8×8 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, 8×8 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, 8×8 is taking aggressive steps to stake out its own cloud turf. On the heels of its 2010 acquisition of Central Host, 8×8 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 8×8 Acquires Zerigo, 8×8 Offers Cloud-Based Video Conf. for SMBs and 8X8 Adopts VCE Vblock for Cloud Services.)

What 8×8 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 Terremark Worldwide Inc. (Nasdaq: TMRK) and Savvis Inc. (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 8×8. "We’ve been doing hosted PBX services, which [is] essentially a cloud service, since 2002."

8×8 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 8×8 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."

8×8 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 Hewlett-Packard Co. (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. (Nasdaq: 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."

8×8’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, 8×8 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.