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CPaaS and API trends: Forecasting the future of embedded communications

The CPaaS and API market has been bustling this past year, with acquisitions and new vendors emerging. Let's take a look at some of the API trends to track in 2017.

The communications platform as a service and API market is currently in flux. Several events in the last couple years have shaken up the market, including Cisco's acquisition of Tropo and wrapping it into Spark, Vonage's acquisition of Nexmo and Twilio's successful initial public offering. As we look to the market's future, here are the CPaaS and API trends you should expect in 2017.

Revenue in the CPaaS and API market will still be made from SMS and voice calling over telephony infrastructure. IP-based services for messaging, voice and video will still amount for a small portion of revenue. We will see CPaaS vendors playing with their pricing and adding features to their IP-based services as they try to find a business model that works.

Acquisitions will continue to be a CPaaS and API trend over the next year and will come in two forms. The will come from market players. Twilio, for instance, will likely acquire another company or two, but limit itself to smaller vendors it can assimilate rather quickly, similar to its acquisitions of Authy and Kurento. Cisco will acquire more companies to wrap into Spark, though its focus will probably be more on competing with Skype for Business and Slack, and less around CPaaS or APIs.

The second type of acquisition we will see is a large, external player acquiring a CPaaS vendor to beef up its offering. Oracle, for example, might decide to acquire a CPaaS vendor. CPaaS vendors like Apidaze, Temasys and VoxImplant could be targets for acquisitions.

CPaaS bundles make it easier for organizations to embed communications capabilities in their business apps with prepackaged APIs.

CPaaS vendors that offer video services will start eyeing the live broadcasting space. Some will enhance their portfolio in this space, or their live broadcasting product. These vendors will effectively start competing with video content delivery networks for their high-end, live-streaming customers.

In the long term, we may see CPaaS and API trends moving in an opposite direction. Namely, instead of unified-communications-as-a-service vendors offering CPaaS services, we may see CPaaS vendors offering UCaaS as part of their product portfolios, either directly to customers or through partners.

Don't expect price wars in the CPaaS market in 2017. Vendors are still focused on building their infrastructures and product portfolios. They don't have time to work on optimizing their cost structure.

In light of these CPaaS and API trends, we can expect an interesting 2017. Buckle up for the ride.

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