A new survey from Infonetics Research finds that video and cloud are driving the enterprise unified communications market, and Microsoft reported that its Lync UC business grew 30% year-over-year and is now at a billion-dollar run rate. However while Gartner states the market is maturing, enterprises continue to struggle to define UC road maps that accommodate conflicting goals, including UC portfolio consolidation, best-of-breed functionality, vendor lock-in avoidance, legacy investment optimization and user demand for advanced functionality.
According to Infonetics, companies are adopting unified communications to improve response times, increase employee productivity, and reduce operational costs. While Cisco and Microsoft dominate, other significant players include Alcatel-Lucent, AT&T, Avaya, IBM, Mitel, NEC, ShoreTel, Siemens Enterprise and Verizon.
“The biggest change we’re seeing in unified communication deployments is the adoption of video,” stated Diane Myers, principal analyst for VoIP, UC and IMS at Infonetics, in a news release. “Businesses have been implementing more mobility into their UC architectures over the past year and now are looking toward videoconferencing to help drive further productivity.”
Key findings include:
-87% of enterprises surveyed plan to add videoconferencing to their UC architecture by August 2014′
-the use of the cloud is also on the rise: 22% of respondents already have implemented portions of their UC architecture in a private cloud, and 19% have done so in a public cloud;
-collaboration is the most common application deployed in the cloud (private or public), followed by conferencing and faxing; and,
-for businesses that have not adopted UC, the #1 barrier is cost.
In TechNavio’s Enterprise Unified Communication forecast, the US market is expected to grow at a compound annual growth rate of 4.19% over the period 2012–2016. In September, Infonetics reported worldwide UC revenue grew 34% in the 2nd quarter from the year-ago quarter, with Microsoft a big beneficiary. Gartner’s forecast sits somewhere between the two, with a CAGR of 15.7%, reaching $61.9 billion by 2018.
At Microsoft’s mid-July F4Q 2013 earnings call, it reported huge growth for its Lync (formerly Microsoft Office Communicator) business. “Lync revenue grew over 30% driving our enterprise communication business to deliver more than $1 billion revenue in this fiscal year” said Chris Suh, GM, Investor Relations.
“We’re the newest $1 billion business at Microsoft, there are 16 billion-dollar businesses at Microsoft and Lync is one of them,” blogged Andrew Cook, Senior Product Marketing, Microsoft. “I think we passed that in late May or early June (2013)…”
In the recent Magic Quadrant for Unified Communications Gartner said the enterprise UC market is now entering the early mainstream adoption phase. Products and best practices both for deployment and increasing end-user adoption will continue to mature during the next several years.
‘The stakes for vendors in the enterprise UC market are exceedingly high and, in some cases, existential. The stakes for enterprise decision makers are also high due to the significant costs, visibility and business impacts of their choice.’
The two dominant vendors come at the market from different directions – networking (Cisco) and email and office tools (Microsoft). Cisco offers a full UC suite, as well as a broad range of additional communications functions, and should be considered ‘when you are committed to using a comprehensive networking solution that includes the UCC suite. Cisco is also attractive for large and multinational corporations requiring strong voice and video capabilities, as well as for firms that require full UC client support on leading mobile platforms.’
Gartner said Microsoft’s Lync 2013 release ‘offers several significant improvements over its Lync 2010 predecessor, including broader mobile client capabilities, improvements to its telephony and video functionality, and partial Skype integration.’ Lync offers a full suite of UC functionality that Microsoft continues to improve with each release, and should be considered by enterprises that wish to ‘align closely with the Microsoft Office product family’.
In the 10 years since its launch, Lync has positioned itself as a product that demands attention from enterprises looking to upgrade or adopt a UC platform. In February, Microsoft announced that it had hit 5 million seats of enterprise voice, up from 3 million in late 2011, and that 90 of the Fortune 100 companies were Lync customers.
“In the UC landscape, Lync is absolutely a real competitor. It has a full feature set, a customer base, channel partners,” says Henry Dewing, a Forrester Research analyst. “Microsoft can deliver the UC services that businesses want today with Lync.”
In what might be considered a design objective of Microsoft products, Lync isn’t being hailed as a product that stands out from the rest in any significant way nor that is blazing trails of innovation in this UC market. “It’s a good, competitive, traditional UC tool,” says Zeus Kerravala, founder and principal analyst with ZK Research.
For Novus, a 30-year-old boutique telecommunications distributor that has focused heavily on the Lync UC revolution, UC collaboration is the biggest driver of its business, said Chris Meehan, Managing Partner, in a recent interview with IT Trends & Analysis. While he agrees with Gartner that Cisco and Microsoft are the UC leaders with the deepest pockets and ability to not only buy marketshare, but to create better technologies, he – not surprisingly – gives the advantage to Microsoft.
“Microsoft is probably going to be the more economical solution than Cisco. We’re seeing interest in education, both higher education and public schools. There is tremendous interest there and sizeable deployments. Other hot markets include healthcare and financials. “The interest goes across the spectrum, but if you look at vertical specifics, those are the three we’re seeing.”
As strong as the growth – and interest – has been, Meehan agrees with Gartner that there are some major challenges in broader UC adoption. “As wonderful as the technology is… the biggest concern is companies are still not convinced on the ROI. It can be simply because of the current economic situation, or large enterprises remaining unsure about policy changes the current administration is going to make and how it might affect them.”
Another barrier is the need for-better understanding from the lay person, as there is still some reluctance to change. He said there are some other factors, like fear of putting all their eggs in one basket and getting locked into Microsoft.
“We’re seeing plenty of large enterprises sitting on large amounts of cash… and the ROI question. However, its (UC) certainly a smarter and more efficient way of doing business.”
Looking forward, Meehan sees UC as a tremendous cloud opportunity for Microsoft. “I think it will find Lync fits into that strategy very well. It makes them that much more relevant in the enterprise when you start managing communications. If you think of where they were just three years ago with the product and where they are today, it is just incredible.”