Factors Encouraging Growth in the Enterprise UC Markets
We just wrapped up our 2010 premises-based enterprise UC solutions market engineering report. In it we take a look at development and adoption trends for comprehensive or partial UC solutions that incorporate multiple foundational elements of the UC applications stack. We expect the report to be published soon. In the meantime, here is a very brief overview for some of our findings.
The unified communications solutions market is highly correlated with trends in IP telephony equipment shipments which suffered substantial declines in 2008 and 2009 due to the economic downturn but began to recover in 2010. Traction for unified communications solutions deployments has followed a similar ebb and flow.
In 2010 global shipments of advanced UC soft clients are estimated to have declined by approximately 12 percent year-over-year from 2009. In addition to conservative spending on new enterprise technologies, this decline is also due in part to the end of aggressive promotional efforts by leading IP telephony vendors. The decline was somewhat offset by growth from other competitors, technology advancements and licensing efforts that reduce cost, and the promises of evolving UC value propositions.
The economy began to stabilize in 2010 and is the UC market expected to resume more normal growth pattern in 2011 and beyond. The impact of the general economic turnaround will be felt in 2011 as pent-up demand is unleashed to spur technology spending such as replacing TDM communications infrastructure with IP. This refresh will be aided by technologies such as UC which are designed to help reduce cost and create operational efficiencies.
We expect the World Unified Communications Market to continue to grow in the near- and mid- term as vendors leverage their installed enterprise telephony and business email accounts to deliver new value to existing customer technology investments.
Value propositions are changing as enterprise communications solutions evolve from hardware-based to software-centric designs. Advancements in server processing power, software virtualization and networking capabilities are driving down cost and expanding implementation flexibility for UC solutions. The result is an increasing audience of addressable customers which will sustain UC market growth in coming years.
Developers are moving toward more flexible consumption models that enable customers to implement UC solutions with greater speed and flexibility, and with reduced risk. Hosted and cloud UC services are gaining much greater visibility as top tier vendors and service providers more fully commit to the emerging opportunity. The flexibility, speed and cost benefits of hosted/cloud-based UC, as well as hardware consolidation offered by virtualization will significantly enlarge the demographic of addressable businesses and users, thereby accelerating adoption.
The need for UC-related professional services skills will expand as the breadth of possible solutions expands. Assessment, consultation, integration and post deployment support will create sticky relationships that encourage more customized and value-added UC solutions that will deliver on promised benefits, thereby encouraging more widespread deployments within organizations.
Historically UC has been marketed as an end-to-end solution comprised of point products which are later integrated together. Often this approach required selling separate point products which lengthened the sales cycle, and combined with the professional services requirements, made UC prohibitively complex and expensive. This approach also necessitated that licenses be purchased in large volumes to help decrease cost. Ultimately licenses were purchased for users that did not need or rarely utilized certain capabilities. In reality few users actually require access to the full range of capabilities in the UC stack. Thus, the perception can be that UC benefits a small percentage of users.
Growth over the next 5 to 6 years growth will be aided by vendor trends toward bundling applications components which help to reduce complexity of the sales process and make UC solutions easier and less expansive for customers to deploy.
Further, vendors are likely to promote UC clients over basic softphones and bundle licenses with other applications, seeding the market for future application integration opportunities. Application bundling strategies with compelling price discounts will further facilitate the adoption of advanced applications such as mobility, multimedia conferencing and collaboration.
Increased emphasis on the business value of UC and its ability to address specific business issues is resonating with customers that require clear ROI from their technology investments.
Enterprise decision makers will increasingly view communications technologies as business tools that can create business efficiencies and competitive advantage. The resulting customer demand for communications and business applications integration will have a more profound impact on product openness for interoperability and will reduce the cost and complexity related to applications integration and UC implementation.
Unified communications solutions are no longer marketed with broad horizontal value propositions. Instead, developers are presenting solutions designed for specific user roles and tasks, lines of business and vertical industries. Licensing schemes now also allow businesses to implement UC more cost effectively and more selectively with the appropriate features for specific users.
The current pervading, more granular approach to UC software licensing encourages customers to migrate to UC at their own pace, addressing needs according to their individual priorities. Thus, the UC discussion today focuses on value over volume.