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North American Hosted IP Telephony and UCC Services Market

  • July 2013
  • -
  • Frost & Sullivan
  • -
  • 98 pages

Summary

Table of Contents

Customer Trends and Technology Advancements Drive Market Growth and Transformation

The North American hosted IP telephony and unified communications and collaboration (UCC) services market offers an exciting growth opportunity for service providers and presents both a threat and an opportunity for premises-based UCC vendors and their partners. This study provides an in-depth analysis of industry trends, market drivers and restraints, and competitor business models. It also provides market forecasts in terms of installed users and recurring service provider revenue, as well as market share analysis. Finally, the study provides recommendations to both end users and service providers. This market analysis is intended to help market participants identify growth opportunities and develop sustainable business strategies.

Executive Summary

• The North American hosted IP telephony and unified communications and collaboration (UCC) services market offers an exciting growth opportunity for service providers and presents both a threat and an opportunity for premises-based UCC vendors and their partners.
• In 2012, the market grew by X percent in terms of installed lines/seats/users and X percent in terms of revenue (including access revenue). Growth rates were slightly lower than anticipated due to economic uncertainty and a degree of restructuring and repositioning in the service provider community, which impacted marketing efforts and ability to attract and retain customers.
• Demand growth in 2012 continued to be driven by the need for flexible and economical telephony and UCC alternatives for underserved small and midsize businesses (SMBs) and small branches. Similar to previous years, SMBs accounted for X percent of the installed base.
• Going forward, the benefits of cloud solutions for mobile and remote workers will drive penetration among larger, geographically distributed organizations. Other factors that will boost hosted communications adoption among larger businesses include a growing focus on quality of service (QoS) and service reliability as well as the addition of presence, mobility, video, and advanced collaboration capabilities to cloud UCC service bundles.
• Security, control, and reliability concerns continue to present major barriers to cloud services adoption, even more so than feature and functionality gaps. Service provider financial stability, track record, and customer support capabilities present additional challenges in this emerging market.
• Multi-tenant platforms based on shared hardware and software continue to account for the majority of the hosted IP telephony installed base, however private branch exchange (PBX) vendors are making an aggressive foray into the market with multi-instance, virtualized PBX solutions. The latter are likely to be most successful among larger organizations with significant investments in a certain vendor’s on-premises technologies looking to deploy hybrid architectures and/or retain existing phone terminals.
• Approximately one-third (X percent) of hosted IP telephony users receive their services over the public Internet (also known as an “over the top” delivery model).
• The majority of providers offer “managed” hosted services delivered over private lines with multi-protocol label switching (MPLS). However, several over-the-top providers have experienced rapid growth and others are adding a bring-your-own-bandwidth (BYOB) option in order to expand their customer reach.
• In 2012, the market remained highly fragmented with someX providers offering a broad spectrum of hosted IP telephony and UCC services. Each provider held less than Xpercent share of the installed base.
• Provider business models vary widely and are likely to continue to evolve over the forecast period. Further market consolidation is expected.
• In the period from 2012 to 2019, the market is forecasted to grow at X percent in terms of installed lines/seats/users, X percent in terms of revenue with access services, and X percent in terms of revenue without access services.

CEO’s Perspective

1. Growth in mobile and remote workers will drive demand for flexible hosted IP telephony and UCC services.
2. Increasing focus on QoS and service reliability enables growth among larger and more demanding organizations.
3. Mobility, video, and collaboration capabilities enhance the value proposition of hosted/cloud solutions.
4. Provider financial stability and business model viability will be critical for survival and success in a maturing market.
5. Emerging cloud UCC/ UCaaS business models will pose a competitive threat as well as a growth opportunity.

Key Questions this Study will Answer

• What is hosted IP telephony, UCaaS, and cloud UCC and how do they fit in the paradigm of business communications and collaboration solutions?
• What is the market potential for hosted IP telephony and UCC services in terms of users and revenue?
• How are technologies and business models evolving and what are the implications for vendors, service providers, and end customers?
• What factors are driving and restraining market growth?
• Who are the key market participants and how are they positioned for growth and success?
• What criteria should end-user organizations apply when evaluating different solutions and providers?

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