UC Trends in 2010

Unified Communications (UC) entails unifying the different communication applications such as voice, email, instant messaging, conferencing & collaboration to deliver productivity gains for the users, better team collaboration and increased agility for the enterprise.

The ultimate aim of unified communications is to embed communications into business processes to deliver quicker and better decision making, enhanced collaboration across geographically diverse teams, and to improve overall efficiency in the business process to make the enterprise more agile and competitive. In order to achieve this, the multiple communication applications that operate in complete silos need to be integrated with one another, and also integrated with business applications.

Key Highlights for UC Market in 2009

From the get-go it was clear that 2009 was going to be a tough year for most industries, and the Unified Communications market was no exception. Given the recession and lower IT spending by enterprises, the Unified Communications market expecting a decline of 6.6 percent over 2008.
2009 saw a significant drop in spending on telephony infrastructure, with the telephony market expected to decline by over 30 percent over 2008. Apart from a slowdown in spending, price erosion also contributed to the overall revenue decline in that market.

The year saw creative financing schemes, attractive migration programs, aggressive application bundling and competitive pricing in the market. While many enterprises did bite into these vendor initiatives, others decided to put some of their infrastructure decisions on hold or delay them by a few quarters.
The silver lining for the Unified Communications industry was the Conferencing & Collaboration market is expected to see a strong growth of 13.1 percent in 2009. The recession brought along with it travel budget cuts which meant more investment in collaboration software and services.

As predicted last year, consolidation in the vendor landscape continued in 2009 with Avaya acquiring Nortel Enterprise, and more recently Logitech-LifeSize, and Cisco-Tandberg. The impact of all of these acquisitions will be felt in 2010.

Predictions for UC Market in 2010

2010 is expected to show some recovery and enterprises are expected to refresh their communications infrastructure and adopt Unified Communications. Frost & Sullivan expects the Unified Communications market in Asia Pacific to grow by 4.4 percent in 2010.

We believe that communications in 2010 and beyond will be increasingly:-

•Rich Communications – Communications in 2010 will be increasingly rich with Video. Growth in Video is expected to be in excess of 16 percent in 2010. Adoption of video conferencing has been on the rise in the Asia Pacific region. TelePresence market has shown good take-up from large enterprises, while boardroom and desktop video solutions are also seeing penetration across enterprises.

•Collaborative Communications – Collaboration is a top-of-mind priority for most CIOs and investments in technology that enables their enterprise to be more collaborative, and agile are of high interest. Web conferencing has seen strong growth over the last few years, and is expected to see a growth over 25 percent in 2010. For most enterprises, moving towards Unified Communications entails embracing a more collaborative communications environment, be it via audio conferencing, web conferencing or simple the ability to connect with the person at the right time on the right device through their Presence status. Enterprise Instant Messaging application is also expected to see continued growth in 2010. Solutions such as Google Wave, which brings together elements of Email, Instant Messaging and Collaboration, will make some impact on the market in 2010, although mainstream adoption of such solutions would only be in a 2011-2012 time frame.

•Social Communications – A more recent trend driven by consumer adoption of web 2.0 applications such as social networking. The idea of having a Facebook-like application for the enterprise was being discussed for the last 12-18 months, and in recent weeks we have seen announcements by vendors such as Cisco and Salesforce.com to offer enterprise social networking based collaboration platforms. Players such as IBM, Cisco and Salesforce.com, as well as other niche players are participating in this new market place.
Using social media for customer communications and customer service is expected to gain traction in 2010. Given the nascent stage of the market, the adoption of enterprise social collaboration platforms might be limited in 2010, however awareness and education amongst enterprises is expected to increase. Leveraging social media for customer service is expected to see some traction in 2010.

•Cloud-based Communications – Communications is increasingly moving to the cloud. Adoption of UC-as-a-Service picked up steam in 2009. Local as well as Global Service Providers have become aggressive with their hosted communications service offerings such as Hosted PBX, Hosted Conferencing and Hosted Messaging. Pure play conferencing service providers such as Intercall, Cisco Webex, Premier Global Services have seen good growth in 2009, and are continuing to see interest from enterprises. Hybrid deployment models of On-Premise and In-the-Cloud will emerge in 2010 and enterprises will choose which applications will be on-premise and which ones should be in the cloud. Vendors such as Cisco, Avaya, Alcatel-Lucent, Mitel are working with service providers to deliver their solutions on a hosted basis. Microsoft is expected to launch Microsoft Online in Asia Pacific in 2010, further spurring the market place.

•On-the-go Communications – Mobility continues to be a business need and adoption of mobility solutions is expected to continue in 2010. Solutions that provide the ability to access all forms of communications from the mobile device are expected to grow in 2010. Soft phone clients on mobile devices, to mobile collaboration clients and mobile email are seeing good traction in the market. As the end-point evolution continues from analog phones to digital phones to IP phones, today the user has the option for a hard IP phone on the desk, soft phone on the desktop and soft phone client on the mobile. While the hard phone on the desk might still be prevalent for the next 2-3 years, the adoption of soft phones is seeing strong growth in Asia Pacific.

Core communication applications such as IP telephony and Email will see flat to marginal growth in 2010. IP migration projects will renew in 2010, and growth is expected to return to the IP telephony market, but price points would still be under pressure. Commoditization of these core communication applications will continue in 2010, and focus on applications will be important.

According to Frost & Sullivan, the Unified Communications Market Opportunity* in 2010 is expected to be worth slightly over US $4.45 Billion, growing at 4.4 % over 2009.

*Note: UC Market Opportunity includes Enterprise Telephony, Email, Instant Messaging (Unified Client), Unified Messaging, Conferencing & Collaboration (Audio, Video & Web), Mobility, Presence & Integrated UC Applications, and Core Contact Center Applications.