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New players pose threat to established unified comms vendors

Unified communications will be an area of some growth for resellers this year according to Frost & Sullivan, with the analyst firm predicting growth of more than 3% in 2015 and 2016.

And while the Kiwi UC market continues to be a two-tiered market, with Microsoft, Cisco and Avaya accounting for more than 50% of market share, new players entering the market ‘will pose greater competitive threat to the established vendors over the next few years’, Frost & Sullivan says.

Among the players ‘steadily increasing their footprint’ are Mitel, ShoreTel and Interactive Intelligence, who Frost & Sullivan says are securing customers in the small and mid-market segments and building local market partnerships to grow their footprint.

Spark Digital, Dimension Data and Vodafone NZ are the three major channel partners and account for the majority of large deployments, with Spark Digital holding the dominant share.

Frost & Sullivan notes the company is ‘advantaged by having telco and systems integration capabilities and will remain a major player in the on-premise and hosted UC market’.

The predicted increases for 2015 come on the back of growth in 2014, as the market emerges from a cycle of weak investments.

Instant messaging/presence and mobility are the highest growing segments, followed by enterprise telephony.

In its new report New Zealand Unified Communications Market Report 2014, Frost & Sullivan says a compound annual growth rate of 2.6% is expected for the UC market from 2013 to 2020.

Cloud signals new entrants

Audrey William, Frost & Sullivan ANZ head of research, says on-premise deployments will continue to account for the majority of UC revenues in the next five years, although growth rates in the on-premise segment will be much lower compared to the hosted and cloud-based segment.

She says on-premise solutions are particularly strong in verticals where there is a greater need for control over the infrastructure, such as government and banking, financial services and insurance (BFSI). These areas have already sunk significant amounts into their UC infrastructures and would not find it cost effective to switch to a hosted model, William notes.

“As the market shifts towards hosted and cloud-based solutions, traditional vendors will face competition from a new breed of cloud-based players.

“Google, Vidyo, Acano, LiveOps and Blue Jeans are already experiencing demand for their solutions and are displacing traditional vendor solutions in many global markets,” William says.

“Over the next few years, these vendors will look to enter and grow their presence in the New Zealand market through industry partnerships.”

The report says New Zealand’s UC client base is largely comprised of small and medium sized organisations, with only a small proportion of large enterprises.

“This market dynamic demands tailored go-to-market strategies from vendors and channel partners who must have a broad solutions portfolio that also caters to the small business segment.

“Players that have such a diverse base are beginning to experience steady revenue growth, and will be advantageously placed over the next few years.”

Frost & Sullivan says responding to the competitive threat posed by new cloud-based players will be a key focus for establish UC vendors, while channel partners will look to partner with these players to address future demand for cloud-based UC solutions.

“Low growth rates and limited opportunities will make for challenging market conditions and give rise to consolidations and acquisitions, reducing the number of major channel players in the market,” Frost & Sullivan says.

Make it app-y

William says UC’s evolution lies in making applications accessible over the web, or through a mobile device app, and demand for this presents ‘a huge opportunity’ for UC vendors to capitalise on.

“App based access to UC becoming mainstream is the next realistic stage given the proliferation of mobile device usage in enterprises,” she says.

“Tailoring UC solutions and making them available as apps that can be downloaded from an app store, will significantly impact the way users communicate and collaborate.”

WebRTC and app based UC are among the emerging technologies aimed at addressing this transformation.

“Although WebRTC is at a nascent stage of availability in the New Zealand market, it offers significant potential to change communication in the B2B and B2C environments.”