TeleDynamic is a Bay Area Leader
Business phone systems have come a long way since the days of the AT&T monopoly. PBX systems have evolved into hosted PBX systems and competition for voice over IP (VoIP) is fierce. As a Bay Area telecommunications leader since 1979, we have seen the telephone industry evolve, and seen three of the largest public VoIP companies emerge here in the San Francisco Bay Area
– RingCentral (NYSE: RNG) of San Mateo, 8×8, Inc. (NASDAQ: EGHT) of San Jose, and ShoreTel (NASDAQ: SHOR) of Sunnyvale.
We compete with these companies for business phone system customers so we have studied their strengths and weaknesses, business practices, and mistakes. In the telephony business, having a quality track record is important and we wanted to see how the records of these three Bay Area VoIP providers compare
The newest company to hit the stock market in September has an insane valuation of $1 billion – eight times their annual sales of $115 million, and for a company posting a loss of $35 million (one dollar out of every three). Last year, RingCentral spent 46 percent of its 2012 budget on sales and marketing and only 21 percent on R&D, which makes me wonder if the company is being managed for customers or the IPO.
RingCentral also proclaims an unheard of 99 percent customer retention rate. If you dig a little you discover that they often give departing customers a free telephone line so they can keep them on the books as customers. Those kinds of business practices and their customer service record (just check Yelp! ) make me wonder about their service model.
ShoreTel was founded in 1996 as a PBX hardware company and is the biggest of the three companies with 965 employees and sales of $313 million, posting a loss of $26 million. They are now in the hosted PBX business because they acquired M5 Networks in March 2012 so they offer two competing products – on-premise PBX and hosted PBX. And they are spending twice as much on marketing (38 percent) as R&D (16 percent), and customers still seem to be confused as to whether to buy ShoreTel hosted PBX or PBX hardware.
Of the three public Bay Area hosted PBX providers, 8X8 seems to be the most stable. They are the only public company of the three to post a profit – 12 percent on $107 million in sales. They are growing rapidly, and with ties to Japan and Europe they are thinking globally. But again, you have to look at their customer service record, which isn’t outstanding.
We compete with these public PBX providers by offering better hosted PBX service. Of all the San Francisco Bay Area telecom providers, we offer the best service and more options at the most competitive rates, because we don’t have an inverted marketing-to-R&D budget, and because we always put our customers first, not stockholders. We welcome a side-by-side competitive comparison, because we know we’ll come out on top every time.