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Frost & Sullivan: Assessing Soaring Cloud Apps Growth


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At Frost & Sullivan, we recently completed one of our flagship study that provides a detailed overview of the state of the global cloud meetings and team collaboration market. The scope of the study covers the global market for personal cloud meetings and team collaboration services, including vendors offering stand-alone cloud meetings, stand-alone team collaboration, and combined cloud meetings/team collaboration services.
Revenue estimations exclude any workload component not directly related to the cloud meetings and team collaboration functionality (e.g., telephony, productivity apps, CRM, contact center, etc.).
Below is a summary of the main findings from the study:
  • In 2019, the global cloud meetings and team collaboration services market earned revenues of $5.53 billion, which is a 38.1% growth when compared to 2018. The installed base of paid cloud meetings and team collaboration paid licenses grew by 57.3% in 2019 to 73.9 million.
  • In 2020, the global cloud meetings and team collaboration service market is expected to at least double its size in revenue, reaching $11.43 billion, and installed paid licenses will increase by almost three-fold to 201.5 million.
  • The top five providers (Cisco, Google, Microsoft, Slack, and Zoom) are expected to have a combined revenue of $8.62 billion in 2020 and a combined installed base of 161.2 million in paid licenses.
  • Net-new paid licenses are expected to jump from 26.9 million in 2019 to a staggering 127.6 million in 2020. While most of this growth will be organic, coming from businesses acquiring cloud meetings and team collaboration services for remote employees, some of the growth will also come from large SaaS productivity providers seeding or enabling their installed bases with meetings and messaging workloads as part of their broader communication bundles
  • In 2020, the COVID-19 pandemic and new WFH realities have set unprecedented levels of demand for cloud meetings and team collaboration services. Major cloud meeting providers have reported three to four times growth in usage in the months since the pandemic’s onset. The same applies to team collaboration providers, adding millions of daily active users during the pandemic.
  • Virtual events have also exploded during the pandemic as organizations need ways to maintain communication and business continuity — interactivity, scale, and reach have become critical capabilities.
  • In terms of innovation, years of digital transformation have been squeezed into just a few months to cater to the demand of hundreds of millions of individuals working from home.
  • The number of individuals that WFH post-pandemic is estimated to be four and a half times that of the pre-pandemic levels — remote work will no longer be considered a privilege. Technology is ripe for disruptive innovation with the objective of elevating the user experience and addressing user behavior challenges.
  • Technology innovation is expected to help many of the 2.7 billion frontline workers around the globe with mobile-first solutions and capabilities that are tailored to address specific workflows. Cloud meetings and team collaboration providers have a vested interest in arming frontline workers and various vertical industries with specific tools to simplify and optimize their workflows.
  • Technology innovation will help businesses and programmers to embed real-time communications within user applications without needing to install any additional products or managing separate log-ins. SDKs and APIs will democratize audio and video.
  • In 2021 and 2022, net-new paid licenses are expected to continue to grow, yet at less aggressive growth rates as market conditions accommodate. Growth will mostly come from continued conversion rates of freemium licenses to paid licenses and additional penetration of cloud meetings and team collaboration solutions into the corporate office, vertical industries, and frontline workers, in general.
  • By the end of 2022, 87.0% of the installed base of licenses will be invested in solutions that include both meetings and messaging capabilities.
  • From 2023-2026, there will be an accelerated adoption of mobile-first solutions deployed by frontline workers, reflected in an increase of paying licenses, with at least 6.0% of the installed cloud meetings and team collaboration paid licenses coming from frontline workers by the end of 2026.
  • During COVID-19, all regions are expected to witness circa two times growth in 2020 in terms of cloud meetings and team collaboration revenues.
  • Frost & Sullivan expects competition in the cloud meetings and team collaboration services market to intensify significantly going forward. Impactful SaaS providers, such as Microsoft and Google, have made tremendous progress to include advanced cloud meetings and team collaboration functionalities as part of their broader bundles. Other participants have increased pressures to continue innovating and differentiating their offers to stay competitive. Many providers are also expected to be acquired along the way.
Some of the main growth opportunities for the market include:
  • Supporting innovation at the edge will be crucial, as users will be staying on top of industry trends shaping the enterprise communications and collaboration market and will expect more from their tools.
  • Increasing demand for AI and IoT will create personalized and safe meeting experiences. A lot of users require transcripts, automated translations, highlights, smart minute-taking, and more integrated into their cloud meetings offering.
  • Arming frontline workers with tools will simplify and accelerate workflows. Mobile-first innovation and capabilities that are tailored to address specific workflows will be crucial.
  • Delivering feature-rich virtual event capabilities will be a necessity, as large-scale events will be among the last pre-COVID activities to normalize.
  • Offering APIs and SDKs to enable programmers and developers to embed cloud meetings and chat functionality into a website, a desktop client, or a mobile application will be increasingly important. API platforms should be fully customizable to automate the business process, create a unique client look and feel, and embed communications directly into a pre-existing third-party application.
  • Cloud meetings will also need to support a wider range of hardware devices.
If you wish to obtain the complete market analysis, don’t hesitate to contact me.