My colleague Roopam Jain recently published her latest research on the worldwide market for videoconferencing and telepresence endpoints (clients can download the full report at www.frost.com). The huge growth potential for video in all its forms is just starting to emerge in enterprise communications, and global revenues for the videoconferencing and telepresence endpoints market grew at a robust 17.8% over the previous year. With a unit growth rate of 14.5% over the prior year, the total installed base of videoconferencing users continues to grow at a fast pace.
That strong performance can largely be attributed to a surge in interest for videoconferencing to cut travel costs and enhance the communications experience. After a general economic recovery in 2010, we expect healthy demand and increased spending throughout 2011. Revenues are expected to reach $4.15 billion in 2016, with a projected revenue growth of 16.5 percent (CAGR 2010-2016). Unit Shipments will show a strong CAGR of 20%.
In the past year, the market has seen significant new product development, pricing shifts, and consolidation. While the market for room systems will continue to be healthy, the fastest acceleration will be seen in desktop and mobile videoconferencing. Vendors are working to help customers support an end to end video strategy that spans immersive and room-based videoconferencing, to desktop and mobile video. The small and mid-size business segment will also provide market growth in the future.
B2B and interoperability issues have taken center stage in videoconferencing. As usage climbs, companies want to maximize their ROI by making video extensible to an increasingly diverse base of endpoints and clients, with both internal and external users. While much work remains, endpoint vendors are focusing on providing interoperability with other vendors’ solutions, and service providers and carriers are introducing inter-exchange services that can connect their customers to users on other carrier's networks. In 2010 Cisco released Telepresence Interoperability Protocol (TIP), which allows multi-screen telepresence systems to interoperate, and which several vendors have signed agreements to license. Polycom’s recent announcement of the Open Visual Communications Consortium and its partnerships with several service providers are expected to spearhead the delivery of cloud-based B2B solutions.
Finally, most businesses today don't have the network infrastructure to support wider deployments of videoconferencing, which require not only a high bandwidth data network, but also upgrades to existing videoconferencing infrastructure, such as multi-point control units (MCUs), gateways, and management software. The immense growth seen in the endpoints market is increasing the demand for videoconferencing infrastructure products. We expect growth in the videoconferencing infrastructure market to accelerate significantly as customers adopt pervasive video, including desktop solutions for large numbers of employees.
