Staff Writer AccountingWEB
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How Zoom is walking all over tech megacorporations like Google and Microsoft

For decades, Google and Microsoft have been two of the biggest tech giants in the game. So how are they continually being outstripped by the young competitor Zoom? And, despite this, why isn’t Zoom’s market value increasing?

12th May 2020
Staff Writer AccountingWEB
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September 3, 2019 San Jose / CA / USA - Zoom corporate headquarters in Silicon Valley; Zoom Video Communications is a company that provides remote conferencing services using cloud computing
istock_aweb_Andrei Stanescu
Zoom corporate headquarters in Silicon Valley, California

Since Covid-19 forced the UK into lockdown accountancy firms have managed to keep business running as close to normal by replacing in-person internal and client meetings with a video call alternative. But in this time of remote working, it's not the tech incumbents of Microsoft and Google that the majority of firms have used to keep connected. Firms have turned to Zoom.  

History

Over the last two decades, both Skype and Google have had their turns at standardising the video call industry. Originally created in 2003, Skype’s 2005 2.0 Beta version revolutionised the internet call industry into what we now know as video calls. 

Google took its turn in 2011, creating various versions of Hangouts (now Meet) and later merged with its 2005 created chat service, Google Talk. For some time, Hangouts became the video call standard alongside Skype – bought by Microsoft in May 2011. 

In 2011, San Jose tech startup Zoom Video Communications was founded, launching the first Zoom service the same year. It became a video call favourite in less than two years.

Microsoft Teams arrived on the scene in 2017 but posed no real competition for Zoom. In 2019, Teams reached 20 million users a day, Skype 10 million and Google Hangouts 6 million*. Zoom was at 200 million in that same year.

So how did Zoom do it? And why are Google and Microsoft lagging behind still?

Diluting the video call

Where Google and Microsoft paled in comparison to Zoom, was their ambiguous approach. From the very offset, Zoom’s approach was direct and unequivocally video calling. Where Google had launched Hangouts as part of its shortlived Google+ and Microsoft included video calling as part of Teams, Skype, and Skype for Business (SFB). 

Google Hangouts later became part of G Suite and in 2020 became Google Meet. Google also added a separate mobile video calling app called Google Duo in 2016.

Both tech giants diluted the release of their primary tools by making them part of other features with wider functions and releasing competing tools. Hangouts fought against Google’s entire suite of apps and another mobile video calling service (Duo). Skype had to fight against Teams and, to an extent, SFB. Teams’ video chat has only ever been one aspect of its greater communication and collaboration service.

One service to rule them

Zoom, on the other hand, from its first launch, was released as a single-feature video calling service. It was designed for no other purpose and was solely focused on delivering the best possible form of that service, alone.

To add to which, Zoom very quickly offered the one-click dial-in option, allowing participants to enter a Zoom meeting as easily as entering a room – putting Zoom ahead of the game.

Cloud suite and desktop services

Early on, Skype’s clunky desktop version had to be loaded to access meetings with 10+ participants. Hangouts could only be accessed by the clunky, now-deceased, Google+ app.

By the time Microsoft and Google began amending this, it was too late in the game.

Both Skype and Teams are still primarily bulky desktop tools, with other versions having a reduced number of features. Skype still struggles against up and coming communication apps like HouseParty, WhatsApp, Facebook and FaceTime which are continually updating and improving their tech to attract a wider user-base.

Facebook’s Whatsapp and Messenger also brought out voice calling services which competed and outran Skype’s version, being part of services that were more widely used.

Too little, too late

Soon after, Google made Hangouts a standalone application incorporating all the key features, but didn’t remove its competing products, making it an ultimately fruitless response. Google Talk continued until 2017. Confusingly, Google released a competing chat app Allo in 2016, which it took down two years later. Mobile video chat Google Duo launched in 2016 and is still in competition with Hangouts Meet.

Although Microsoft has declared it will decommission SFB by 2021, SFB and Teams are still in competition with the basic Skype app.

COVID-19 pandemic: The final battle round

When COVID-19 hit and remote working became enforced, it became the video call’s time to shine, replacing meetings, phone calls and conferencing. Suddenly, these apps were a necessity. But Microsoft and Google were still playing a slow game of catch-up

Early April, Skype added a one-click call-joining feature to compete with Zoom and its plethora of call-joining functions (most notably one-click).

Despite previously claiming it would decommission Hangouts, by the end of April, Google contradictorily added its premium service Google Meet to G Suite and made it free to use – although there appears to be little difference between Meet and Hangouts.

But all of these apps still remain locked in suites or desktops that prevent video calling from being accessed immediately, failing to quickly adapt to contemporary needs accelerated by the pandemic.

Currently, the average daily usage figures stand at:

  • Skype: 40 million
  • Teams: 75 million
  • Google Meet: 100 million
  • Zoom: Over 300 million

Despite the enormity of the competing companies and Zoom’s ongoing privacy issues, Microsoft and Google still pose no real competition for Zoom.

Zoom Technologies trading suspended

There is, however, a delightfully ironic ending to the tale of Zoom’s success. 

Despite Zoom’s overriding success as the world-leading video calling service to date, its market value as of last month has increased little to reflect this.

Thousands of investors have been confusing Zoom Video Communications Inc. with Beijing-based Zoom Technologies, buying shares in the wrong company

While Zoom Technologies stock rose from $31m to $321bn, Zoom stock’s only rose from $40bn to $65bn over the last three months.

According to MarketWatch, “Zoom Technologies soared an eye-popping 56,000%” before its trading was suspended by U.S. Securities and Exchange Commission on 26 March until 8 April. 

Zoom Video Communications’ market value has reached a comparatively meagre 50% increase over the same period.

*This figure is estimated based on the number of G Suite users as Google does not release these figures for Hangouts Meet.

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By Justin Bryant
12th May 2020 17:16

Very amusing re the wrong company thing (I assume there will be some serious shorting shortly).

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