Mobile, cloud to revive the struggling videoconferencing market

by Sohini Bagchi    May 31, 2013

mobile conferencing

At a time when enterprises are considering collaboration as a key tool, the videoconferencing market is expected to skyrocket. However, an IDC report released this week on the video conferencing market in the first quarter of 2013 proved otherwise. According to the report, the videoconferencing equipment revenue declined 13.2 per cent year over year and 21.9 per cent quarter over quarter, while total worldwide enterprise videoconferencing and telepresence equipment revenue stood at $563.4 million in the first quarter of 2013, its worst result since the second quarter of 2010.

The report diverges from the earlier predictions by analysts that the videoconferencing market is set to witness a robust growth in 2013 and will become increasingly popular for enterprises, across size and verticals. The current video equipment market is still dominated by Cisco with 43.4 per cent market share, although it witnessed a 17.2 per cent year-over-year decline in revenue from both the first and last quarters of 2012. Polycom’s worldwide video equipment market share stands at 26.5 per cent, up from 23.6 per cent in the fourth quarter of 2012 as the vendor introduced a range of new video products and services to the market last year. However, Polycom’s first quarter 2013 videoconferencing equipment revenue decreased 12.4 per cent quarter over quarter, and 11.2 per cent year over year. But the overall scenario looks gloomy.

“Videoconferencing vendors point to longer procurement cycles and challenging macroeconomic situation in EMEA as reasons for the challenging first quarter results,” Rich Costello, senior analyst for enterprise communications infrastructure at IDC, said in a statement. He says in addition to this, increasing customer considerations over more software-centric solutions, virtualization and real-time browser-based communications are also posing a challenge to the video equipment market.

Increasing customer considerations over more software-centric solutions, virtualization and real-time browser-based communications are posing a challenge to the video equipment market.
-Rich Costello, senior analyst for enterprise communications infrastructure, IDC

Video still a priority

Despite a weak first quarter, Video as a key component of collaboration still places high among priorities for many organizations. Analysts believe emerging technologies such as mobile and cloud can revive the struggling video conferencing market. For example, with more people utilizing mobile devices for business and personal use, videoconferencing platforms must go mobile so that enterprises can access through smartphones and tablets. Many believe, transition from hardware-based videoconferencing solutions to software-based solutions – With the explosion of mobile devices for both personal and business use, and growing utilization of cloud-based services, companies will continue to shift from hardware only videoconferencing to software-based solutions.

Similarly, cloud based offerings will also drive adoption among enterprises. Polycom’s Cloud Suite for example, is a game changer for enterprise videoconferencing, uniting users of various video platforms, including Facebook, Google and Skype into one cloud for easy communication.

One consistent limitation of videoconferencing earlier was the compatibility and interoperability between dedicated systems. “As more companies conduct video meetings with customers, partners and suppliers, ubiquitous videoconferencing technology will become critical,” says Michael Helmbrecht, Vice President of video solutions at LifeSize. This is a key consideration for vendors when they bring a new solution to the market.

APAC sees robust growth

Although the video conferencing market showed a weak disposition globally, especially in the North American and European markets, Asia Pacific performed much better in terms of market growth and adoption. In India for example, a recent Microsoft study also reveals that 80 per cent firms they polled use video solutions. In APAC, usage levels of these tools tend to be higher than in most other markets across the world, says the report.

In the next one year, a growing number of firms, especially in healthcare, banking, IT/ITeS and manufacturing are showing an interest in the adoption of video-based solution. The long-term outlook also seems positive, believes Matthias Machowinski, Directing Analyst - Enterprise networks and video at Infonetics Research who states that the continuing interest by enterprises to deploy video communications would help the market to sustain a 6 per cent CAGR through 2017.

Machowinski also notices a shift from voice to visual forms of communication when it comes to conferencing, indicating that smartphones and tablets are becoming the most preferred conferencing tools. As a result Machowinski indicates that the Bring Your Own device (BYOD) phenomenon is partly responsible for driving the growth of the video conferencing market. Alongside, cloud-based and device-agnostic solutions will also facilitate greater collaboration in the enterprise in the coming months.

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In our view, the VC market is doing fine. Customers usage of video is growing very healthily; they may not be buying new equipment but rather making the systems they have work harder. We see a pattern where utilisation is driven-up (substantially) at which point new purchases can be justified. We are seeing a trend from managed services to self-service (as a mechanism to meet demand) and growing demand for Lync. We’re also noticing a transition to next generation, much larger deployments and there is considerable innovation at the moment that will support this trend (scalable software MCUs, Lync, iPad based clients and HTML5 based VC directly from the browser) - something we saw at Infocomm. Mike Horsley, CTO, VQ. www.vqcomms.com ... 17 Jun 2013, Mike Horsley