According to research recently published by my colleagues Roopam Jain and Rob Arnold, the global videoconferencing and telepresence endpoints market grew at a rapid pace in 2011. Revenue surged to nearly $2 billion in 2011, growing at 19.4 percent over the prior year. Prices were stable in 2011 and user demand remained strong, with unit shipments growing at 19.1 percent over 2010.
North America led the global market in 2011, contributing 36.9 percent of global revenue, followed by Europe, Middle East, and Africa (EMEA); Asia-Pacific; and Central and Latin America. Asia-Pacific led with the highest number of units shipped.
Demand for executive and personal videoconferencing endpoints has increased as users continue to look for more convenient and less expensive alternatives to conference room and boardroom meetings. Due to its high costs, immersive telepresence--the real thing, not the label so many videoconferencing providers slap onto a range of products--remains a niche solution. Revenue from multi-codec immersive telepresence systems grew at a significantly slower pace than the revenue growth in single-codec room systems.
Companies are deploying videoconferencing because they want to give their employees an enhanced communications experience and improve productivity, while continuing to keep travel costs in check.
Still, even as organizations continue to adopt traditional room-based systems, mobile and desktop (i.e. PC-based) video is where the future lies. The videoconferencing market is fast approaching an inflection point driven by high-quality and low-cost solutions combined with an escalating need for rich collaboration. While adoption in the past has largely taken place as a high-end enterprise application, the benefits of videoconferencing are now extending to mainstream users.
So although Cisco and Polycom remain the market leaders, we expect other, less traditional vendors to disrupt the market in the years to come.
Unit Shipments will show a strong growth through the forecast period. However, lower prices and the impending shift to newer form factors such as enterprise tablets and desktop soft clients will increasingly lead to commoditization and pricing pressures, resulting in a more subdued but healthy revenue CAGR of 13.9 percent (2011-2016).
Indeed, recently announced Q1 results painted a less rosy picture of the videoconferencing market. Quarter-over-quarter revenues declined by a whopping 22.6 percent, from $830.7 million in Q4 2011, to $642.9 million in Q1 2012. Endpoints declined by 21.5 percent; infrastructure, by 25.4 percent. This is two to three times the seasonal dip normally seen in the first quarter of the year. The primary reasons cited by vendors are the impact of a soft economy and pricing pressures.
The study also includes a look at other demand drivers and restraints; an analysis of the leading industry players and shifts in market positioning; trends around high-definition (HD), mobile and broader collaboration solutions; leading use cases and ROI discussions; issues around integration and infrastructure; the effects of hosted and managed services on the market; and opportunities for growth for both traditional and upstart vendors. Clients can download it now at www.frost.com.
