IP communications service provider 8x8 Inc. this summer reported its highest quarterly revenue ever, thanks to its almost-exclusive focus on SMB, rather than residential, customers. VON/xchange’s Business & Regulatory Editor, Kelly Teal, recently talked with 8x8 CEO Bryan Martin to find out more about the company’s business-model diversification and views on industry topics including cloud computing and Facebook. Following is an edited transcript of that conversation.
VON/xchange: How is 8x8 diversifying to create new revenue streams?
Martin: We’ve been a service provider since 2002 and at first were competing against companies like Vonage and Qwest. We launched our first business service in ’04 and, in ’06, decided to focus on businesses. In the most recent quarter, more than 90 percent of our revenue derived from business services, mostly hosted PBX. We’ve really diversified that reach to include unified communications, mobile phone apps, and managed hosting and cloud computing. So we’re in the process of increasing the breadth of our services.
V/x: What kind of apps are you selling?
Martin: For more than about 18 months, we’ve had some mobile smartphone apps that enable international calling on our network. And then we introduced components to unified communications that included the ability to integrate the smartphone with hosted voice. So an iPhone in your pocket can do everything your desk phone can do. Beyond being able to place and receive calls as if you were at your desk phone, there’s Web conferencing, electronic fax, call recording, corporate directory, click-to-dial, and so on.
V/x: Which new products are proving profitable for 8x8?
Martin: There are some things, like call recording, where we charge extra. We do surveys and users groups to find out what tools SMBs need, so for example, we just added dedicated call center functionality. Debt collectors and the like can set up a cost-effective call center. We charge extra for that – call recording has been a huge request, and so have hosted Key systems for small business owners used to that type of telephony system.
A year ago, we added Web conferencing. We’d surveyed customers and were surprised to learn 60 percent had participated in a Web conference in the previous 90 days and a lot were forced to use free services. If you look at the gorillas in the space, like Webex, it’s too much for small businesses to pay. We’re in the business of enabling these capabilities at a price point [for SMBs].
V/x: Talk more about the cloud.
Martin: The whole cloud concept – everyone is looking to save money and space, payroll costs. We’re trying to make all of those avenues a lot easier [with the acquisition of Central Host]. We put the information in the cloud and sell it on a subscription basis. We do the heavy lifting.
V/x: So Central Host is now fully part of 8x8?
Martin: The integration was done very quickly. It was a small business, about 50 customers. They were billing about $1 million in revenue, have very few employees, so it only took about a month to bring it in-house. It’s the first acquisition we’ve done here in 10 years and the last one didn’t go so well.
