Two days ago I pointed out that CPaaS was the next big thing in telecom. About a month ago, I shared a comment with a client that it was time to watch out for Nexmo, as they were about to make moves. Yesterday, Nexmo, backed by Vonage cash since their acquisition, bought TokBox away from Telefonica for $35 million in cash and their liabilities.
The sale though has to be considered a bargain for Vonage given how prior to 2012, when Telefonica acquired TokBox, the Bay area WebRTC pioneer had already raised $26 million in venture money. It was considered by some to be a hail Mary fire sale.
In the announcement yesterday TokBox claimed to now have 2300 global customers and to be embedded in 1700 mobile apps. If we knew the debt load the actual price may be higher in what it will end up costing Vonage.
My view is Vonage bought a team and technology that fills a gap in WebRTC for Nexmo as rival Twilio already has a WebRTC offering. TokBox likely also has some patents, and enough enterprise customers that Nexmo can sell more services to. The key tell comes from another long time friend, Mark Winther, of IDC who was quoted in the release about the acquisition:
Mark Winther, VP Telecom Consulting for IDC, commented, “Already a strong provider in programmable SMS, voice and IP messaging, this strategic move by Vonage builds out its portfolio of cloud communications capabilities. TokBox extends Vonage’s ability to gain share in the fast growing CPaaS market with a set of interactive video APIs and a customer base that proves the value of programmable video communications.”
Given the past ownership by Telefonica, it wouldn't surprise me if there were some other "handshake" deals between Vonage and the Spanish telecom operator which has holdings in mobile and telecom networks that can end up sweetening the deal.
Telefonica has a massive enterprise sales operation worldwide, so with this asset going to Nexmo, why not have Telefonica serve as an extended sales force for the CPaaS company to deliver features and functionality not available from Telefonica but usable and useful to its customers. And given Telefonica's network into Latam and Europe, why not haul some of Vonage's voice and messaging traffic too. Deals like this make for interesting opportunities, and this could be a bigger win for Vonage if there's more than what looks like an asset, IP and acqui-hire buy on paper with some business on the books to make it an attractive buy.
I'm actually very happy to see this, as TokBox CEO Scott Lomond is an old friend, and a former client at SightSpeed (which was acquired by Logitech). Scott is a solid operator who put structure into TokBox and turned it into a well run operation, delivering a solid platform under Telefonica Digital's ownership.
Side note: Back in 2013 I wrote that it would be 5-10 years before Telefonica's acquisition of TokBox would be part of a spin out or sell off in 5-10 years. I only missed by a month as I viewed this, and other efforts like it, more as lab experiments for telecom giants like them.