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2022 UC Outlook: 15 Projections, 3 Vendors to Watch
Last January, 23% of U.S. workers completed their jobs from home due to COVID-19. The U.S. Bureau of Labor Statistics, which gathered the data, calls this teleworking. One might not have expected 2021 to be a good year for unified communications (UC) sales. Why should IT managers spring for a new PBX, on-premises, or cloud if workers wouldn’t be in the office?
As offices emptied last year, IT managers moved into action. Work-from-home (WFH) or work-from-anywhere (WFA) catalyzed a PBX market reform.
COVID-19 greased the skids for a very different 2022. The pandemic accelerated the rollout of myriads of technologies and timetables— moving them up from somewhere down the road to now. Research for this post is based on Eastern Management Group's new report "Unified Communications Market 2022-2027."
Enterprises Will Invest In UC In 2022: 15 Projections
The Eastern Management Group interviewed enterprise IT managers for nearly two years about COVID-19. Here are 15 UC projections for 2022 based on our survey analysis:
- With the increase in empty offices and hybrid workers, more companies will move this year to new, occasionally smaller quarters; and push-up UC sales.
- One-quarter of U.S. businesses will buy a new phone system in 2022
- 20-25% of system purchasers will buy systems to enable WFH
- 15% of buyers will obtain new UC applications to improve productivity
- UC purchases will pull through sales of adjunct technologies and applications to improve WFH outcomes.
- More significant investments will be in productivity driving applications: mobility, video, presence, instant messaging, customer relationship management (CRM), contact center as a service (CCaaS), communications platform as a service (CPaaS), and session initiation protocol (SIP).
- On-premises PBX will remain the largest selling UC platform accounting for 40% of all UC sales.
- Unified communications as a service (UCaaS) will account for more than 30% of all UC platform sales.
- Professional services, health, and education will experience substantial market growth as each did in 2021
- The average price of a fully-equipped cloud seat will exceed $85 based on Eastern Management Group market basket prices
- On average, vendors will sell three services for every new cloud seat
- A dollar of cloud sales will generate$0.36 in additional sales.
- 40% of customers will buy managed services from their UC vendor
- Enterprise investments to upgrade corporate networks and architectures will grow.
- Enterprise 5G rollout will expand as vendors package wireless solutions.
Watch for Ericsson, 8x8, and Lumen in 2022
Great vendor options exist as IT managers upgrade architectures, platforms, networks, and services in 2022. The Eastern Management Group tracks more than 300 communications providers for our clients.
Ericsson, 8x8, and Lumen are three companies we expect to make significant contributions to WFH, WFA, and hybrid work in 2022. Here’s why.
1. Ericsson - Ericsson defines its future as a next-generation enterprise provider.
The November 2021 announcement to acquire Vonage for $6.2 billion (the transaction is expected to close in the first half of 2022) is a strategic move that could pay dividends in the short, mid, and long term. For example:
Short-term—Vonage's UCaaS platform for enterprises is robust, proven, and successful, with many business customers. Eastern Management Group's annual survey of Vonage customers shows high satisfaction with Vonage's UCaaS technology year after year. In our latest survey, 80% of Vonage customers said they would recommend the product to a friend. We expect Ericsson to leverage its 26,000 research and development (R&D)specialist team to enhance Vonage's core offering.
The investments are sure to boost sales.
Mid-term—The heart of Ericsson's acquisition is the Vonage Communications Platform (VCP). VCP provides enterprises with communication solutions for employees and contact center capabilities for customer relationships.
The application programming interface (API) within the VCP allows developers to embed communications, including messaging, voice, and video, into applications and products, without back-end infrastructure or interfaces.
Such applications are quickly increasing in demand.
Long-term—Vonage’s long-term plan will boost Ericsson's enterprise services business. Ericsson will develop an open platform to create an ecosystem of 5G solutions for enterprises. The core of the strategy is to build leading mobile networks through technology leadership; this provides the foundation to build the enterprise business by putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers.
2. 8x8 - 8x8 has positioned itself to be the future of software solutions for the enterprise.
8x8, with some of the world's best cloud technology, is used by more than two million business users.
8x8 increases research and development spending every year, and in fiscal year (FY) 2021, this came to 17.3% of total revenue, high for the UC industry. We expect 8x8 to spend around $100 million on R&D in 2022.
Customers see the fruits of 8x8's technology investments. In the Eastern Management Group's recent satisfaction survey, 8x8 customers rated its technology and product the highest of 12 8x8 customer satisfaction measurements. Around 85% of 8x8 customers would recommend the company's cloud products to a friend.
Not surprisingly, 8x8's revenue climbed 19% in the latest full FY. The company is guiding to 14%-15% year-over-year growth for 2022.
8x8 has experienced leadership and growing ranks of them. For example, its CEO was formerly Chief Operational Officer (COO) at RingCentral. The Chief Customer Officer (CCO) is from RingCentral and ShoreTel, where he worked with the UC customer satisfaction luminary John Combs.
In 2022 we expect 8x8 to invest in the following:
- Platform expansion
- Partner management
- Mid-market and enterprise growth, currently 19% and 49% of ARR, respectively
- Business operations as 8x8 approaches $1 billion in revenue
3. Lumen - Lumen is a fourth industrial revolution (4IR) exponent.
Lumen believes that current architectures for network, cloud and IT architectures cannot support the real-time data access and security needs of distributed environments.
Lumen has backed this up with significant investments in the Lumen Platform, which unifies the architectural necessities for next-generation applications:
- Software-Defined Networks – Using hybrid wired and wireless to connect users to the right compute services
- Hybrid-Cloud Diversity – Computing venues in the cloud, network, edge locations, and end-user premises
- Managed Orchestration – Deploy apps and services to the right execution venue, on the right network, with the right secure operational controls
- Integrated Security – Proactively identify and mitigate threats to ensure the application environment is safe
Lumen invested 18% of total revenue in capital expenditure (CAPEX) in the most recent calendar year, ahead of Verizon (14%) and AT&T (9%).
Enterprise IT managers approve of Lumen. In the Eastern Management Group's latest survey interviews with 150 Lumen customers, the company received five stars for its technology and product and another five stars for overall customer satisfaction. 80% of Lumen's enterprise customers would recommend Lumen to a friend.
Lumen offers four complimentary solution portfolios for enterprise customers: Adaptive Networking, Edge Cloud and IT Agility, Connected Security, and Collaboration.
Lumen's UC portfolio targets the enterprise by offering Cisco HCS and Webex, Microsoft Teams, Zoom, and Oracle. Lumen integrates with Unified Square (Unisys) to manage multiple enterprise platforms.
As we enter 2022, the impact of COVID-19 on commercial work and gathering facilities is altering business landscapes. Although inevitable at some future point in time, the changes are here today.
Dozens of providers can support the rapidly evolving technology needs of enterprises. Ericsson, 8x8, and Lumen are only three of them.
For more information, contact John Malone at 212-738-9402 Ext. 2201 or [email protected]