The Australia Video Conferencing Market – Opportunities and Challenges ahead in this dynamic market


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Frost & Sullivan Market Insight on the Australia Videoconferencing Market – Opportunities and Challenges ahead in this dynamic market

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The Australia Video Conferencing Market – Opportunities and Challenges ahead in this dynamic market

  1. 1. June 2012The Australia Video Conferencing MarketOpportunities and Challengesahead in this dynamic marketBy: Audrey William and Anand Balasubramanian Market Insight “We Accelerate Growth”
  2. 2. The Australia Videoconferencing Market – Opportunities and Challenges ahead in this dynamic market Market InsightIntroductionThe Australia videoconferencing market, including videoconferencing end points, infrastructure andser vices, is expected to be wor th over A$700 million by 2018. Whilst there will be strong growth forendpoints, the ser vices market is offering increasing oppor tunities for vendors and channels mainly inthe areas of cloud-based videoconferencing and managed ser vices. The Australian videoconferencingmarket is expected to register a healthy growth of close to 18% from 2011 to 2017. Given the currenteconomic climate, with generally cautious IT spending, this healthy growth rate suggests thatbusinesses still see videoconferencing as an attractive option for reducing travel costs. The rapidincrease in smar t phones and tablets usage is also expected to impact videoconferencing adoption inthe enterprise market, as an increasing number of business users utilise these mobile devices forvideoconferencing. The decline in price points for videoconferencing solutions is another contributorto the growth in the Australia market.This market insight looks at the state of competition between the major vendors, as well as marketoppor tunities and challenges.Whilst Polycom and Cisco Dominate the local market,many new entrants are starting to ramp up their activitiesThe Australian market continues to be a key Asia Pacific market for both Cisco and Polycom. Lastweek, Polycom announced a corporate rebranding including a new logo. The new logo and identityindicates that both Polycom and the broader industr y are increasingly moving towards software basedsolutions. In an era where mobility, social media and cloud are the big themes in enterprisecommunications, this demonstrates Polycom’s increasing focus on these areas. Polycom has a strongfoothold in the Australian market, and has a strong channels strategy with Telstra being one of its mainchannels. Both Telstra and Polycom will be looking to offer cloud based videoconferencing ser vices onthe back of Polycom’s Real Presence solution. Another growth area for Polycom is through itspar tnership with Microsoft. Microsoft’s Lync has experienced good growth in the Australian market inthe last 12 months and is a great platform for Polycom to enter new market segments.Cisco’s edge comes from its clear lead in the Unified Communications market in Australia, with Ciscoable to offer customer solutions in areas such as IP telephony, web conferencing and videoconferencing. In the last 12 months however, Cisco has seen increased competition from Microsoft’sLync. Although Lync voice is still in its early stages of development, the pressure is star ting to mounton Cisco. From a videoconferencing standpoint, this also means added pressure from Polycom as aresult of its par tnership with Microsoft.Cisco’s video strategy is beyond just offering end points and infrastructure. The Tandberg and WebExacquisitions helped Cisco broaden its product range. Cisco is looking to build an end to endecosystem for its video offerings in segments such as digital signage and video sur veillance. Overrecent months Cisco has star ted to evaluate its overall por tfolio and has exited several marketsincluding the hosted e-mail, Flip Camera and Umi Home Telepresence markets. Last week thecompany also announced that it was no longer going to invest in the Cius Tablet. Cisco’s main focus- Page 2
  3. 3. The Australia Videoconferencing Market – Opportunities and Challenges ahead in this dynamic market Market Insightin enterprise communications in coming months will be to strengthen its software communicationsplatform, Jabber UC .Although Huawei has emerged as competitor in many global videoconferencing markets, it has not yetdeveloped a significant market position in Australia. However competitors will underestimate Huaweiat their own risk, as the company has been steadily growing its revenues in the carrier space and hasemerged as a strong competitor to several established vendors in recent times. Huawei has also statedthat at a global level it will focus on increasing its revenues in the enterprise communications space –with a specific focus on the unified communications and videoconferencing segments.LifeSize is star ting to emerge as a strong player in the small-to-medium business (SMB) space. Inrecent months, it introduced its cloud based videoconferencing solution called Connections. Thissolution handles all the processing tasks in the cloud, thereby minimizing infrastructure investmentsfor the customer. One of the challenges for LifeSize in the Australian market is its weak channelstrategy. This is a key reason the company finds it challenging to compete against Cisco and Polycomfor major deals in Australia. Therefore, par tnering with the right channel will be critical for LifeSize toincrease penetration in the Australian market.Other vendors in the Australian market vying for a share of videoconferencing revenues include Teliris,Vidyo and Sony. A clear channel strategy will be critical for these players to secure major customerwins in the market. As a result of the Radvision acquisition, Avaya has also gained an entr y this market.While the acquisition will strengthen its overall UC and collaboration por tfolio, Avaya will face intensecompetition in a market dominated by Cisco and Polycom.Videoconferencing ServicesManaged and Cloud Video Services to witness good growthThe most talked about oppor tunity today is in the area of cloud based ser vices, and many of thevendors are positioning their products with the major ser vice providers as par t of their go to marketstrategy. The market is expected to gather momentum in the next few months as companies arelooking to drive IT spending down with the pay as you go model expected to be appealing to bothSMBs and large organisations. However the market for cloud based video ser vices is still in its earlystages of growth. Implementation still accounts for the bulk of the ser vices revenues in Australia, withthe managed ser vices segment witnessing the strongest growth in the ser vices space. Largeorganisations across the Financial Ser vices, Mining, Professional Ser vices, and Education andHealthcare ver ticals are some of the main buyers for managed ser vices offerings in Australia. Majorplayers providing end-to-end managed ser vices include Telstra, Dimension Data and Optus-Alphawest.The ser vices segment definitely offers channels and ser vice providers the oppor tunity to re-inventtheir offerings beyond the basic ser vices to offer ser vices in the areas of hosted, cloud and managed Page 3
  4. 4. The Australia Videoconferencing Market – Opportunities and Challenges ahead in this dynamic market Market InsightConclusionCompetition is heating up in the Australian videoconferencing endpoints and ser vices markets. Com-petitive dynamics continue to evolve with recent acquisitions, and perhaps more on the cards. Forexample, it remains to be seen if Polycom is acquired, given its established presence and strong brandname in the videoconferencing space. The company will definitely be on the radar screen of a few ITand software vendors. Other players such as LifeSize and Huawei are star ting to become aggressivein the Australian market. However for any vendor to succeed in this market, a solid channel strategyis vital. The telecom carriers are best placed in this market given the ability of these players to offerthe end to end spectrum of ser vices. Managed and cloud based ser vices oppor tunities will drivegrowth in the ser vices segment in the years to come.Audrey William is Head of ICT Research at Frost Australia and New ZealandAnand Balasubramnian is Industry Analyst at Frost & Sullivan Australia and New Zealand Page 4