In this photo illustration Zoom app logo can be seen, Kolkata, India, 17 April, 2020. India said on … [+]
Zoom Video dominates the corporate videoconference market while Apple’s
On April 7, Apple announced some changes to FaceTime at its Worldwide Developers Conference (WWDC).
I see three reasons why FaceTime will not slow down Zoom’s growth:
- Zoom is run by an innovative founder and is growing much faster than Apple
- Zoom dominates the videoconferencing market
- Apple blew an opportunity for FaceTime to lead and is offering too little too late
(I have no financial interest in the securities mentioned in this post).
Apple’s Changes To FaceTime
At its WWDC, Apple announced software enhancements to FaceTime aimed at extending its availability to people who don’t own Apple devices. According to MarketWatch, Apple plans to introduce three new features to FaceTime:
- FaceTime links will enabled meeting organizers to pass around a link to a scheduled FaceTime call — ”even to web-based users who don’t have Macs or other Apple devices.”
- Enhanced audio settings on FaceTime that enable users to “block out noisy background sounds” or “captures everything going on around them.”
- Content sharing. Apple will launch SharePlay that enables FaceTime users to watch content together. This will work with Apple TV+ and others — such as Disney and HBO Max.
These changes strike me as bringing FaceTime closer to providing the basic features of competing products rather than yielding a competitively superior videoconferencing option for business and individual users.
Zoom’s Innovative Founder Drives Surprisingly Strong First Quarter
Zoom’s innovative founder — Eric Yuan — has accomplished so much in his career. As I wrote in 2017, he helped start WebEx, became an executive at Cisco after it acquired the company, and left to start Zoom because he was embarrassed with what Cisco had done to “his baby.”
Since Zoom went public in 2019, its stock has soared 453%. After all, thanks to Zoom’s dedication to making its customers and employees happy and its rapid response to the surge in demand during the pandemic, it became the Google
This resulted in a very strong first quarter 2021 earnings report. According to CNBC, Zoom reported better-than-expected 191% sales growth in the first quarter — with revenue of $956 million beating the Refinitiv consensus by about $50 million.
This is much slower than the 369% growth that Zoom enjoyed in the previous quarter which reflected its growth from before the pandemic. Sadly, that growth slowdown could help explain why its stock has lost 42% of its value since peaking at $588 last October.
For the full 2022 fiscal year, Zoom expects revenue in the range of $3.98 billion to $3.99 billion — about $200 million more than the Refinitiv consensus and 50% more than it generated in fiscal 2021.
Zoom is planning for people to return to work in hybrid mode, As Yuan explained in a statement, “The hybrid model is here to stay.” As the Wall Street Journal reported, “Zoom Rooms, the company’s take on the traditional conference room, and Zoom Phone, which the company sells as a telephone option for huddle rooms and executive offices, saw strong user growth as more employees returned to traditional offices.”
Zoom Leads In Business VideoConferencing
At the end of March Zoom was way ahead of rivals such as Google Meet, Microsoft Teams
Compared to rivals, Zoom’s market share soared from 22.3% in 2019 to 48.7% in 2020.
The study’s author, Robert Brandl, founder and CEO of EmailToolTester, considered Zoom and Microsoft Teams to be the leaders. As he said, these two are “all-powerful players in keeping people and businesses connected and have become increasingly imperative since the pandemic.”
Skype blew its chance. “Sadly, Skype has struggled to keep up with the likes of Zoom since they started adding pertinent features and improving the quality of their calls which caused Zoom to become most people’s choice of application, with Skype becoming a thing of the past,” said Brandl.
Apple Blew Its Opportunity Years Ago — Too Late To Catch Up
Apple also blew an opportunity to be the category leaders in video collaboration. According to ComputerWorld, when FaceTime was launched by Steve Jobs, Apple promised to make it a standard that would make it available across all platforms.
ComputerWorld noted that under Tim Cook, Apple failed to realize this promise. “No matter how many Animoji’s you throw at Apple’s video chat solution it’s still only of use to people who live on the Apple Island. And even now — years later — it lacks collaboration tools. What a waste of a potential platform with hundreds of millions of users.”
Apple clearly had a leg up in one respect — a “trusted position on security and privacy and its growing market share in enterprise IT.” So when Zoom suffered security breaches that led to Zoombombing, Apple was unable to take advantage of the opportunity.
The key to Zoom’s continued lead is that Yuan places so much value on making its customers happy. That means that it adapts much more quickly than rivals do to service problems and opportunities to tailor its service the rapidly evolving needs of its customers.
