World Web Conferencing Hosted Services Market: Need and Growth Don't Match
Revenue growth was slower than expected in 2009, but a general rebound is expected in 2010, with a return of healthy demand.
My colleague Roopam Jain recently published the results of Frost & Sullivan's annual World Web Conferencing Market study, and the research shows that a slow economy combined with the impact of declining prices resulted in lower than expected revenue growth for web conferencing hosted services in 2009: Global revenues reached $1.09 billion, growing at 10.5 percent over the previous year.
But we expect that to be a small blip in a strong upward trend. The growing need for real time collaboration, coupled with a rising interest in cloud based communications, continues to draw users to Web conferencing technology. As companies look for ways to accelerate decision making and boost collaboration, productivity and innovation, real-time communications are playing a larger role in everyday work life, making the overall outlook for web conferencing hosted services robust. It helps, too, that IT is making web conferencing services an investment priority as part of a bigger bundle of collaborative applications for mainstream communications.
Following a general recovery in 2010, we expect healthy demand for collaboration tools in general to result in increased spending on Web conferencing. Revenues are expected to reach $2.85 billion in 2015, with a projected revenue growth of 17.2 percent (CAGR 2009-2015).
The global market for web conferencing continues to morph as new technologies are developed and introduced. Cloud services that combine hosted email, groupware, and conferencing with social media tools are emerging, and companies are increasingly evaluating collaboration as part of a bigger enterprise communications purchase. These collaboration bundles will eventually overshadow sales of stand-alone Web conferencing tools, as users buy complete collaboration suites from a single vendor or service provider.
Indeed, what's most striking about the numbers is that despite the rise in interest in Software-as-a-Service (SaaS), and despite the fact that hosted services contributed 81 percent of revenues in the 2009 Web conferencing market, for the first time, on-premises revenues grew at a higher pace than SaaS revenues in this space. In 2009, on-premises revenues reached $263 million (14.6 percent revenue growth over 2008).That's mainly due to the growing adoption for premises-based UC solutions, such as Microsoft Office Communications Server and Lotus Sametime.
Certainly, SaaS will continue to be the dominant delivery model for Web conferencing for the foreseeable future, especially among SMBs. But as the world of enterprise communications converges, more companies will deploy premises-based conferencing applications to the majority of their end users. Frost & Sullivan expects premises-based Web conferencing to see a CAGR of 27.6 percent, compared to 17.2 percent for hosted services, for the forecast period.
Revenues for web event services (webinar and webcasting) reached $226.8 million in 2009, representing 16 percent growth over the prior year. Global web-based remote support market reached $209.3 million in 2009, growing by 18% over 2008.