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Cisco Delivers Spark Messaging and Calling Plans – You’ll Never Guess What Happens Next!

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Cisco Delivers Spark Messaging and Calling Plans – You’ll Never Guess What Happens Next!
    

By: -
8 Mar 2016
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Cisco, that quaint little $50B-a-year company known for best-in-class voice, video, and web collaboration, is quietly undergoing a massive and potentially disruptive shift within its collaboration division. Led by rogue-maverick-executive Rowan Trollope, Cisco collaboration boasted Q4 '15 YoY gains around 15%. Rowan has the collaboration team firing on all cylinders, which is obviously the perfect time to reinvent itself, amiright?

This aforementioned reinvention centers on Cisco's Spark offer, a cloud-first collaboration ecosystem built on the latest / greatest tech. As or more interesting than the tech itself is the decidedly un-Cisco product development approach that Team Trollope is following - agile development, continuous release cycles, analytics-based requirements gathering. Rowan has this team delivering, observing, and updating the current user experience so fast that the solution has yet to be formally productized - until now. In early March, Cisco will launch Spark Messaging and Calling packages, available initially in the U.S., with a global rollout to follow.

Cisco Spark fits into our Persistent Collaboration Spaces collaboration genre, supporting persistent group messaging, file storage / sharing, and audio, video, and web collaboration. I'll summarize the new offer structure and pricing here - but if you're not familiar with Spark, you can sign up for a free account and soak in the current experience to your heart's content.

Offer Structure 

The new Cisco offer structure follows the much needed and highly appreciated KISS (Keep It Simple, Stupid) principle that has recently become popular within many UC product teams. Cisco segments the new offer into 1) Spark Messaging, 2) Calling, and 3) Add-ons, all described below.

Messaging - there are three simple sub-segments to messaging:

  • M1 - Business Messaging: you get IT-friendly messaging, with SSO, reporting, analytics, and admin-controls across your company's Spark users. (Can we agree to call them Sparkies? All in favor? Great, Sparkies it is.) M1 also lets you communicate via audio (VoIP) and video and share your screen with up to three other Sparkies.
  • M2 - Business Messaging + Basic Meetings: everything in M1, plus your meeting capacity is bumped to 25 Sparkies. Sounds like a party. A decidedly nerdy party.
  • M3 - Business Messaging + Advanced Meetings: effectively adds a WebEx license to the mix - you get a personal WebEx meeting room, can schedule meetings, and bump your party to 200 participants.

Calling - adds PBX functionality and PSTN connectivity via the Spark cloud:

  • PBX Features: core PBX functionality will be provided by Cisco’s Spark Cloud. An exact list of features will be made available at launch, and we expect this will be a useable subset of the full Cisco Unified Communications Manager (CUCM) feature-set.
  • PSTN Connectivity: phone numbers and voice plans will be provided by a group of qualified Media Providers (aka service providers). The list of providers, related calling plans, purchase process, and further details will be made available at launch.
  • Hybrid Configuration: Spark Calling, as you might expect, can be configured as a hybrid service – allowing for seamless integration with an enterprise's existing CUCM or Cisco Hosted Collaboration Solution (HCS) installation.
  • Phones: Spark Calling will also support a range of Cisco desk phones and endpoints – the exact list to be provided.

Add-ons - Cisco identified three core add-ons that can be purchased in addition to Messaging and Calling packages:

  • Rooms: supporting room endpoints connecting into a Spark Meeting.
  • Conference Audio: adding PSTN connectivity for Spark Meetings.
  • Additional Centers: adding WebEx Event, Training, and Support Center options.

Pricing 

Cisco published an extensive pricing schedule for all things Spark at Enterprise Connect – this update will focus on comparing the base Spark Messaging and Calling offers (M1 and C1), and Wainhouse Research subscribers can access our full review in a research note to be published shortly.

The per-user-per-month (PUPM) MSRP for the base M1 messaging package will be $9.50 USD ($8 PUPM annual pre-paid). The base Cloud Calling package (C1) will list at $22.50 PUPM ($19.50 PUPM annual) – note that this includes the base (M1) messaging functionality. Of course, these are MSRP / list rates - as with other Cisco products, we won't be surprised to see some bundling incentives and volume-based partner incentives, although we expect any discount ranges to be limited based on Cisco's approach across other collaboration products.

Comparison 

With this product extension, Cisco formally joins the direct-offer UCaaS party, elbowing its way to a bar crowded by the likes of Microsoft, Google, and a very long tail of hosted UC providers like 8x8, RingCentral, Vonage, Mitel, ShoreTel, and Fuze (formerly Thinking Phones). It's difficult to provide a pure apples / apples comparison across offers based on the unique mix of services that are often bundled with a UCaaS license. That said, the following table provides as close to an apples / apples comparison for a base UCaaS offer that includes a client, messaging / IM, audio / video / web conferencing with at least three users, PBX functionality, and a base domestic PSTN conferencing and calling plan.  The plans are all based on per-user per-month (PUPM) pricing:

A few important notes here:

  • Cisco’s total estimated rate includes a domestic PSTN Voice Plan provided by Intellipeer – the only certified voice partner at launch. We can expect a range of PSTN pricing as additional partners come on board – which should happen in the near-term. Also, remember: this is the base offer - conferencing with three participants max, no WebEx.
  • Microsoft's E1 plan provides Skype for Business (and up to 200 participants per SfB meeting), along with Office Online (no Office apps - browser only), Yammer, SharePoint, OneDrive for Business, and Exchange Online. You can purchase Cloud PBX as an a la carte add-on, and add PSTN plans at the incremental rates listed above.
  • Google's Apps for Work offer includes Hangouts for Work, in addition to Google Apps, Google Drive, and a Gmail account. Google doesn't support native PBX or PSTN conferencing - both services must be purchased from a qualified third party. We also used UberConference’s paid plan as the comparative example for PSTN conferencing – UberConference also provides a freemium offer that limits the conference to 10 PSTN participants while reducing features and support options.
  • UCaaS providers also support a range of incremental service options, including managed network, storage, and contact center functionality, depending on the provider in question. The estimates above reflect a base UCaaS offer – no peripheral services or devices. The lower PUPM pricing for larger enterprises reflects common volume discounting for both licenses and calling plans.

Rambling Observations 

First and foremost: the packaging and pricing outlined in this update reflect Cisco’s first-release. We can expect to see the model and initial MSRP/ list pricing mature and morph as the channel is engaged, discounts are applied, and the market communicates its preferences by voting with its wallet.

All said, Cisco’s fully-loaded base offer comes in at a premium compared to the competition’s pricing here. Spark’s MSRP of $38.75 is 17% higher than Microsoft’s base O365 enterprise offer, which includes Office, e-mail, SharePoint, etc. etc. They are 10% higher than the comparable offer we used for Google, which one could argue is the high-end of a PSTN-enabled Google Apps for Work subscription – you could use UberConference’s freemium PSTN bridging offer and drop that price to $25 PUPM, putting Spark Calling at 35% above Big G. Spark’s base offer even comes in above the average sales price for UCaaS providers – 16% above those selling to the SMB (the market Cisco is initially targeting here), and a whopping 42% above UCaaS offers targeting larger enterprises – the market targeted by Cisco’s own HCS providers, BTW.

So what gives?

Let's start with the target market here: Cisco’s focus on the smaller enterprise makes sense – most of their HCS providers focus on the mid-to-large enterprise as the HCS economics get wobbly for the sub-500 seat customer; Spark Calling opens the door to these partners expanding into the smaller enterprise market. In addition, the Cisco Loyal are likely to view Spark Calling favorably – certainly for those users who will benefit from Spark’s PCS experience, and/or users who may not need the fully-loaded CUCM or HCS experience.

Ask Cisco, and they will quickly point to their pedigree in IP telephony and the associated trust they have built with the IT community. Rowan has made it very clear that they are working to create the best real-time communications platform available across voice, video, and web collaboration product lines. To hear Rowan tell it, and I'm paraphrasing only slightly here: "If you want commodity productivity solutions - email, documents, spreadsheets, online storage - give Microsoft or Google a call. But when you need a real-time communications platform you can count on, come to Cisco. And we're happy to integrate with other provider's asynchronous solutions when and where it makes sense."

From my chair, it appears Cisco is coming into this dance with a large - and perhaps well-deserved - chip on its shoulder. Cisco's product team points to Microsoft's E5 pricing strategy as one that you'd expect from a company needing to buy its way into a market. Cisco, on the other hand, boasts an established market leading position across IP Telephony (CUCM), Web Conferencing (WebEx), and group video (Telepresence) product lines. All said, the 'best-of-breed' approach has been working for Cisco.

Still, Spark represents a new and somewhat uncharted territory. While WebEx has enjoyed a long run as the enterprise web conferencing market leader, Spark comes in with a closer resemblance to a Valley-based startup offer than anything else we’ve seen from Cisco. And while Cisco continues to show its strength in selling through a well-established channel, Spark's intentional new-school agile product development approach is a source of confusion within the partner community - and Cisco itself - as they work to absorb and understand opportunity and go-to-market models. We’re observing an epic mashup here, as Cisco leverages core and proven technologies, while reinventing its core architecture, user experience, and product delivery process. While success certainly isn’t guaranteed, it’s hard to argue with this approach. Rough spots, gaps, and questions are all being addressed at the speed of agile development.

Lastly, I can't let a Spark post end without dropping a mad API reference, yo. Cisco's made a big deal of Spark as a platform above all else - one that will drive collaboration innovation through third-party development. Mr. Trollope's money is where his mouth is here, having acquired Tropo last May - bringing on a team known for its best-in-class and dev-friendly API chops. While we see Spark Messaging and Calling plans emerging, we need to keep in mind that Mr. T's master plan is likely much bigger than just selling a boatload of Spark licenses. I've spoken to a few partners who fundamentally get this, and are on board - the first movers and shakers are already ring-fencing their own dev resources, affording them creative license to explore new and interesting solutions by leveraging Spark workloads. I expect all parties involved - Cisco, its partner community, enterprise IT teams, and end users alike - will spend 2016 figuring out how best to leverage the emerging Spark experience. But before we know it, we'll see the Spark-enabled solution space grow before our eyes.  How's that sound, Sparky?