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A Further Look at Synergy's Market Numbers

There were some additional revelations in the Synergy Research report that I wrote about last week, some insights that I think this report is uniquely able to provide. That's because Synergy reported revenues rather than lines shipped; and because the elements that Synergy counts as UC collaboration are so comprehensive.

First of all, let's review the products/technologies that Synergy includes under the UC collaboration heading, and the percentage of the total market revenues that each comprised as of 2012, which was the latest year that Synergy Founder and CEO Jeremy Duke released to me:

* Enterprise voice (PBX and phones)--39.8%
* UC applications (including software, unified messaging, contact center, and presence)--18.5%
* Telepresence/videoconferencing--11.6%
* Email software--20.3%
* Collaborative workspace software--6.4%
* Enterprise social networking--3.4%

First of all, consider the fact that Jeremy told me elsewhere that both Cisco's and Avaya's Enterprise Voice revenues had declined 7% Y/Y in 3Q13. Though Jeremy didn't release the complete figures for all vendors, it seems reasonable to assume that this is a sign that overall Enterprise Voice revenues have been stagnant or declining, at a time when UC Apps are growing. This suggests that, while Enterprise Voice revenues were more than twice the size of UC Apps revenues last year, this gap will narrow this year and probably into the future.

On the other hand, the fact that Contact Centers are included with UC Apps rather than Enterprise Voice suggests that what many enterprises might think of, functionally, as the Voice infrastructure--i.e., an architecture that includes both PBX and ACD and its successors--probably still accounts for half or more of revenues.

Another sort of obvoius point is, the inclusion of email and enterprise social is what accounts for IBM's otherwise-mystifying placement on this chart, in the fourth position; and interestingly, IBM had been on a run the last year and a half that temporarily moved it ahead of Avaya on the overall leader board. Nevertheless, Enterprise Social is still a very small portion of the overall communications picture.

When we look at Synergy's chart drilling down on the UC Apps segment, the big news for the market, as Jeremy pointed out, is the rapid pace at which Microsoft is catching up to Cisco in revenues. This is all the more important when you notice from the chart below that Cisco's UC Apps revenues have been largely flat over the last 2+ years, while Avaya has declined. So the growth in UC Apps revenues basically belongs to Microsoft, at least among the leaders.

Another noteworthy fact is that we see continuation of a trend that'll be familiar to longtime market-watchers: The biggest single category on the UC Apps leaderboard belongs to "Others"--i.e., companies that aren't Cisco, Microsoft, Avaya, Citrix, or IBM. So the market may be on its way to consolidation, but it's still pretty fragmented.

Another thing to note about the Synergy UC Apps figure is that Microsoft is making its run at Cisco while lacking one of the key, proven technologies that Synergy places within the category: Contact Center. Microsoft relies on integration with partner software from the likes of PrairieFyre (now part of Mitel) and Interactive Intelligence to provide contact center capabilities for a Lync deployment.

All in all, the UC Apps portion seems a clear testimony to the growth of Lync and its success relative to its competitors in the IM/presence space; as well as to the strength of unified messaging based off Microsoft Exchange.

Meanwhile, as long as Cisco dominates Enterprise Voice, and Enterprise Voice represents a major segment of UC collaboration, they'll continue to be a dominating force. And one question is: Which will move at a faster pace--the apparent decline of the Enterprise Voice market, or the maturing of the UC Apps market?

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