UCaaS Market Bolsters Leaders in Different Segments

Synergy's 3Q17 UCaaS Market Tracker and UCaaS Firmographic Market Tracker reports are out, and results show the UCaaS market is accelerating well over 25% per year.

The UCaaS market is now generating revenues exceeding $400 million per quarter and approaching $2 billion annually. While the combination of hosted PBX and UCaaS adoption is still low, at mid-single digits, the market has already created a dynamic set of UCaaS providers that are competing fiercely for prized customers with varying different strategic approaches.

Please note, Synergy excludes traditional hosted PBX voice services built on softswitch architectures from technology vendors such as BroadSoft (BroadWorks; now a Cisco company), Cisco (HCS), Metaswitch, and Genband from our UCaaS market study discussed here; however, we track the hosted PBX market through a different research service.

Hitting the Million Mark: RingCentral & Mitel

3Q17 marks a significant period for the early stages of the UCaaS market. For the first time, a UCaaS provider -- make that two! -- has managed to cross the one million subscriber mark. The vendors couldn't be more different from one another: RingCentral & Mitel.

Please note, above graph only includes the Top 5 UCaaS vendors of which Synergy tracks 17 currently, as well as more than 70 hosted PBX vendors. Further, BroadSoft subscribers included here represent the company's wholesale UCaaS platform, BroadCloud. Also, the Vonage seats represented here reflect UCaaS subscribers and not the equally sizable hosted PBX business.

RingCentral was born in the cloud, sells its services direct (mostly), and is focusing on organic growth through bulking up its digital sales and marketing. Mitel was born for the premises, sells its services mostly indirect (although Mitel also sells direct), and is pursuing UCaaS with an aggressive industry consolidation and premises-to-cloud migration strategy.

SMB: An Active Battleground

Driven by the compelling economic advantages of UCaaS, SMBs (fewer than 100 seats) have been the beachhead where vendors first found headway with this emerging technology. Of the top five players in this segment, which all have above 350,000 seats, BroadSoft, Mitel, RingCentral, and Vonage have grown their bases by at least 20% over the last 12 months. 8x8, while ranked as the third largest by number of subscribers, has been focusing its growth in the 100-to-1,000 segment, which has been seeing growth of more than 20%.

RingCentral and Mitel have managed to surpass and distinguish themselves from the competition by growing their bases by more than 30% in this segment over the last 12 months. As noted above, RingCentral has done so through organic growth while Mitel has done so through acquisition.

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