Zoom enters UCaaS market with new cloud PBX service

Zoom plans to release a cloud telephony service for businesses that subscribe to its web conferencing platform -- a significant step for the startup that shows its cloud ambitions extend beyond video.

The vendor will release its cloud PBX service -- announced in beta this week -- to the North American market in the first quarter of 2019, with calling support in 16 countries initially. And it said it would expand service globally throughout next year.

Zoom won't offer the cloud PBX service as a stand-alone product -- at least for now. The vendor will only sell Zoom Voice to paid customers of its flagship web conferencing platform.

The product could appeal to companies that want to reduce the number of vendors from which they buy unified communications (UC) services, said Rob Arnold, analyst at Frost & Sullivan. It may also be cheaper to buy Zoom's bundle than to subscribe to Zoom for video and obtain telephony services separately.

However, Zoom is entering a crowded market for UC-as-a-service (UCaaS) plans and will face competition from pure-cloud vendors, like RingCentral and 8x8, as well as from legacy UC vendors, such as Cisco and Mitel.

"In a way, it surprises me, because [Zoom is] growing and doing very well in their initial market, their core competency," Arnold said. "I don't think it's a bad idea. It's just there is a lot of competition in the UCaaS market at the moment."

Zoom took an initial step into the telephony market earlier this year when it released a oftphone client that customers could connect to third-party PBX systems. Now, the vendor will let customers power an audio tab within the Zoom client with Zoom's cloud PBX service. The calling system will also work with standards-based phones, including from Cisco, Polycom and Yealink.

Founded in 2011, Zoom has established itself as a leader in the video conferencing space, rivaling UC giants Microsoft and Cisco. Zoom's decision to develop a cloud PBX service comes as those two competitors have been investing heavily in team collaboration apps -- Microsoft Teams and Cisco Webex Teams -- that support both audio and video communications in the cloud.

"[Zoom is] moving from being seen as a video conferencing company to be seen as a communication service provider," Arnold said. "They already have the development prowess that they've proven. So, I think that they can do this. It's just a matter of, how do you compete in this very fragmented, nascent market?"