Examining State of Communications Endpoints Market

The business communications endpoints market is in a state of constant flux. Today, with the revolution of computers and IP communications well underway and after 20 years of accelerated technology innovation, a business worker can conduct his or her job anywhere and anytime using a wide array of hardware and software endpoints and interfaces.

Interaction is no longer limited to a desk or a handset, but can happen anytime, on the go, at home, on a plane, or in a hotel room by simply dialing in, clicking, touching, dragging, or connecting via a smartphone, tablet, PC, or any type of IP communications device.

Software communications and collaboration usage has gone through the roof. Email and instant messaging services, which became mainstream in the late 1990s/early 2000s, are still used by the vast majority of businesses around the world to communicate and collaborate. But different types of software-based chat, audio, Web, and video clients, applications, and services have invaded the enterprise setting as well. Today, finding a business worker who hasn't engaged in any type of audio, Web, or video conversation via a software-based communications and collaboration endpoint is becoming harder and harder.

As Generation Y workers continue to penetrate the workplace and newer types of communications and collaboration technologies continue to emerge, desktop phones and other types of hard endpoints are becoming less popular. This isn't to say that desktop phones will disappear anytime soon, but their popularity has been noticeably fading. As for email, it will continue to be the main form of digital communications among the vast majority of business users around the world, at least within the coming decade, despite the arrival of new software communications and collaboration services and applications for desktop PCs and mobile devices.

One important sign of the continued relevance of business desktop phones is their growth rate. While revenue of business desktop phones (TDM and IP phones) is expected to experience a compound annual growth rate (CAGR) of negative 1.2% from 2016 to 2021, unit shipment is expected to grow at a CAGR of 2.2% within the same time period. Open SIP phones deployed in cloud-based telephony environments are expected to be the main driver behind the growth of desktop phones.

When it comes to business phones supporting indoor mobility (DECT and VoWLAN/Wi-Fi phones), growth rates were considerably affected starting in the mid-2000s, after the proliferation of smartphones in the enterprise. However, a large number of businesses still prefer the features and characteristics of DECT devices and Wi-Fi phones -- including reliability, indoor coverage, compliance, security, and ruggedness -- for daily communications and collaboration. While Frost & Sullivan expects the indoor mobility phone market to experience a decline in terms of revenue, with a CAGR of negative 8.9%from 2016 to 2021, unit shipment is estimated to grow at a CAGR of 3.5% during the same time period.

Frost & Sullivan estimates the global smartphone market will grow at a CAGR of 10.6% in terms of revenue and 12.8% in terms of shipment from 2016 to 2021. Additionally, the global tablets market is expected to see shipment of approximately 150 million devices every year for the next five years.

A 2017 Frost & Sullivan survey of more than 1,900 decision makers around the globe revealed that 36% of their employees currently use smartphones, both company-owned and bring your own device (BYOD), to perform their job functions. Additionally, 23% use tablets to perform their job functions. Before the advent of smartphones and tablets, the usage of cellular or mobile devices to conduct work was limited to a few use cases. A notable 44% of the respondents expect BYOD programs to increase either somewhat or dramatically in their organizations over the course of the next two years.

In terms of hard group communications endpoints, such as tabletop audio conference phones and video conferencing devices, the increasing focus on collaboration among business users and the growth of meeting spaces will continue to spur demand for these types of devices within businesses around the world. Frost & Sullivan forecasts the global market for hard group communications endpoints to grow at a CAGR of 12.4% in terms of shipments from 2016 to 2021.

The usage of communications peripherals and components such as professional headsets, conference room USB cams, and commercial microphones has been on the rise, mainly due to the increase of software communications and collaboration endpoints and the growth of meeting spaces. The combined market for professional headsets, conference room USB cams and commercial microphones, is expected to grow at a CAGR of 10.9% in terms of revenues and 9.8% in terms of unit shipment from 2016 to 2021.

With regard to IP versus TDM endpoints, only around 15% of the hard enterprise endpoints shipped in 2016 (excluding peripherals, smartphones, and tablets) were TDM endpoints versus 85% of IP hard endpoints shipped during the same time period.

Hard TDM communications endpoints shipments are expected to decrease at a CAGR of negative 11.9% from 2016 to 2021. During the same time period hard IP communications endpoints shipments are expected to continue increasing at a CAGR of 5.1%.

Within the soft communications endpoints market, vendors provisioned 47.73 million software seat licenses in 2016. This figure almost equaled the 52.23 million hard communications endpoints (excluding peripherals, smartphones, and tablets) shipped within the same time period.

Soft communications seat licenses are expected to grow at a CAGR of 15.8% from 2016 to 2021, reaching 99.58 million by 2021, exceeding the number of hard communications endpoints shipped by more than 40%.

Among the various types of soft communications endpoints, messaging-centric/team collaboration clients are expected to experience the highest CAGR in terms of net-new seats, growing at 38.4% from 2016 to 2021. Frost & Sullivan believes that, over time, many of the current telephony-centric/Web conferencing-centric/VCaaS-centric clients and services will move toward these newer types of all-in-one team collaboration interfaces, adding to the numbers of the latter, while taking share away from standalone soft communications services.

Frost & Sullivan's latest study, "Growth Opportunities in the Communications Endpoints Market" provides forecasts and discusses growth opportunities for the main types of enterprise hard and soft communications endpoints. For more information, please contact me at [email protected].

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