If you haven’t yet figured it out, the channel has become the biggest success driver in the business communications space. Once upon a time, cloud communications providers chased direct customer relationships with expensive internal sales teams, invested heavily in marketing automation, and competed fiercely for accounts. It made sense early in the cloud era. Today, though, it just doesn’t make economic sense and, while some providers still have a sizable direct sales force, the market has clearly flipped the traditional SaaS (News - Alert) model on its head.
The latest evidence comes from 26North’s acquisition of Intermedia and its $430 million in annual recurring revenue, which is driven by some 7,500 partners with more than 150,000 business customers. Intermedia (News - Alert) reported 20% year-over-year growth while expanding profitability. Those are strong numbers in a market that has been noticeably quiet in the media in recent years.
Intermedia’s Customer Ownership Reseller (CORE) model has proven to be a successful strategy, driving alignment between the vendor and its channel. Rather than treating partners as mere lead generators or implementation resources, Intermedia allows IT service providers, MSPs, telcos, and cable companies to white-label its entire platform. Under this framework, partners maintain complete customer ownership, set their own pricing, and build equity in those client relationships.
Those relationships are important because, in today’s increasingly complex IT landscape, businesses rely more heavily on their IT providers to deliver a full range of services, and the branding matters because of the trust factor. Businesses rely less on direct vendor relationships and, instead, look for deeper relationships with their IT providers – the channel partners – who are seen as trusted consultants and advisors than mere service pass-through conduits. In a largely commoditized cloud communications market, the relationship matters more than ever. The trust, the local support, and the strategic guidance are the differentiators – and the brands belong to the partners, not the vendors.
For the SMB customer, a local IT provider recommending a communications platform carries far more weight than any vendor's glossy marketing campaign. For partners, CORE provides a clear path to recurring revenue without the capital intensity of building their own infrastructure. They can offer enterprise-grade communications under their own brand, maintain customer relationships, and capture economics that reflect the actual value they are creating through curated service bundles.
"Intermedia has spent a decade building the right model to capture the opportunity in today’s cloud communications market by focusing on channel partners and the SMBs they serve," said 26North Private Equity Partner Tyler Sipprelle.
While its model explains Intermedia’s success, AI is undoubtedly part of its future.
“We have built the business around a model that aligns closely with our partners and customers, and that alignment is becoming even more relevant as AI opens new opportunities for how organizations communicate and operate,” said Intermedia CEO Michael Gold.
Intermedia had already embedded AI into it communications platform with several AI assistants, and AI agents reportedly coming soon. But, the AI revolution is about more than just the features and capabilities. As AI reshapes business communications – enabling real-time transcription, intelligent routing, automated summarization, predictive analytics, and much more – platform complexity platforms increases. As a result, SMBs will need more support, not less. They'll need partners who understand their workflows, can configure AI features appropriately, and can integrate communications intelligence into broader business processes.
This plays directly to Intermedia’s CORE strategy. Partners can position AI-enhanced communications as part of a comprehensive digital transformation strategy rather than a standalone product purchase. They become essential interpreters of new capability, not commodity resellers of undifferentiated features.
Now, as much as cloud communications is a largely commoditized market, cloud migration is far from complete. Millions of business phone lines still run on aging legacy equipment. As AI capabilities mature and the cost-benefit equation shifts further toward cloud solutions, the migration will continue – those businesses simply have no option if they intend to be competitive.
Who will capture the lion’s share of that continued transition? I say it’s the vendors with the deepest partner relationships, the most aligned economic models, and the infrastructure to support increasingly complex AI-enhanced solutions.
26North seems to have placed the same bet, adding Intermedia to its $35 billion portfolio that also includes other tech companies like AVI-SPL (News - Alert), NEP Group, and ArchKey Solutions. For the rest of the industry, the message is clear: in the AI era, distribution matters as much as innovation. Perhaps more.
Edited by
Erik Linask
