How Zoom Beat Huge, Established Videoconferencing Players
By Jim Harris
In December of 2019, Zoom had 10 million daily users. From April to June 2020, the app was downloaded 300 million times – 200 million times from Google Play and 94 million times on Apple’s App Store, shattering records for the most downloaded non-game app in history. How many companies do you know that increased their customer count by 30X during the pandemic? And look at Zoom’s revenue growth:
Zoom’s Quarterly Revenue
Zoom had the highest growth in brand recognition among American consumers in 2020, according to Morning Consult’s annual study. And Zoom is worth as much as the top seven airlines (by 2019 revenue) COMBINED in March 2021.
How could videoconferencing upstart Zoom crush well established players like Skype (owned by Microsoft) and Cisco’s Webex?
I was in Nepal in 1998 and needed to call back to North America. By telephone, it cost 300 Nepalese Rupees per minute (about $2.50 US). Instead I went to an Internet café, put on a headset and called for just 10 Rupees a minute (8.5 cents). While at the time the Voice Over Internet Protocol (VoIP) technology wasn’t duplexed, I nonetheless predicted that all long distance would be free by 2005 for North American consumers. Skype beat my prediction by 2 years launching in 2003.
In the graph below, VoIP calls (in red) don’t even register until 2005. International long distance for telcos (navy blue) peaked in 2014 and then began to decline. By contrast, VoIP continued exploding. International VoIP calls are now more than 1,200 billion minutes – or 1.2 trillion minutes a year. Important insight: disruption can be a decade or two in the making until the technology matures enough to overwhelm traditional incumbent companies. Think about this: in 1998 US telcos used to make 70% of their profit from long distance calls.
Now here’s the killer stat: Zoom is now providing 3.5 TRILLION minutes of videoconferencing a year (baby blue bar). That’s more than ALL international minutes from all traditional telcos added to all international VoIP minutes — then doubled! And Zoom is doing that all by itself. The VoIP disruption prepared the stage for Zoom’s disruption. (Note: navy blue and red are only international long distance. Zoom’s is domestic and international long distance and local)
Source: TeleGeography, final bar’s data from Zoom
Freemium. Zoom allows users to experience the system with its freemium model. A free account allows a user to host meetings of up to 40 minutes for up to 100 people. That allows individuals working in companies that are locked into existing contracts with WebEx or Skype for Business, to still try Zoom. Zoom founder Eric Yuan said: “Without a freemium product, you’re going to lose the opportunity to let many users test your products.”
Price. In 2008 I was at a Cisco Telepresence demo. The system provided an immersive video conferencing experience – at a cost of $70,000 per location. Fast forward to 2020 when a Zoom Pro account is $20 a month and uses existing hardware (laptop, desktop, or smartphone). Cutting the cost of video communication to almost to zero results in exploding demand. But that’s still not the full story.
Quality. Zoom has worked diligently to have the best possible video and audio experience across a wide array of devices. The system has been designed to be feature rich and customer-centric.
Ease of Use. Zoom has focused on creating a frictionless experience compared to other platforms. You access a meeting with a simple link. No one wants to have to download an .exe file or an app, or to be forced to register for an account. No one wants to be 10 minutes late for a meeting because they were fighting to make the thing work.
Scalability. Zoom was designed from the ground up to scale. It’s built on AWS for the very purpose of being able to serve explosive demand.
Zoom’s success will accelerate the decline of landlines. The average cost of a home landline in the US is $45 per month. Why would you pay that when can call anywhere in the world via Zoom for $20 a month and have no long distance charges?
What does become more important is bandwidth. If you’re at home in the pandemic with kids who are at school on Zoom, and you have business meetings, bandwidth is key. We’re going to see an increase in bandwidth demands and expectations – connected Ethernet, WiFi and mobile. This, of course, will fuel consumer desire for Gigabit Ethernet, WiFi 6 and 5G. Welcome to the Zoom revolution.
Jim Harris is the author of the Blindsided which focuses on disruptive innovation. It is published in 80 countries worldwide and is a #1 international bestseller. You can follow him on Twitter @JimHarris or email him at email@example.com