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8x8 Has Lofty Cloud Ambitions

As one of the handful of VoIP players that survived the market shakeout by offering managed and hosted services to SMBs, 8x8 Inc. (Nasdaq: EGHT) is now seeing the telecom industry rush headlong in its direction, designing cloud-based services for SMBs and enterprises.

Rather than just defend its turf, 8x8 is taking aggressive steps to stake out its own cloud turf. On the heels of its 2010 acquisition of Central Host, 8x8 this year has acquired Zerigo, launched a cloud-based video conferencing based on Polycom Inc. (Nasdaq: PLCM) technology and adopted the Vblock Infrastructure Platform from VCE, the Virtual Computing Environment Company formed by Cisco Systems Inc. (Nasdaq: CSCO) and EMC Corp. (NYSE: EMC) with investments from VMware Inc. (NYSE: VMW) and Intel Corp. (Nasdaq: INTC). (See 8x8 Acquires Zerigo, 8x8 Offers Cloud-Based Video Conf. for SMBs and 8X8 Adopts VCE Vblock for Cloud Services.)

What 8x8 is trying to do, in fact, is not only expand its service portfolio to include Unified Communications and computing as a service, but also move up-market to serve larger companies, and compete with the likes of Verizon Terremark and Savvis (Nasdaq: SVVS) in the process.

"We laugh around here about this 'new' thing called cloud," admits Debbie Jo Severin, CMO and VP of marketing for 8x8. "We've been doing hosted PBX services, which [is] essentially a cloud service, since 2002."

8x8 is trying to build on its strength as a hosted communications company while adding cloud computing of all kinds, including a commodity level, dedicated managed hosting, and enterprise-class private cloud services. The commodity service is based on the Verigo acquisition and includes self-service access to Linux servers and DNSs through a user portal.

The acquisitions of Central Host and Verigo have brought with them both intellectual property and personnel that 8x8 has retained to implement its cloud strategy, Severin says.

All of that is offered in addition to its hosted and managed communications service, which layers Unified Communications, including virtual meetings via video conferencing and a wireless app, on top of the hosted PBX offer.

"I don't believe there is another company out there that has tackled the voice and computing side together," Severin says. "We see lots of companies doing voice in breadth or on the computing side but not together."

8x8 is also adding an enterprise sales force, having hired former Cisco and Polycom exec Kim Niederman as SVP of sales, and industry vet Don Trimble, formerly of HP Inc. (NYSE: HPQ), Cisco and Polycom, as VP of channel sales. The company set up a new Cloud Sales Channel. And it has partnered with Level 3 Communications Inc. (NYSE: LVLT) to court the government segment.

"Our bread and butter is SMB, but a year ago we started developing an enterprise sales team, and we also developed an indirect sales team through data VARs," Severin says. "Our services were being requested by larger and larger businesses, especially in distributed enterprises."

8x8's intent to take on many of the bigger players in cloud might seem bold for a smaller company, but the firm's track record is solid. In addition to steady growth over the years, 8x8 posted record growth numbers for fiscal year 2011 and the first quarter of 2012 and is something of a stock market darling, as the Motley Fool notes here.

— Carol Wilson, Chief Editor, Events, Light Reading

paolo.franzoi 12/5/2012 | 4:54:37 PM
re: 8x8 Has Lofty Cloud Ambitions

Yes there is a lot of marketing hype around the word "cloud".  Because of this "cloud" does not really mean much more than:


1 - It is a service so I don't have to buy capital to deploy it.  Most of the services have products that could be bought in their stead.


2 - It is Internet accessible so I have access to it basically anywhere.  It may have other means of reaching it, but the Internet Access is the baseline.


Beyond that, what people claim as a cloud environment does not really means that much. 


I believe the original intent was to use cloud to represent a virtual computing environment.  However, I am aware of many "cloud services" that use nary a VM (the one I work on for example).


seven

sam masud 12/5/2012 | 4:54:37 PM
re: 8x8 Has Lofty Cloud Ambitions

Someone please explain what is a "cloud." I read cloud this, cloud that but don't have a clear understanding what is meant by cloud. Or is there just a lof of marketing behind this cloud hype because it seems to mean anything anyone wants it to mean, including delivering what typically are called managed or hosted services...

cnwedit 12/5/2012 | 4:54:36 PM
re: 8x8 Has Lofty Cloud Ambitions

Adding to what's already here, cloud is usually thought of as on-demand, pay-as-you-go and able to be turned up and turned down as needed.


Initially, cloud computing services weren't subscription-based - you didn't pay anything until you consumed the resources. That is changing a bit as cloud moves beyond computing resources and into things that require some more permanent allocation of resources. But all cloud services need to retain a pay-for-what-you-use element to be truly cloud-based.


All of that said, there is way too much hype around cloud right now, but that's typical of new service offerings. The industry will develop some standards, the question is when.


 

sam masud 12/5/2012 | 4:54:36 PM
re: 8x8 Has Lofty Cloud Ambitions

Thanks. And, yes, I do remember the time when it was applied to virtual computing but "cloud" now seems to pop up everywhere.

paolo.franzoi 12/5/2012 | 4:54:35 PM
re: 8x8 Has Lofty Cloud Ambitions

 


Carol,


I think I would like to debate (respectfully to add to this conversation) your adder.  So, when I think of AWS what you said definitely comes to mind.  And that is a Cloud Service.  But then I look at say SalesForce.com (which I think of as a Cloud Service) and the billing model that you stated does not apply.


So, strictly I could say that the Virtual Computing part of the cloud - sure.  But the actual services?  Not so much.  What I found interesting (okay only to me maybe) was that we talked about that style of billing for remote DSL when I was at AFC.  We would sell 100% take rate DSL cabinets and charge people for the DSL ports when they turned them up.  So, the billing model you describe is not necessarily even tied to virtualization. 


seven


 

cnwedit 12/5/2012 | 4:54:35 PM
re: 8x8 Has Lofty Cloud Ambitions

No one ever said on-demand and pay-as-you-go was exclusive to cloud services, but it is a basic tenet for many in the cloud community, including many of the end-users.


There is a lot of debate going on right now as to whether "Aas" -- as a service -- constructs such as softare as a service (like salesforce.com) are cloud offerings are not.


Some folks want to wrap everything up in the cloud universe including SaaS and infrastructure as a service, etc. and others want cloud to remain on-demand. 


At the end of the day, I'm not sure it matters all that much.

paolo.franzoi 12/5/2012 | 4:54:30 PM
re: 8x8 Has Lofty Cloud Ambitions

 


By on-demand you mean the pay as you go service model not the I can start a service today correct?


seven


 

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