Zoom Video Communications held its annual Zoomtopia conference, rolled out a series of generative AI capabilities across its platform and made it clear that it all about reinventing work with tools like Zoom Docs as well as customer experience. What was missing? Talk about add-ons for Zoom's AI Companion, price increases, monetization strategies and ways to get more money out of customers.

If Zoom's analyst Q&A was any indication, Wall Street isn't thrilled about delivering value without charging more. Wall Street is hooked on this concept of $30 extra a month per user for generative AI features.

The abbreviated list of questions went like this:

  • What is your monetization strategy and where can we expect incremental revenue?
  • How do you monetize virtual agent vs. human agent capabilities in Zoom Contact Center?
  • How can the company monetize and upsell Zoom One?
  • GPU costs aren't cheap so what's the plan for pricing AI Companion?
  • Please explain the decision to offer AI Companion at no additional cost relative to the competition.

See a theme here?

Zoom executives didn't exactly alleviate concerns about monetization. Customers, however, are happy that Zoom isn't prematurely gouging them. For adoption, Zoom's approach to refrain from add-ons isn't a bad idea. The company said nearly 30,000 companies have enabled AI Companion so far.

CFO Kelly Steckelberg said the AI products recently announced are free. Regarding Zoom Docs, the company will outline monetization closer to general availability.

As for Zoom Contact Center, Steckelberg added that Contact Center is sold on a per seat basis and Virtual Agent is based on queries. "They're priced according to bring value to the customer," she said. Features like AI Expert Assist for Contact Center could be monetized at some point, but that's separate from AI Companion.

Zoom One is a big opportunity, said Steckelberg, who noted that the bundle approach will see more traction as renewals come up. Zoom One Pro prices increased at the beginning of 2023.

On GPU costs, Steckelberg noted that Zoom outlined that it expected gross margins to fall a bit due to "the computing power we are continuing to acquire."

Zoom's Mahesh Ram, Head of AI Applications, addressed the elephant in the AI room for software companies. He said:

"When you listen to the customers intently, you hear what they're saying. And I think what we were hearing from customers was, if you make AI a premium offering, then I have to choose between the haves and the have-nots. And we see generative AI as being something that's just part and parcel of everyday work and collaboration.

If you have a 20,000, 50,000 employee workforce company and you're having to think about $30 a month, you're making decisions that are probably not in the best interest of your business.

We want to make Zoom the platform of choice. We want to make it as valuable to every employee as possible in every business. As you start talking to customers, there's a collective sigh of relief."

The upshot here is that Zoom is playing a long game with customers and that the future benefit is vendor consolidation. Workday is playing a similar game and Adobe’s generative AI pricing seems fair, but the club of vendors not focusing on add-ons is small. As vendors go add-on happy, CIOs are going to look to consolidate costs and vendors. That outcome will only benefit platform plays like Zoom that held back from the add-on pricing frenzy.

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