Melanie Turek
Melanie Turek is Vice President, Research at Frost & Sullivan. She is a renowned expert in unified communications, collaboration, social...
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Melanie Turek | November 27, 2011 |


Video Conferencing Services to See Double-Digit Growth

Video Conferencing Services to See Double-Digit Growth The growing complexity in troubleshooting video issues is compelling larger enterprises to get extra support for videoconferencing via a managed service offering.

The growing complexity in troubleshooting video issues is compelling larger enterprises to get extra support for videoconferencing via a managed service offering.

My colleague Ronald Gruia recently completed Frost & Sullivan's latest research on the video conferencing services market. The full study will be available soon to clients at In the meantime, here are some highlights.

Although it's still at an early stage of maturity--thanks mostly to issues around interoperability and relatively high costs--the market grew at a rate of 19.5 percent in 2010, reaching $225.6 million in total revenues. Between 2010 and 2015, the videoconferencing services market is expected to grow at a compound annual growth rate (CAGR) of 19 percent to $538.2 million.

That growth was fueled mainly by managed services, which continue to be the sweet spot for hosted video services. The growing complexity in troubleshooting video issues is compelling larger enterprises to get extra support for videoconferencing via a managed service offering. Managed services are expected to increase from $150.5 million in 2010 to $374.1 million in 2015, at a CAGR of 20 percent, as cultural barriers to managed offerings diminish over time. Telepresence will grow as a driver for the managed videoconferencing services market, with its contribution going up from 9.5 percent in 2010 to 44.3 percent in 2015.

Meanwhile, medium-sized businesses are also willing to outsource the operation of videoconferencing systems to service providers, focusing on their core competencies instead. The hosted model will appeal to SMBs willing to adopt video but not able to overcome the high front-end CAPEX of videoconferencing solutions. As a result, hosted services are poised to grow to $164.1 million by 2015, a CAGR of 16.9 percent.

Lowering costs remains one of the biggest drivers for video conferencing in general, and the numbers continue to back this up. For instance, a Polycom study revealed that, on average, enterprises, by adopting videoconferencing, can save 30 percent on travel costs, lower time-to-market by 24 percent, reduce training costs by 25 percent, trim recruitment times by 19 percent, and shrink sales-related costs by 24 percent. Similarly, by embracing collaboration via videoconferencing and telepresence, Cisco was able to achieve T&E savings of 14 to 20 percent for its European Services unit. "Soft dollar" benefits include fewer transportation delays, less administrative time spent planning trips, and a reduction in lost productivity during travel.

Progress in video technology and the push towards doing business on a global platform have also spurred companies to adopt videoconferencing solutions as a travel alternative. For instance, the advent of H.264 SVC (Scalable Video Coding) is a market catalyst, since it delivers a better quality of experience at any bandwidth over congested networks, and it supports a broad range of devices. This is especially important for inter-company communications, since IT doesn't have control over other companies’ networks, or the devices they give to their end users.

Not surprisingly, mobile videoconferencing via handsets/tablets will gain prominence over the forecast period. As more employees rely on a mobile device for video conferencing, services become the most viable solution.


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