|Mergers and acquisitions are redistributing power as the market enters mass-adoption stage, finds Frost & Sullivan
MOUNTAIN VIEW, Calif. – July 30, 2015 – The North American hosted Internet Protocol (IP) telephony and unified communications and collaboration (UCC) services market is undergoing major changes as it transitions from the early-adopter to mass-adoption stage. Growth rates are accelerating due to an increase in customer awareness of cloud communications benefits. Greater scrutiny of service quality and reliability is compelling providers to differentiate through innovative features and to scout for mergers and acquisitions in order to gain efficiencies and achieve economies of scale.
New analysis from Frost & Sullivan, Analysis of the North American Hosted IP Telephony and UCC Services Market. finds that the market reached 8 million installed users in 2014 and estimates this to reach 41.9 million installed users by 2021.7
Small and medium businesses (SMBs) will account for the majority of installed users and a considerable portion of new users for these flexible, economical outsourced communications solutions. Larger distributed organizations looking to consolidate communications infrastructure, optimize IT operations, and cost-efficiently manage remote and mobile worker communications will follow suit, contributing to a growing percentage of users.
“Budget and resource constraints, as well as the appeal of faster access to advanced features, and the ability to supplement limited in-house IT staff, are lending momentum to hosted services among SMBs,” said Frost & Sullivan Unified Communications & Collaboration Program Director Elka Popova. “Among larger distributed organizations, concerted service provider efforts, in addition to maturing technologies and business models, will drive adoption.”
Rapid penetration of hosted services among larger businesses, which require more advanced features and typically engage for a longer term, will help propel profitability in the North American IP telephony and UCC services space. The market will receive an additional boost as vendors with a differentiated value proposition target new customer segments.
Despite this large-scale shift to the cloud, control and security will remain key customer concerns. Apprehensions surrounding reliability, customization, and integration often tip the scales in favor of premises-based deployments. Furthermore, new business models in the premises-based solutions domain, including subscription-based pricing and fully managed solutions, entice customers to retain or upgrade existing on-premises investments rather than opt for hosted solutions.
“Going beyond features and functionality, service providers must offer strong customer onboarding, consistent support, a balanced mix of automated sales and consultation, as well as efficient service provisioning and upgrades,” urged Frost & Sullivan Unified Communications & Collaboration Program Manager Robert Arnold. “With entrants vying for market share and many participants joining forces through mergers and acquisitions, vendors must align their growth objectives with market needs, portfolio capabilities, and marketing approaches to carve their place in the still-untapped North American market.”
Analysis of the North American Hosted IP Telephony and UCC Services Market is part of the Enterprise Communications Growth Partnership Service program. Frost & Sullivan’s related studies include: Global Enterprise Communications Platforms and Endpoints Market, Partner Growth Opportunities in the Evolving UC Market, and Regional Growth Opportunities for Session Initiation Protocol (SIP) Phones. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.