The outbreak of the COVID-19 pandemic in March 2020 has led to incredible challenges for the global economy, public health care systems and societies as a whole. While the crisis has caused many globally operating firms such as Virgin Atlantic or Hertz to file for bankruptcy (Clifford & Wahba 2020), not all companies have in fact suffered from the pandemic. One astonishing example is the video conferencing company Zoom, that has experienced an unprecedented growth within the last two quarters (Evans 2020). Ironically, in an interview back in 2017, Zoom’s CEO Eric Yuan mentioned that he did not want the firm to grow too fast but rather focus on increasing customer satisfaction (Tonneson 2020). However, due to the massive shift from employee’s physical to virtual presence, Zoom did not have the time to slowly grow its business. For instance, Zoom’s daily users skyrocketed from just 10 million in December 2019 to 200 million in March 2020 (Evans 2020). Additionally, the year-to-year revenue for the first quarter of 2020 increased by 169% (Beauford 2020) – growth figures most other companies can only dream about. So, what exactly is it that Zoom does better than its competition?
Success factors of Zoom
When analyzing Zoom’s video conferencing service, several competitive advantages can be identified. First of all, Zoom allowed its free users to host 40-minute video calls which could be easily restarted after the time limit (Tonneson 2020). In order to further benefit from a growing user base in the long-term, Zoom later lifted the time limit during the pandemic (Hern 2020). At the beginning of the outbreak, Zoom struggled with scaling and security (Beauford 2020). Security lapses allowed malicious users to join a meeting and show explicit images which quickly raised privacy concerns (Evans 2020). However, Zoom demonstrated an incredibly fast market respondance and soon after launched an adjusted version with increased security (Beauford 2020). Besides free services and security, Zoom dominates competitors with respect to video quality and functionality (Tonneson 2020). For example, Zoom allows larger meetings, customizable backgrounds and a ‘breakout room’ option to split participants into smaller groups (Tonneson 2020). From my own experience studying at RSM, the latter function is particularly valuable when discussing case studies in smaller groups during lectures.
Looking into the future
One important question remains: Will the rapid success of Zoom continue even after the pandemic? According to several analysts, Zoom’s momentum will remain even after lifted lockdown regulations, because the service has established itself as the video conferencing standard in many companies (Haider & Rasay 2020). Moreover, many companies find that their employees prefer to work more from home (Hern 2020). As long as high levels of productivity are ensured, employers could be incentivized to allow their employees to work from home, as overhead cost (e.g. rent and utilities) will be reduced (Haider & Rasay 2020). Hence, if the trend of working from home will continue even after the pandemic, Zoom is in a pole position to grow even further. What is your forecast? Do you think that Zoom is able to build on its past success?
References:
Clifford, L., Wahba, P. 2020, ‘A running list of companies that have filed for bankruptcy during the coronavirus pandemic’, Fortune, viewed 16 September 2020, <https://fortune.com/2020/08/04/companies-filing-bankruptcy-2020-due-to-covid-list-filed-chapter-11-coronavirus-pandemic/>.
Evans, D. 2020, ‘How Zoom became so popular during social distancing’, CNBC, viewed 16 September 2020, <https://www.cnbc.com/2020/04/03/how-zoom-rose-to-the-top-during-the-coronavirus-pandemic.html>.
Tonneson, S. 2020, ‘Zoom Becomes Video Conferencing Leader During COVID-19. Why?’, ZoomInfo, viewed 16 September 2020, <https://blog.zoominfo.com/zoom-video-growth-coronavirus/>.
Beauford, M. 2020, ‘ COVID-19’s Transformed Zoom into a Powerhouse’, UC Today, viewed 16 September 2020, <https://www.uctoday.com/collaboration/video-conferencing/covid-19s-transformed-zoom-into-a-powerhouse/>.
Haider, A., Rasay, S. J. 2020, ‘Zoom’s massive growth amid COVID-19 set to continue after pandemic, analysts say’, S&P Global, viewed 16 September 2020, <https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/zoom-s-massive-growth-amid-covid-19-set-to-continue-after-pandemic-analysts-say-58907516>.
Hern, A. 2020, ‘Covid19 could cause permanent shift towards home working’, The Guardian, viewed 16 September 2020, <http://www.miamidadetpo.org/library/2020-03-13-uk-covid19-could-cause-permanent-shift-towards-home-working.pdf>.