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Sizing UC Market Makes Little Sense
I recently read some industry news stories and articles referencing a recent market research report about the size and spectacular forecast growth of the Unified Communications (UC) market and had to laugh in response. UC is not a product, but the result of multiple products sometimes interacting on a particular task. As Dave Michels' recent No Jitter article said, UC is a result, not the start of a communications process or session.So how does one define the UC market to track it? And how does one have any sense of market revenues if one or more of the tracked products are often used in isolation of others, i.e. "non-UC" situations?
When market segments are still immature, a trick that market researchers use to bloat their numbers is to bundle the revenues of mature product markets that were previously defined. This appears to be the case today for UC, because more than a few researchers are including PBX revenues incorporated into UC revenues. Also being bundled are voice messaging, IVR, and ACD contact center revenues. This trick has been used for a good many years. I remember back in the early 1980s a voice mail system market forecast that included PBX revenues, because the PBX system was necessary to support the peripheral voice mail system. In the 1990s CTI market numbers were also inflated by including voice messaging and IVR revenues. Looking back at the CTI forecast today would be laughable, because the numbers were so off target as to be risible with 20-20 hindsight.
It appears that what some researchers call the UC market may just as well be called the Communications, only, market, without the Unified prefix. Same holds for renaming UC as Collaboration, unless we use a term I much prefer--Communications and Collaboration. In almost all UC sessions and many Collaboration situations there is the need and involvement of the core communications system (PBX system or whatever you wish to call it) to either establish a call or implement a telephony feature, such as Call Forward or Bridged Call Appearance. If UC is to include the subsegment referred to as Mobile Communications, why not also all include cell phone handset revenues along with PBX revenues? Let's not stop there, let's also include PC revenues, since it is a commonly used interface into the UC environment.
As product revenue streams have shifted from hardware to software elements, sizing up the UC market is made difficult by the fact that the PBX manufacturers have been bundling UC-type station licenses with the generic software program license fee, sometimes at no incremental cost to customers. As I have written before, Avaya is almost giving away the UC software shop for free these days to customers who buy the Enterprise edition of its Communications Manager generic software program; Standard edition customers, though, must pay, but the incremental license is only $60 per user, a very low price tag, indeed, for multiple licenses once costing more than the price of a basic PBX system per station user. Avaya's pricing strategy was in response to the Cisco Unified Workspace License (CUWL) strategy that bundled UC-type license fees with its Unified Communications Manager generic software at a very hefty discount to customers. Other market competitors have also jumped on board the UC license giveaway train.
The inclusion of Microsoft offerings as part of the UC market universe creates additional revenue sizing problems. Are revenues derived from Outlook, an essential element in many UC-type applications, to be counted? And how does one estimate Outlook revenues when it is bundled with the Windows operating system usually bundled into the PC price? Are we also to include Microsoft Office, because it would be difficult for most customers holding a web conference to share a presentation without PowerPoint slides?
Several of my points may on the surface appear to be either nitpicking or ridiculous, depending on your point of view. My case for sizing the UC market is not to size it at all, because it is impossible to define and estimate revenues. And since there is no such thing as a single UC product that does it all, it would be better for market researchers to stick to estimating revenues and creating forecasts for more easily definable product markets for which real data exists. Lumping everything under the banner of UC is a means of selling just another useless market research report.