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Illustration: Christopher T. Fong/Protocol

Zooming into the enterprise won’t be easy

Protocol Enterprise

Hello, and welcome to Protocol Enterprise! Today: the real work is underway now that Zoom’s pandemic-fueled growth spurt is over, Google makes its Arm ambitions apparent with Ampere, and why hacking and disinformation campaigns are two sides of the same coin.

What’s next for Zoom?

During the pandemic, Zoom grew so quickly it became a verb. But two years after the worst of the pandemic seems to have subsided, Zoom’s future isn’t as certain.

While CEO Eric Yuan laid out plans to turn Zoom into a true enterprise platform player, a falling stock price, failed acquisition and unmet investor expectations have threatened those ambitions.

The question facing Zoom now is: What’s next?

  • Acquisition options are gone now that Zoom’s high-flying stock has come down to earth, and platforms like Microsoft and Salesforce are taking direct aim at its core video service.

To find long-term enterprise success, Zoom will need to simultaneously land more enterprise customers, expand internationally and execute well on its non-video products.

  • That task will be much harder now that its pandemic-fueled growth is slowing down.
  • But if Zoom can succeed, the rewards are high. “I think if they can execute on both sides of the equation, I can see them getting back to 20% growth,” said Rishi Jaluria, managing director at RBC Capital Markets.

Despite a number of setbacks and lowered market sentiment, Zoom is well-positioned for this next phase of its journey.

  • The numbers show Zoom is still a growing SaaS company with an expanding product line, healthy revenue and profitability.
  • “The market is just recognizing that: Nothing is wrong with Zoom as a company; it's a fundamentally good company,” said SoftBank managing partner Nagraj Kashyap.

However, it’s not hard to see Zoom’s pandemic experience as a missed opportunity.

  • Now Zoom has the chance to take more of a long-term view, a change from the reactionary posture it had to adopt to keep up with soaring pandemic demand.
  • “We're taking the long view here,” said CFO Kelly Steckelberg. “We're building for a $10 billion software company and beyond, that's the focus that we have here.”

Read the full story here.

— Aisha Counts (email | twitter)

Google Cloud is now Armed by Ampere

Arm-based computing has been making slow but steady inroads into the data center, with the promise of lower costs and competitive computing horsepower. AWS and Azure have each produced an Arm-based flavor, with AWS opting to make custom processors and Azure picking a design made by Oracle-backed chip startup Ampere.

Google Cloud has taken a page from Azure’s playbook, announcing Wednesday it had launched a version of its virtual machines that are powered by Ampere’s Altra chips. The new virtual machines will run under Google Cloud’s Tau T2A, and the new server instances are useful for web servers, data-logging processing, media transcoding and Java apps, among other things.

Arm has become more popular in recent years, but it still captures a tiny portion of the data center market. AWS’ Arm-based Graviton accounted for just 4.5% of the market, and Ampere captured less than 1% as of May, according to data from Jefferies analyst Mark Lipacis.

By contrast, AMD accounted for 15% of data center processor instances and Intel dominated the space with 78%. Lipacis noted that he expects Arm to continue to take share through Ampere, Graviton and other Arm-based chips such as Alibaba’s Yitian 710.

— Max A. Cherney (email | twitter)

When the bubbles burst

As the old saying goes: If we don’t learn from our history, we are doomed to repeat it. In this Protocol Pipeline event, hosted by Biz Carson on July 19 at 10 a.m. PDT, we will be joined by a panel of VCs who expertly navigated the 2001 and 2008 crashes to talk about the downturn around the corner.

They will share lessons on how to shift strategies when the market changes, what emerging VCs should focus on in order to survive and when it is — and isn’t — time to make that next big bet. Joining Biz on the panel are Beezer Clarkson, partner at Sapphire Partners; Geoff Yang, founding partner and managing director at Redpoint Ventures; and Matt Murphy, partner at Menlo Ventures.

RSVP here.

Come together

Here's a thing I keep hearing: We've been thinking about the threats from hacking and disinfo as separate, and we really shouldn't be. Because the Russians don't.

This topic came up recently while I was speaking with Jessica Brandt, policy director for the Artificial Intelligence and Emerging Technology Initiative at the Brookings Institution. Brandt told me she was glad to see Microsoft treat influence operations and espionage as an "integrated threat" in its recent report on Russia. Clearly, Vladimir Putin uses them in combination with one another, she noted — and it's tough to fully grasp what he's doing without viewing them as one.

This week's report from the Council on Foreign Relations makes the same point. "The Russia-Ukraine war demonstrates how tightly intertwined cyber and information operations are," the writers of the report, Adam Segal and Gordon Goldstein, said. "The United States can no longer treat cyber and information operations as two separate domains."

The bottom line, according to all of these thinkers, is that if influence and espionage operations are actually a single threat, it calls for a response from the West that's also integrated. And with the looming threat of a wave of disruptive cyberattacks by Russian actors, perhaps keeping an eye on disinfo might be key to understanding what's ahead.

— Kyle Alspach (email | twitter)

Around the enterprise

A ransomware attack on a health care debt collector might have exposed a new type of supply chain attack after Professional Finance Company acknowledged that data belonging to 1.19 million patients of the company’s 650 health care provider customers was compromised earlier this year, according to TechCrunch.

Alibaba abruptly cut off access to its private cloud network for customers in Taiwan at the end of June, citing a “business adjustment.”

Thanks for reading — see you tomorrow!

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