Web Conferencing Trends to Watch
We recently published our 2011 web conferencing research which points at the strong demand and growth potential for web conferencing solutions. Global revenues in the web conferencing market reached $1.5 billion last year, growing at 10.8%. User demand is growing rapidly though revenue growth is starting to slow down due to increasing market maturity and the impact of declining prices. Revenues are expected to reach $3.1 billion in 2015, supporting a widening user base and a healthy 5-year CAGR of 15.3%.
Fast decline in prices and significant technology evolution are permitting customers to roll out web conferencing at a wider scale, going beyond traditional departmental-level deployments. The market is seeing early mainstreaming with penetration rates pushing up. Here are the key trends and findings:
SaaS Remains Dominant – Hosted services or SaaS contributed 81% of total web conferencing revenues. Based on an OPEX model, cloud technologies are creating time to market advantage for organizations of all size. The on-premise market showed strong momentum registering higher revenue growth than SaaS. The push toward UC is expected to lead to stronger growth for on-premise web conferencing. Cloud based UC services are evolving and do not yet offer the robust capabilities that their server-based counterparts provide. The need for customization and deeper integration are other reasons for adoption of on-premise UC.
Mobility and Video Redefine Collaboration – Enterprise communications is getting redefined as it centers around three new trends: mobile, social, and visual. End users will continue to win the "battle of choice" (BYOD, BYOA, consumerization of IT…). The mobility explosion, combined with growing demand for video and social media, has led to richer forms of web collaboration enhancing the end-user experience. Personal videoconferencing fueled by Skype, Apple FaceTime, Google Talk, is making enterprises more video-ready which has pushed video into all collaboration forms including web conferencing.
Software plus Service – Private clouds, hybrid solutions, and managed services are emerging to shake up traditional business models. As users move from an "either/or" approach to a hybrid ‘software plus service’ model, vendors are offering flexible deployment modes to meet changing end-user needs. Private clouds are the right answer for large enterprises that are risk averse and want to take small steps to cloud computing.
Growing Focus on Interoperability – Interoperability across multiple devices, networks, and applications will be critical to long-term viability of any offering. Vendors are offering SDKs, and open APIs for seamless integration with line of business applications, development of customized mobile apps, integration with telepresence systems, and so on.
Global Footprint – Growth in APAC far exceeds the annual growth in other regions. APAC is growing from a smaller base and remains under penetrated, posing strong opportunities over the next several years. Ensuring global availability and support of products and services will define the winning vendors and solutions. BRIC nations as well as countries classified as MAVINS (Mexico, Argentina, Vietnam, Indonesia, Nigeria, and South Africa) are the next hotspots for growth.
Pricing Pressures – While web conferencing continues to be a good growth market, revenue growth is not fully indicative of demand. Rapidly declining prices are bringing in early stage commoditization. We expect price declines to be in the 15 to 20% range over the next few years resulting from heightened competitive pressures and an increased focus on selling larger communications solutions.
Strong SMB growth – Cloud-based solutions are winning big among SMBs. SMB contribution in hosted web conferencing market continues to climb at a rapid pace. Vendors across the board are revving up ecommerce capabilities for better SMB penetration. While e-commerce is well established in North America, efforts are underway for ecommerce enablement and local language and currency support in several international markets.
Ongoing Market Consolidation - The web conferencing market has seen several smaller players and free conferencing providers gain significant traction. However, with the overall move toward UC, the market is getting more concentrated in the hands of larger vendors. Recent acquisitions include Dimdim by Salesforce, Elluminate and Wimba by Blackboard, Netviewer by Citrix Online, and more recently that of iLinc by Broadsoft. In the UC space, Microsoft’s acquisition of Skype further consolidated its position in the communications market. The well-established position and marketing muscle of communications giants pose threats for smaller players. However, larger vendors that are integrating web conferencing into their UC portfolio have to evolve their business models to continually innovate, offer attractive pricing, and stay agile to outsmart smaller more nimble competitors.
Keep it Simple – The dominant theme is simplification and creating easy-to-use stickier solutions at attractive price points. Feature explosion, or overloading a product with features, leads to explosion in complexity. What remain top of mind among customers are simpler intuitive yet rich user interfaces that deliver real business functionality. Open solutions are enabling an entire ecosystem of third party applications that run on top, so users can customize their user experiences and functionality.
For further information and in-depth market metrics, forecasts, market shares and valuable insights see the full study titled "Analysis of the Global Web Conferencing Market" (code N9D0-64) on www.frost.com.