According to analyst firm Canalys, on-premises call control shipments have declined 1.1 percent year-on-year to 12.3m lines while end-user revenue also fell 5.5 percent to $2.1bn.
This was the seventh consecutive quarter of contraction and an indication an on-going shift in how organisations buy, deploy and use UC.
"There are too many vendors that lack scale, which are not growing and remaining unprofitable. The market is too fragmented and will not sustain the 50-plus vendors still competing," commnets Matthew Ball, principal analyst at Canalys.
According to Ball, over the last decade the shift from digital to IP and from hardware to software has resulted in consolidation and the emergence of new vendors which will grow especially as Microsoft Lync continues to gain traction. “Some vendors will be acquired or form partnerships, and others will have to radically change their business models to focus on growth opportunities,” Ball adds.
However that the macro-economic conditions are providing optimism for recovery according to the newly releases Canalys’ Worldwide Unified Communications (UC) Vendor Performance Index report for Q2 2013, especially in North America and Western Europe.
Although the report warns that any improvement will take time to filter into IT spending, particularly UC projects, which typically have six to nine month sales cycles.The outlook for full-year 2013 is for shipments to return to growth, albeit at just 1.1 percent, but end-user revenue will continue to decline due to on-going price erosion. The on-premises market is expected to recover over the next five years, though it will not return to the highs recorded in 2007.
Although on premise shows decline, Unified-Communication-as-a-Service is rising according to Phillip Pexton, research analyst at Canalys, “Revenue from UCaaS will grow on average by 18.8 percent a year to $4.1bn by 2017, making it by far the fastest growing market segment. The emergence of multi-tenant platforms offering voice, video, messaging, presence and contact center capabilities from a single source will accelerate the move from on-premises solutions. It will enable channel partners to offer more innovative packages to customers”
For Q2 2013, the top five call control vendors accounted for 53.8 percent of total shipments. Cisco took first place with 17.1 percent of line shipments, followed by Avaya (14.5 percent), NEC (9.3 percent), Siemens (6.6 percent) and Alcatel-Lucent (6.3 percent).
Peter Tebbutt, sales director for UK and Ireland at Alcatel-Lucent believes that, "...there is still a lot of vanilla in the market, and you have to ask yourself what is the differentiation?" Tebbutt suggests that the lack of uniqueness will drive vendor consolidation and areas like integration, SLA and user experience will be essential for the channel to differentiate its offerings.
