June 5, 2020
Looking to reclaim lost share of the PBX market, NEC’s new cloud-based UCaaS offering is now available in the U.S.
NEC faced a competitive disadvantage to rivals Avaya and Cisco because it lacked modern cloud PBX and contact center products and services.
It couldn’t expeditiously develop its own cloud UCaaS offering, so NEC considered various licensing options, ultimately partnering with Intermedia.
Intermedia and NEC Corp., based in Tokyo, inked the global partnership in late April. Intermedia’s largest UCaaS footprint is in the U.S. Consequently, NEC Corp. of America (NECAM) was able to begin rollout of NEC’s UCaaS.
NEC’s Marc Hebner
“We partnered with Intermedia because they are truly channel-focused,” Marc Hebner, VP of NECAM’s enterprise channel, told Channel Partners.
“Intermedia’s whole model is to sell their product through a channel,” Hebner added. “And that, aligned with our vision and what we’ve built here over the past 50 years in the United States. We are 100% dedicated and focused on selling our products through our channel.”
We recently compiled a list of 20 top UCaaS providers offering products and services via channel partners.
Michael Gold, Intermedia’s CEO, said partners account for 80% of an estimated $250 million in sales. The company gives partners the choice of using the Intermedia brand or a white-label option using their own branding.
Most opt for the latter, Gold told Channel Partners.
Intermedia’s Michael Gold
“NEC, a great global brand with global reach, wanted to have their brand,” Gold said. “There’s a whole platform behind it that allows NEC and NEC’s partners to run the business as if it’s their own.”
This partnership is more extensive than most for Intermedia. For example, Gold said Intermedia is integrating NEC’s legacy on-premises PBX systems with its network. That will allow NEC’s new UCaaS offering to include hybrid solutions.
Flexible Partner Options
Last year, Intermedia expanded its go-to-market options with the addition of new white-label models.
Hebner said flexible partner options were a key factor in why his company chose to partner with Intermedia.
Partners can opt to offer NEC’s new UCaaS offering through a revenue share model, said Hebner. They can also choose customer ownership or the traditional agent option, Hebner said.
“We’re giving our channel huge flexibility on how they want to go to market with this product,” he said. “If they want to take all the top line revenue, they can. If they want to control the margins that they make and add additional services, they can. But maybe they want NEC to be the face of this. If they want NEC to manage the invoicing and have it be NEC-branded and for us to do tier one, tier two and tier three support, they could do that too, under the traditional agent model.”
Given the variation in the types of partners in NEC’s ecosystem, that choice of model is key, said Paul Diesu, CEO of Forerunner Technologies.
As one of NEC’s largest national system integrators, Diesu said NEC’s new cloud UCaaS offering is long overdue.
“My biggest complaint as their largest distributor was that their cloud story was not very good,” Diesu said. “They relied upon small third-party vendors that couldn’t deliver, especially in the enterprise space.”
Given the growth of UCaaS options, that has made it difficult to …
… match offers from Cisco, Avaya and pure-plays such as RingCentral, 8×8 and others, he said.
NEC was once among the dominant enterprise PBX providers, but its share over the years has declined. Nevertheless, the company has a strong foothold of customers in health care, government agencies and in hospitality. Many of his customers are looking at hybrid options, Diesu said.
Comparisons to Avaya-RingCentral Partnership
While once a larger force, analysts say NEC’s presence has shrunk.
“We haven’t seen much of NEC in the enterprise space in the last few years, except in Japan,” said Irwin Lazar, VP and research leader for digital workplace technology at Nemertes.
Like many observers, Lazar said the partnership is similar to the pact Avaya and RingCentral formed. Under that arrangement, RingCentral is the Avaya UCaaS platform for Avaya Cloud Office.
“It allows NEC to more rapidly offer a UCaaS service and offer a migration path to cloud for existing NEC customers and resellers,” Lazar said. “They are also stressing that their reseller approach allows partners to own the customer relationship, versus the Avaya-RingCentral approach of only allowing channel partners to act as master agents. This is an NEC-branded offering, so potentially less buyer confusion.”
Forerunner’s Diesu said he advised NEC executives against the Avaya-RingCentral model for that reason.
“If you think about what RingCentral is doing today, in my opinion, they are just buying the SMB customer base from Avaya and they’ll convert it to RingCentral,” Diesu said. “But Avaya won’t own the relationship any longer.”
The Right Fit?
Dave Michels, principal analyst and founder of TalkingPointz, agreed that the NEC-Intermedia arrangement is structurally better in several ways. But NEC’s choice surprised Michels.
“Intermedia is a curious selection for a global company like NEC,” said Michels. “Intermedia is a very small U.S.-only provider. They announced North American and European coverage by the end of year, and APAC in 2021, but that seems unlikely.”
Mark Sher, Intermedia’s VP of product marketing, is confident the platform will be available worldwide early next year. Canada will go live over the next several weeks. And in August, it will become available in EMEA, including the U.K., Netherlands and Italy, and then Australia and Japan.
‘We’ve got our carrier relationships up and running and have our infrastructure,” Sher said. “We’re really finalizing, right now with the localization of our apps, so we’ll be going into beta in the near future with partners there.”
Nevertheless, Michels views the partnership largely as NEC’s effort to slowly exit the UC/UCaaS market.
“The arrangement, which likely didn’t cost anything, allows NEC to leverage its brand, base and channel,” he said. “NEC has been reducing its investments in R&D and this will likely accelerate that. NEC has become more focused on broader IT opportunities in servers, networking, video biometrics, and IoT.”
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