Genesys Buying Cloud UC Vendor Interactive Intelligence

The $1.4 billion deal is the latest move in a fast-changing UC market that is being impacted by customer demand for cloud-based offerings.

cloud UC

Contact center specialist Genesys is buying rival Interactive Intelligence for about $1.4 billion, the latest move in a unified communications space that is undergoing rapid change as businesses push to move their collaboration and customer experience environments to the cloud.

The companies announced the deal this week, with officials from both saying it will combine complementary technologies to create a larger company with a much broader and varied reach. It also puts aside speculation that arose in August that Genesys could buy Avaya's contact center business for about $4 billion.

The move comes about a month after Genesys received an infusion of about $900 million from private equity firm Hellman and Friedman, which took a significant stake in the company. Buying Interactive Intelligence is another step in growing the business as it looks to navigate its way through a rapidly changing industry, according to Genesys CEO Paul Segre.

"Our market is in the midst of massive transformation, and Genesys is leading the disruption," Segre said in a post on the company blog. "In just a few short years, we have evolved from supplying powerful contact center technologies and tools to deliver on the future of omnichannel customer engagement with the world's number one customer experience platform."

He added that "digitization is causing every industry to evolve. Our mission is to support businesses in transitioning to this new world, while effectively serving and anticipating the engagement needs of their customers across all channels."

The Interactive Intelligence acquisition, which is expected to close by the end of the year, will create a larger company that supports billions of customer interactions every year, has 10,000 customers worldwide, and offers products for both the cloud and on-premises environments. Interactive Intelligence had begun shifting to an all-cloud strategy that was led by its PureCloud cloud-based unified communications (UC) offering. In July, Interactive Intelligence CEO Don Brown noted the rapid growth of the cloud business, saying in a statement that "PureCloud is happening." The number of PureCloud customers had grown from 24 at the end of 2015 to more than 300 in the middle of this year, and cloud subscriptions had grown by 43 percent.

In a statement, Genesys' Segre said the company planned to "significantly invest" in Interactive Intelligence's entire portfolio, including PureCloud, Cloud Communications-as-a-Service (CaaS) and Customer Interaction Center (CIC).

The collaboration space is changing quickly as businesses deal with such trends as greater workforce mobility, the proliferation of mobile devices and bring-your-own-device (BYOD). Workers want to be able to collaborate wherever they are at anytime they want and on any device they want, so businesses are increasingly pushing for software- and cloud-based solutions. IHS analysts earlier this year noted that the adoption of collaboration tools is on the rise, and while most businesses aren't going all in with the cloud, they are putting some communications applications in the cloud while keeping others on-premises.

The trend toward the cloud is roiling the competitive UC landscape and making it ripe for consolidation. In recent years, Nokia bought Alcatel-Lucent, Atos bought Unify, Lifesize spun out of Logitech after shifting its portfolio to the cloud, and now Siris Capital is buying Polycom after outbidding UC vendor Mitel, which itself has bought a couple of companies. In addition, both ShoreTel and Avaya have brought on advisers to help review options for their futures, which could entail selling some or all of the companies.