In recent times, Zoom has become one of the most talked-about companies around the globe. It’s Zoom application which is available on all platforms, has grabbed the attention of many people. Zoom was founded in 2011 by Eric Yuan, a former corporate vice president for Cisco Webex. However, after leaving the company with a team of 40 engineers, Yuan started his own company.
Yuan started the company as Saasbee, which he later renamed Zoom. Zoom released its initial version of the app in 2012. From there, the company went on to grow substantially and started obtaining new clients. Zoom soon became a competitor to Cisco Webex. However, it wasn’t until recent events that Zoom started becoming more popular.
The COVID-19 pandemic played a significant role in Zoom’s success. The company was performing averagely in the past. However, due to the pandemic, most people were forced to work or study from home. Zoom was one of the apps that provided a solution for collaboration between these people and allowed them to cooperate and coordinate their activities.
The boom in Zoom’s business is also reflected in its financials. Zoom generated revenues of $2.651 billion in 2021. It was a staggering 326% increase over the $622.66 million the company generated in 2020. Most experts believe the company will further increase its revenues in the upcoming year. The $2.651 billion it generated in 2021 was the company’s highest sales to date.
Zoom also went public in 2019 through an initial public offering. The company got a valuation of $16 billion at the end of the first day of trading. The company’s valuation has significantly grown by then, getting to almost $160 billion at one point. However, the company’s market cap has declined after that due to normalization.
Zoom – At a Glance
Given below is Zoom’s company profile.
| Name | Zoom Video Communications, Inc. |
| Website | zoom.us |
| Founder | Eric Yuan |
| Year founded | 2011 |
| Chief Executive Officer (CEO) | Eric Yuan |
| Chief Financial Officer | Kelly Steckelberg |
| Headquarters | San Jose, California |
| Type of corporation | Public |
| Revenues (2021) | $2.651 billion |
| Company market capitalization | $121 billion |
| Key products/ services | Videotelephony, Online Chat, Business Telephone Systems, Collaboration And Meeting Tools |
| Key competitors | Cisco Webex, GoToMeeting, Google Hangouts Mee, Microsoft Teams, Messenger Rooms, Skye Meet Now, and Slack, etc. |
Zoom’s SWOT Analysis
SWOT analysis is a tool that users utilize to understand a company’s strategic position. It provides an internal and external view of a company’s operations. Unlike other tools, such as Porter’s Five Forces, SWOT analysis does not focus on external factors only. Therefore, it provides a complete view of a company’s operations.
A SWOT analysis consists of analyzing four aspects of a company’s operations. These include Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses both represent internal factors that impact a company’s operations. In contrast, opportunities and threats are external factors. By analyzing all of these, users can get a better insight into a company.
Zoom is a company that operates in the technology industry. Therefore, most of these factors will relate to that industry. Nonetheless, given below is the complete SWOT Analysis for Zoom.
Zoom’s Strengths
As mentioned, strengths are internal factors that impact a company’s operations. These include activities or areas where a company excels. Similarly, these are areas that a company gets right, but its competitors can’t. In Zoom SWOT analysis, the most prominent strengths include the following.
Easy to Use
One of Zoom’s top-selling points was that it allowed for easy connectivity between a group of people. The Zoom app does not require any complicated process to get registered. Therefore, it became the first choice for most people around the world. It even allows people to join meetings without an account, which makes it simpler for users.
Niche Product
The features that Zoom provides were already available in the market through some of its competitors. However, Zoom was able to take the product and make it niche, which allowed it to cater to a specific audience. Apps like Skype or Hangouts already facilitate video and voice calls. However, Zoom was able to identify its weaknesses and address those issues to enhance its product.
Unique Features
As mentioned, Zoom was able to improve on existing technologies to increase its demand. On top of that, it also introduced other unique features, which made a choice clear for customers who were looking for collaboration and meeting tools. It further increased its usability by introducing specific features, such as allowing customized screen sharing or whiteboard features.
Brand Name
During the COVID-19 pandemic, many apps were developed that allowed easy collaboration between participants. However, none of those apps came close to Zoom’s popularity. It was primarily because of Zoom’s widely recognized brand name. Zoom’s brand name has allowed the company to increase its user count significantly.
Zoom’s Weaknesses
Similar to strengths, weaknesses are also internal factors. However, these are the exact opposites of each other. Weaknesses include all activities that allow a company’s competitors to obtain a competitive edge. These are activities that a company can’t get right. In Zoom SWOT analysis, the top weaknesses are as below.
Ineffective Encryption
Zoom does provide users with the ability to use end-to-end encryption. However, some experts believe that the system doesn’t work as it should. Some other competitors have taken this opportunity to introduce better products that address these issues. For users that find these issues concerning, Zoom may not be the primary choice.
Unpolished Features
Zoom does a good job of introducing new and unique features. However, it lacks the ability to polish those features to provide users with the best experience. For example, Zoom Rooms allows users to create rooms for specific topics. However, it does not have the proper management tools to allow moderators to regulate them.
Security Problems
Some experts also believe that Zoom’s usage of Chinese servers may indicate security issues. Since China is notorious for keeping an eye on users’ data, this may be alarming for users that use the app. Zoom’s lack of proper security features has allowed some competitors to overtake the app in that area. Similarly, some customers have switched to alternatives for that reason as well.
Zoom’s Opportunities
Opportunities include external factors that can significantly improve a company’s operations in the future. However, opportunities usually apply to all market or industry participants rather than a single company. Therefore, only companies that act first and avail themselves can benefit from them. In Zoom SWOT analysis, the top opportunities consist of the following.
Increasing Demand
One of the reasons behind Zoom’s increased popularity was the COVID-19 pandemic. The pandemic forced most people to work or study from home. The pandemic increased the demand for apps like Zoom that allowed meeting and collaboration solutions. Zoom has the opportunity to further capitalize on this increased demand and increase its users.
Technological Developments
One of the reasons behind Zoom’s success, as mentioned above, was innovative solutions. However, in the world of technology, these innovations have a finite life. Zoom has to consistently improve its product and introduce new solutions to stay successful. It presents the company with an opportunity to increase its user count significantly. It already has experience in the past in this area.
Diversification
As of now, Zoom only has a limited product. It only provides online collaboration and meeting solutions. While this product is already successful and yielding profits for the company, Zoom has the opportunity to diversify even further. For example, it can create a small social media platform or chat app for its specific users to increase its profitability.
Zoom’s Threats
Threats are also external factors. However, unlike opportunities, these represent adverse future prospects for companies. Threats are things that companies must always be aware of as they can cause significant damage in the future. In Zoom SWOT analysis, below are some of its threats.
Competition
One of the most significant threats that Zoom faces right now is that of competition. Due to its easy-to-replicate business model, Zoom faces a lot of competition. Some of its competitors include big names such as Microsoft and Google, both of which have introduced similar products. The competition threat can significantly deter Zoom’s profitability in the future if it realizes this.
Normalization
As previously mentioned, the COVID-19 pandemic played a significant role in Zoom’s sudden rise to success. Before that, Zoom had existed since 2011. However, it became substantially more relevant during the pandemic. Zoom faces a risk that after things normalize, it will lose its customers.
Many Substitutes
Another threat that Zoom faces is that of substitutes. While Zoom has a niche product, it still faces competition from apps such as Skype and Discord. Both of these apps may not offer dedicated meeting and collaboration tools, but they still pose a threat to Zoom’s product. Apart from that, these apps provide some additional features that Zoom doesn’t. It further makes it easier for users to switch.
Conclusion
Zoom is an online video communication app that makes digital collaboration and meeting straightforward. Zoom rose to fame during the COVID-19 pandemic when it experienced an influx of users from around the world. The company was formed in 2011 by Eric Yuan. Zoom’s SWOT analysis, which identifies its strengths, weaknesses, opportunities, and threats, is given above.
