After three consecutive years of revenue decline, the global video conferencing endpoints and infrastructure market returned to positive growth for full year 2015 indicating a turnaround. Businesses are rapidly adopting video communications and this trend shows no sign of slowing down.
Here are the key takeaways from Frost & Sullivan’s recently published market update on video conferencing. (Note: This report covers the market for video conferencing endpoints and infrastructure systems and does not include video conferencing use over soft UC clients, web and video conferencing services, and team collaboration solutions. For a more comprehensive view of the market, stay tuned for our upcoming report “Enterprise Video Conferencing Adoption: A Holistic View of Growth Opportunities”, which takes an end to end view across varied platforms and services).
User demand for video communications has been accelerating which is enabling the market to reach a tipping point. The proliferation of mobile devices combined with an unending appetite to consume video content and associated services has been a big driver for boosting adoption of video communications including video conferencing.
With the onset of consumerization, user expectations have shifted greatly. While exploding consumer use of video is feeding into demand for video communications at work, it sets the bar high for technology providers to match consumer expectations of easy to use, light weight applications with frictionless user experiences over connected devices.
Newer and agile clients and platforms are giving providers the control and flexibility to drive the direction for next-generation video conferencing and accelerate innovation to offer new business models.
The total market for video conferencing endpoints and infrastructure is forecast to grow at a compound annual growth rate (CAGR) of 5.5 percent from 2015 to 2020 to reach $2.9 billion by 2020.
The endpoints market is forecast to grow at a compound annual growth rate (CAGR) of 6.8 percent from 2015 to 2020. Unit shipment CAGR on the other hand is forecasted at 25.8%; with rapid adoption coming from the next-generation low priced devices in huddle rooms and open meeting spaces.
Currently standing at less than 10% penetration rate, growth in the future will be driven by a stronger adoption of video in multiple meeting environments – conference rooms, huddle rooms, open spaces, desktops, and mobile devices. It is estimated that globally there are 30 million huddle rooms and less than 5% of those are video enabled.
Infrastructure revenue continues to decline as migration to cloud leads to declining CAPEX investments. In addition, there is a downward impact on the market from the shift to converged call control. Growing virtualization and software-based solutions have led to declining prices putting further strain on revenues.
Cisco’s acquisition of Acano and Mitel’s acquisition of Polycom signal continued consolidation in an increasingly crowded and competitive market.
The future clearly lies in software that enables mobile and connected work. At the same time meeting rooms are not going to go away. Infact, we expect to see more rooms and more meetings. Meetings are getting less structured and less formal.
The distinction between video and web conferencing is fast diminishing. Most web conferencing solutions now offer rich video conferencing while video-centric vendors are enhancing content sharing and collaboration. It is expected that in a few years, the two solutions will look almost identical in features and price, effectively competing for the same user-base.
The onset of solutions like Slack, HipChat, and Glip mark a significant shift in the market. These free or low-priced team collaboration products have attracted a significant customer base. Conferencing in the future will increasingly get built into team collaboration solutions. This triggers the need for open platforms that allow users to integrate their choice of collaboration applications.
As collaboration becomes increasingly integrated with business applications, vendors are focusing on building open and extensible platforms and a wide network of developer partners to enable video communications into custom work flows