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Is Zoom Wasting Money on Its Phone?

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Does anyone even use the phone in their cubicle anymore?

The coronavirus has made Zoom Video Communications (ZM 2.78%) a household name. If you have worked remotely, its video platform is a key way to collaborate with colleagues wherever they are. But somewhat surprisingly, the company has branched out and now offers a phone product. On a Fool Live episode recorded on March 31, Fool contributors Toby Bordelon, Brian Feroldi, and Brian Withers discuss whether this product will end up being a waste of money for this video conferencing specialist.

Toby Bordelon: Is Zoom wasting money on Zoom Phone, from Bob and Alex. [inaudible] I don't know. I guess if you're thinking about the whole corporate office building idea, maybe Zoom Phone could be something interesting. I'm not sure that's going to be a real driver for them, though. I don't think anyone really wants Zoom to be their phone provider. I don't think anyone really has a phone anymore, outside the office context, as far as a landline or anything like that. Even we saw a couple of years ago the whole VOIP thing that was pretty big, but that's fallen by the wayside in favor of cell phones. Maybe they can roll this into a bigger package with their Zoom Rooms, and their corporate offerings, perhaps, maybe that's the direction they're going with this. But the phone itself I'm not sure it's going to really move the needle much at all.

Brian Withers: Toby, we had a voice-over IP phone, and then we used Skype for video calls in my previous company, and the phone was supposed to integrate with your computer, and it sucked. It totally was awful. There were so many people that used it that said it was lousy and it didn't work. I think if Zoom comes out with something that'll work, I think this is like to your point, a temporary solution and a way for them to continue to stay in corporate space. But five years from now I think it's a non-event for them.

Bordelon: I definitely see this as an add-on, this part of the package. I don't think anyone's going out and say I want a Zoom Phone and nothing else. But yeah, it could be something that would be attractive to some corporate users in a corporate space who already have the Zoom set up in some other way.

Brian Feroldi: I love the optionality of it. They're a communications company, they're offering another communications product, and they already have great relationships with tons of enterprises. If this fails miserably, company's still great, if it takes off, great, another revenue source. I love it when companies do stuff like this.

Withers: To me the only reason they're doing it is because customers want it.

Feroldi: Yeah. Eric Yuan, "The mission of Zoom is to make people happy." I don't think he would launch this product [laughs] unless he thought it was going to make people happy. [laughs] He's dead serious about that mission. He tells employees: "If you're not happy, don't come to work. Take a day off."

Withers: That's awesome.

Feroldi: He is an amazing leader.

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