by Jim Lundy
On April 16th, Verizon announced its purchase of enterprise web and video conferencing provider BlueJeans. The $400 million deal comes at a time of dramatic growth and opportunity for the web and video conferencing (WVC) market, as providers position themselves to take advantage of the growth of remote work and other emerging trends. With the coronavirus pandemic creating significant demand for web and video conferencing tools to support jobs working remotely, this is a strategic move for Verizon. In this blog, we review the basics of the deal and suggest some implications it may have for understanding the video conferencing market and the enterprise communications market more generally.
Who Is BlueJeans?
BlueJeans is a provider of enterprise communications tools. Its offerings are focused on providing intelligent solutions to meetings, virtual events, and other remote communications use cases. Aragon estimates that BlueJeans’ revenue was over $100 million before the Verizon purchase, so the deal amounts to 4X revenue for BlueJeans. BlueJeans will become a part of the Verizon Business portfolio and will continue to operate independently.
Verizon and The Rise of 5G
Purchasing BlueJeans makes sense given Verizon’s ongoing 5G rollout and the impending growth of 5G infrastructure across the globe. Video has traditionally been a bandwidth hog, and one of the limiting factors for the adoption of real-time conferencing has been a slow connection.
By leveraging video alongside 5G, Verizon aims to increase its market penetration for both, taking advantage of the demand for tools that can meet the challenges of working remotely. At the same time, it is important to note that the economic disruptions caused by the coronavirus contagion may delay the rollout of new infrastructure for 5G providers like Verizon, so this trend may be more of a long-term payoff.
The increase in remote work that has accompanied the coronavirus pandemic puts video conferencing providers in a strong market position.
Remote Work and the Web and Video Conferencing Market During Coronavirus
As enterprises scramble to find the right tools to support teams that are working remotely from home, competition is growing between the web and video conferencing providers. Verizon obviously sees the success of vendors like Zoom and wants to be able to leverage that with its customers. The recent security challenges faced by Zoom may be an opening for providers who heavily emphasize security—like BlueJeans–to expand their customer base.
The pandemic has already caused most workplaces to shut down. Still, Aragon expects that this is only the beginning of a remote work era in which many enterprises will permanently transition large parts of their workforce to virtual work. For employers, there are many advantages to having employees work remotely. The challenge is finding a set of reliable tools to support the team.
More Mergers Are on the Horizon
As large firms realize the market potential video conferencing tools have at this moment, we expect to see more providers like BlueJeans getting purchased. The Verizon deal may even signal the beginning of another merger wave in which other companies such as Pexip or Highfive could become targets too. AT&T, one of Verizon’s primary competitors, offers Cisco Webex, a version of RingCentral Office, and Zoom. This deal could provoke them to make an acquisition.
Bottom Line
The deal between Verizon and BlueJeans demonstrates the growth potential of the current web and video conferencing market, which we predict will continue to expand as trends like remote work and 5G make provider offerings more desirable. While we may have a full coronavirus treatment and coronavirus diagnosis by the end of the year, the impressions this pandemic has left on the organization of the workforce will not go away. Verizon customers now have more options and the awareness this brings to BlueJeans should mean more business for them going forward.