Outlook for UCC in 2016
Feb 05, 2016
If Frost & Sullivan’s research tells us anything about the UCC market, it’s that it is relatively stagnant. Multiple factors—economic, technological, competitive, and need—have contributed to this slow growth. And the outlook for 2016 doesn’t look much better.
Ongoing macro-economic challenges in many areas of the world are slowing investments in next-generation platforms and applications. In 2015, just as the US and certain Western Europe countries began to emerge from the economic downturn that started in 2008, other countries plunged into mild recession (Canada) and deeper financial turmoil (e.g., Greece, Spain, China).
Political and social crises in the Middle East have also shaken technology buyer confidence. War and refugee crises are likely to continue to negatively impact global economies, particularly in EMEA, in 2016 and beyond. Political concerns have also impacted imports and exports in certain BRIC, APAC, and EMEA countries, adding to the industry’ sales and support challenges.
But micro factors are also at play in the communications industry.
Despite initial optimistic projections of companies migrating their voice systems en mass from time division multiplexing (TDM) to IP networks, our research indicates that many companies are content to keep their timeTDM systems because they “just work,” providing the reliable dial tone that is all many organizations really need. More than half of all businesses in the world still use legacy telephony systems that do not easily or cost-effectively support advanced UCC tools, delaying their adoption.
The hype around cloud communications is also impacting investment decisions. Most businesses understand the benefits of cloud, yet many also see its shortcomings: over-reliance on a third party and loss of control; limited customization; perpetual subscriptions fees without long-term ownership; higher long-term costs; and others.
That said, migration to the cloud is taking place. The hosted video conferencing services segment will experience 22 percent revenue growth globally through 2019. The global hosted IP telephony user base is expanding at about 30 percent per year.
Finally, the “Microsoft effect” continues to disrupt the enterprise communications market. With an enormous installed base of email, instant messaging (IM), and conferencing users, the vendor affects the market like no other. Now, Lync/Skype for Business is making a huge push into the enterprise telephony market, with both premises-based and cloud UC deployment options.
The disruption is evident in Microsoft’s growing share of enterprise voice users, and even more-so in the hesitation it is causing among business decision makers. Many are not comfortable embracing Microsoft as their voice provider and are instead taking a “wait and see” approach, delaying investments to see how Microsoft UC solutions fare in the market before they commit to Microsoft, another premises-based UC vendor, or a cloud service provider.
Of course, we could (and did) say the same thing about Microsoft five years ago; whether companies will ever trust the vendor with their voice communications is anyone’s guess—but it sure seems to make a handy excuse for delaying future investment.
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