This year's version of our annual Enterprise Connect Voice Market Share session drew bigger crowds than it has the past several years, likely because voice market share has become a topic of fierce debate, especially among the partisans of the Cisco-Microsoft battle. Again this year, Peter Hale of MZA and Jerry Caron of Current Analysis led the session, and they offered measured comments about a couple of charts that I found interesting. The first is vendor market shares for the total North American market; the second is the large (above 100 stations) market in North America:
Basically what you see here is a very stable market: In the overall market chart (top), no vendor gained or lost more than 1 point of share from 2012 to 2013. And in the large-customer segment (bottom), there was no more than a 2-point swing for any vendor.
But you also can't fail to notice that, within that very tight range, the one vendor that dropped the most was...Cisco. That's worth noting because it's the first time at least I can remember seeing Cisco lose share in the voice market since the early days of the IP-PBX market. Cisco has been taking share from incumbent providers since Day One; but now they clearly are the incumbent, and everyone's gunning for them.
Which is essentially what Jerry Caron and Peter Hale said in their Enterprise Connect session as they explained these market share figures: "When you're leading the market, you're always targeted by all the competition," Peter Hale told the crowd. He characterized Cisco's 1-point drop in the total market as a "marginal drop in share," and the 2-point decline in the 100+ segment as a "small decline," adding that, "They still absolutely dominate." Which the numbers clearly back up.
Jerry Caron, who adds market analysis to Peter and MZA's numbers in the Enterprise Connect session, elaborated, saying that everything's relative: "Cisco's all about growth," he said. "The fact that they declined a couple percent is a tragedy for them." That was clearly a bit of deliberate overstatement; the point being that it's rare to ever see Cisco give ground in a market.
Of course, the main company gunning for Cisco is Microsoft, and the MZA figures show that, in voice, Microsoft has come a long way very quickly, jumping into third place with 13% share of the 100+ station segment, a "quite significant market share in a very short space of time," as Peter Hale put it. Jerry Caron noted that there is a block of Lync licenses out there, and, "The challenge for Microsoft and their channel partners is to actually get that deployed."
Indeed, the MZA numbers suggest that, after strong initial success at this goal over the last few years, Microsoft's progress is becoming much more incremental. As noted at the outset of this post, nobody gained or lost a lot of share in either direction last year, according to the MZA figures. Microsoft may have leapfrogged the likes of NEC, Mitel, ShoreTel, and Unify, but their year-over-year share gain suggests that much low-hanging fruit has been snatched already.
In fact, the MZA chart challenges an assumption that many industry observers have been making, and that would seem logical: The idea that Lync (and when not Lync, Cisco) is taking share away from Avaya in large numbers. That may have been the case for 2012 and before, but MZA actually shows Avaya holding steady (overall market) or even ticking up a point (100+ segment) in 2013.
Make no mistake: Avaya's task is daunting. The company remains the installed base leader, which is as much a curse as a blessing: They have much more to lose than to gain in the voice market as systems continue to age. Meanwhile, the company's revenues continue to fall. Still, it's better to be gaining market share or holding steady than it is to be losing share, especially when faced with stiff challenges from competitors many times your size.
Remember too that these figures are for 2012 and 2013. Will 2014 see a resumed acceleration of the shift toward Microsoft, as enterprises decide they're more comfortable with Microsoft as a voice provider? Will it show a trend toward an emerging Cisco-Microsoft duopoly? Or maybe we'll simply see a continuation of the this year's flatness, as enterprises sweat assets and de-emphasize voice in general.
In fact, that's the bigger story in all of this: The voice market is looking like a zero-sum game for the foreseeable future: MZA predicts that the voice market will grow just 1% total between 2013 and 2018--that's not annual growth, that's cumulative growth. This market is flat, and the vendors will be fighting it out for a limited amount of business.
That's the bad news. The good news is that the enterprise communications market is a lot more than voice.
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