NEC will not be the last vendor to shift wholly to cloud-based, hosted voice offerings, as the news comes on the heels of Avaya's strategic partnership with Zoom and Mitel's Unify acquisition, two players with on-premises unified communications users who comprise the bulk of their business.

Is Microsoft Responsible for the On-Premise Unified Communications Exodus? 

Rick Garcia, executive VP of product marketing at business communications firm Momentum, cites Microsoft's market dominance for the NEC move, noting that since the unified communications landscape is continually evolving, providers tethered to traditional delivery and staffing models sit at a crossroads.

NEC's Rick Garcia

Contextualizing the move for the channel, Garcia noted that "as the industry witnesses a seismic shift toward platforms like Microsoft Teams − which boasts some 320 million monthly active users − Zoom, and Webex, channel professionals are swiftly adapting, pivoting their strategies toward more sustainable revenue streams.

"The stark reality is that if a UC provider has yet to acknowledge the colossal impact of Microsoft Teams, the wake-up call is imminent," Garcia said. "With unprecedented growth rates, Microsoft Teams is not just a player but a dominant force in the market, simplifying product accessibility from Operator Connect services to Microsoft’s calling plans."

Businesses of varying sizes are either considering or actively transitioning to Teams. Garcia told us they are "signaling a rapid transformation in the UC arena, leading to the kind of executive move similar to what NEC made." 

Garcia also said the recent move by 8x8 to join Operator Connect is telling.

"It's a tacit admission that the UC battle may very well be tipping in Microsoft's favor," he told Channel Futures. "This strategic pivot to ally with Microsoft and leverage its vast base of 320 million users to promote its contact center product suite is a testament to the 'partner or perish' reality facing today’s UC providers."

Similarly, vendors making related moves, Garcia shared, are coming to terms with the diminishing viability of legacy cost models in delivering UC — something he called "a strategy increasingly resembling an exercise in futility."

Garcia likewise reminded us of RingCentral's play, which he said is aggressively marketing Microsoft Teams, "yet it has no native Teams solutions. Llike many others, RingCentral faces a critical juncture: partner or perish."

On-Premise Unified Communications Exit a 'Tremendous Partner Opportunity'

A single unified platform is a conversation most unified communications firms have had for years now, with the idea seeming to have gone mainstream as more and more companies exit their on-premises unified communications business in locations where on-premise communications aren't required. 

"You have a unified platform to update versus hundreds of distributed systems; it’s much more effective from a security perspective," noted Norbert Doeberlein, CEO and founder at compliance assessment provider Netzbahn. From an MSP’s perspective trying to understand this, it’s the same as PSA and RMM vendors eliminating their on-prem offerings — updates and hotfixes are deployed more often and with greater diligence," Doeberlein added.  

Netzbahn's Norbert Doeberlein

For systems integrators, Enterprise Governance Systems' Braun said they stand to profit as well.

"Systems integrators have an opportunity between now and the end of 2024 to assist NEC customer sites with migration planning and contract extensions to support their existing systems, and they have a renewed opportunity to discuss resilience security and life cycle of all their customers' communication infrastructures," he said.

For other firms set to make the same move, there will likely be no shortage of partner opportunity that presents itself.

Braun said that systems integrators adhering to best practices are apt to have vendor-diverse UC and UCaaS offerings to service customer organizations with on-premises and cloud-based solutions." 

When such a move inevitably occurs again, that minimum end-of-support time frames will present opportunities for integrators/partners to develop strategies for existing customers' migration and new customer acquisition, "as well as to implement successful programs to help their customers achieve operational excellence with rapidly evolving UCaaS platforms," Braun said. 

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About the Author(s)

Moshe Beauford

Contributing Editor, Channel Futures

Moshe has nearly a decade of expertise reporting on enterprise technology. Within that world, he covers breaking news, artificial intelligence, contact center, unified communications, collaboration, cloud adoption (digital transformation), user/customer experience, hardware/software, etc.

As a contributing editor at Channel Futures, Moshe covers unified communications/collaboration from a channel angle. He formerly served as senior editor at GetVoIP News and as a tech reporter at UC/CX Today.

Moshe also has contributed to Unleash, Workspace-Connect, Paste Magazine, Claims Magazine, Property Casualty 360, the Independent, Gizmodo UK, and ‘CBD Intel.’ In addition to reporting, he spends time DJing electronic music and playing the violin. He resides in Mexico.

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