Growth In Hosted UCaaS and IP Telephony Not Limited To Big Providers

Frost & Sullivan has recently updated their North American Hosted IP Telephony and UCaaS Market, Forecast to 2023.  The news continues to be positive. The report shows that we can expect to continue on the current growth trajectory through 2023. In 2016, the market experienced healthy growth of 32.1 percent in terms of installed users and 30.6 percent in terms of revenue (without access).

Continued Growth Forecast

“Growing customer demand for more flexible technology consumption models to support digital transformation projects represents a key growth driver. Premises-based communications solutions reaching end of life and increasing availability of compelling UCaaS offerings are also encouraging the move to cloud communications.”

Not Limited To Big Providers

The other good news is that this growth is not limited to only a few big providers.

“Currently, the market is relatively untapped and can support a large number of providers with a diverse background and skill set. As the market matures, highly diversified telecommunications companies and software-as-a-service (SaaS) providers are likely to dominate the market,” said Frost & Sullivan Digital Transformation Vice President Elka Popova.

The report states that such issues as security, control, and more flexible customization will be important drivers as companies continue to move away from premise-based systems. Bigger providers must deliver a more “cookie-cutter” solution in order to maintain scale. This is the antithesis of what customers are looking for.

We believe that a local provider (backed by an outstanding white label partner like SkySwitch)  is best positioned to deliver the customized solutions that many companies are looking for.

North American Hosted IP Telephony and UCaaS Market, Forecast to 2023 InfoGraphic

Lots of Room for Revenue in UCaaS

According to Synergy Research Group, the UCaaS market continues to grow in the US at an astounding 29% a year.  Retail UCaaS services account for well over 80% of the total market. The UCaaS market is now generating revenues exceeding $400 million per quarter and approaching $2 billion annually.

While the big guys like Ring Central, 8×8, Mitel, Broadsoft, and Vonage continue to duke it out at the top, there is plenty of market share available for those resellers who deliver a more personalized service to businesses in their local area. This is particularly true as smaller businesses, who have little or no dedicated IT personnel, migrate to UCaaS and Hosted PBX. This is becoming an under-served market as market leaders move to serving larger businesses and enterprises.

“UCaaS continues to provide a richer and more cost effective collaborative communication system for businesses globally,” said Jeremy Duke, Synergy Research Group’s founder and Chief Analyst. “We are also seeing an up-market acceleration of UCaaS adoption, moving from serving mostly smaller sized organizations now to gaining traction in businesses of over 100 seats and over 1,000 seats. Given that the displacement of premise PBXs remains low today, there is ample ground for UCaaS to find strong growth in displacing these legacy systems over a long stretch of time.”

Surprising Facts About Millennial Phone Usage

Prevailing wisdom suggests that talking on the telephone is a declining activity among today’s Millennials, the generation born between 1982 and 2004.  After all, as any parent of a teenager will tell you, it is a well accepted fact that this group loves to send SMS messages (also know as text messaging).  In my own household, the voice component of my daughter’s iPhone stopped working, yet she barely noticed … so long as Instagram and Snapchat were still available.

Screen Shot 2014-06-26 at 12.56.46 AMDriven largely by the Millenials usage,  text messaging has grown at a phenomenal rate.  Increasing from fewer than a billion messages per month in 2001 to nearly 80 billion per month in the U.S. for 2010.  Globally, the SMS market accounted for $114.6 billion in service provider earnings in 2010.

Anecdotal evidence about Millennial avoidance of phone calls is plentiful.  Articles, such as this one from the Wall Street Journal, are replete with examples, such as the one quote below, that paint phone avoidance in stark terms.

Kevin Castle, a 32-year-old chief technology officer at Technossus, an Irvine, Calif.-based business software company, says unplanned calls are such an annoyance that he usually unplugs his desk phone and stashes it in a cabinet. Calling someone without emailing first can make it seem as though you’re prioritizing your needs over theirs, Mr. Castle says. Technossus’s staff relies mainly on email to communicate, which helps bridge the time difference between the company’s offices in the U.S. and India, he says. He uses Microsoft Lync for instant messaging and video conferencing. Phone calls are his last resort.

 

Surprisingly, however, it seems that all the text messaging and phone avoidance has not diminished the number or length of phone calls – even among 15-19 year olds.  In fact, as of 2011, people within this age group talked more on the phone than their contemporaries did in 2003 (the year when text messaging started gaining critical mass).

As noted by a recent article in The Boston Globe, texts aren’t really substitutes for phone calls. “We don’t text instead of talking, we text in addition to talking. A Pew Research survey from 2011 found that people who send or receive more than 50 texts a day also take 30 phone calls a day.”

Minutes spent talking on the phone by 15-19 year oldsAs it turns out, [i]n defiance of that stereotype which paints millennials as text-obsessed and screen-addicted, the average 15-to-19-year-old spends about 11 minutes talking on the phone every day. That’s not just more time than they spent in 2003, it’s more than any other age group and twice as much as their 35-to-54-year-old parents.

So another bit of conventional wisdom proves to be untrue.  It turns out that talking on the phone is not a dying art form after all.  A surprise to me for sure.