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Growth Opportunities and Challenges in the Videoconferencing Market
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Growth Opportunities and Challenges in the Videoconferencing Market


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Frost & Sullivan analysis of the Growth Opportunities and Challenges in the Videoconferencing Market.

Frost & Sullivan analysis of the Growth Opportunities and Challenges in the Videoconferencing Market.

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  • 1. Growth Opportunities and Challenges in the Videoconferencing Market Krithi Rao Industry Analyst, Unified Communications March 30, 2010
  • 2. Agenda 1 1 Growth in Videoconferencing Markets Growth in Videoconferencing Markets 2 2 Key Factors Impacting Growth Key Factors Impacting Growth 3 3 Impact of Telepresence Impact of Telepresence 4 4 Impending Desktop Video Adoption Impending Desktop Video Adoption 5 5 Forecast Forecast 6 6 Q&A Q&A 2
  • 3. Continued Growth Momentum Visual Communications Growth Stats 09 • Endpoints revenues declined by 4.3% (vs. 16.7% growth in 08) and unit growth of 4.1% reflecting economic impact, pricing pressures and tapering impact of HD felt in the previous years • Revenues for Videoconferencing Infrastructure (MCUs/bridges, gatekeepers, gateways, management tools) showed better performance with more than 25% growth* • Telepresence - Adoption continues at a strong pace even through tough economic times (more than 75% growth in revenues in 2009) • Managed videoconferencing services grew by 26% in 2009 – users increasingly looking to outsource the management of videoconferencing to a third party provider Total Videoconferencing Systems and Services A $2.27 billion market in 2009 forecast to reach $5 Billion (2014) - 5 Year CAGR is 17.7% *Draft numbers All figures are rounded. Source: Frost & Sullivan 3
  • 4. Key Factors Impacting Growth Drivers Restraints orkforce Global a nd remote w costs – cut travel plexity of of HD Cost and Com Availability Solutions ing at lower vid eoconferenc price points g effect of u ncertain n Lingerin onditions ndor focus o economic c Increasing ve the SMB ndscape Volatile competitive la g carbon Focus on reducin footprint Source: Frost & Sullivan 4
  • 5. Evolving Competitive Landscape Currently focusing on desktop video software, and will probably continue partnering with a number of vendors for hardware endpoints. HP’s strategic partnership with Tandberg likely to breakdown leaving only Halo at the top end. Arming itself with a close partnership with Polycom. Europe Left-field: Telcos, smaller equipment Avaya, Siemens bolstering manufacturers ? and private videoconferencing strategy through a close joint A video vendor acquisition may not equity investors partnership with be a great fit, but are they worried see VC is hot videoconferencing vendors that partner opportunities may close and prepared to if vendors all bought up by rivals? place a bet Source: Frost & Sullivan 5
  • 6. Videoconferencing Endpoints Market Revenues by Region Videoconferencing Endpoints Market: Revenue Contribution by Region (World), 2008–2009 North America (NA) 39% in 2009 EMEA vs. 30.8% in 2009 38.6% in 2008 Asia Pacific vs. 26.9% in 2009 33.4% in 2008 vs. 24.4% in 2008 CALA 3.3% in 2009 vs. 3.6% in 2008 Revenue Growth in 09 – Americas: (4.1%) EMEA : (11.7%) APAC: +5.6% All figures are rounded. Source: Frost & Sullivan 6
  • 7. The Immersive Telepresence Factor Telepresence means different things to different people - the term “Immersive Telepresence” will help differentiate it from traditional videoconferencing market Immersive Telepresence - “high end visual communications in a completely integrated environment; immersive video experience backed by tight network management and service delivery” - focusing on multi codec multi screen telepresence rooms that provide an “almost being there” experience A fast emerging market for non “shrink-wrapped” Telepresence by AV integrators offer high end experience at lower costs with room design flexibility An estimated $300.5M market in 2009, complemented by additional revenue from sales of kits and codecs to custom TP solutions, telepresence is forecast to grow to close to $822.7M by 2014 (CAGR- 67.7%). Sales of telepresence systems creating significant opportunities for service providers, network operators and systems integrators. 7
  • 8. Interoperability leads to Adoption Interoperability with Enterprise Communication Infrastructure Interoperability Outside corporate Boundaries and Between Vendors Interoperability Required Across Endpoint Portfolio Mobile Executive Immersive Personal Group Application Videophones, PC-based Room Telepresence Custom Desktop Software Systems Systems Solutions Appliances Source: Frost & Sullivan 8
  • 9. Desktop Video is Coming Core videoconferencing equipment vendors are focusing on the low-hanging fruit- extension of traditional room conferencing to remote workers and telecommuters. Skype’s recent announcements of HD video and Google’s free videoconferencing feature all point at how desktop video will go nowhere but mainstream. 2007 2008 2009 2010 2011 2012 2013 2014 True adoption for desktop video will happen Video-centric Desktop Video as part of UC/collaboration solutions UC/Collaboration-centric Desktop Video Today while the video clients themselves are well developed, the challenge is to connect these clients and manage a wide scale desktop deployment effectively and cost efficiently Provisioning, control and network management at a low cost are areas where we expect to see considerable developments. Source: Frost & Sullivan 9
  • 10. Desktop Video - Solutions Options Business desktop video currently available in several forms - Video centric solutions; UC/collaboration-centric solutions offered as part of UC and IPT; Peer-to-peer video chat Unified Unified Converged Converged Comm- Comm- Conferencing Conferencing unications unications Software with Software with Platform Level of Integration Platform Level of Integration Server/ Server/ Desktop Desktop Bridge- Bridge- Video Video based based Desktop Desktop Video Video Stand- Stand- Client Client alone PC alone PC Client Client Software Software Consumer Consumer Video Video Number of Users Number of Users Source: Frost & Sullivan 10
  • 11. Other Key Developments Increasing SMB focus - -pricing and service delivery is key Increasing SMB focus pricing and service delivery is key Technology enhancements ––SVC, High Profile, 720p 60 Technology enhancements SVC, High Profile, 720p 60 Over 65% of systems shipped are HD, but many are still being used in SD mode Over 65% of systems shipped are HD, but many are still being used in SD mode Decision shifting from just IT - -key stakeholders included in decision making Decision shifting from just IT key stakeholders included in decision making Verticals ––Federal Government has increased spending Verticals Federal Government has increased spending Economic Recovery in sight ––Markets starting to see aaglimmer Economic Recovery in sight Markets starting to see glimmer 11
  • 12. Growth Outlook for Videoconferencing Markets $3.13B Revenue Growth Rate (%) Endpoints - CAGR (2009-2015) Revenue in $ Millions $1.25B in revenues of 16.5 percent. 2007 2008 2009 2010 2011 2012 2013 2014 2015 $1.2B* Revenue Growth Rate (%) Revenue in $ Millions $440M* Infrastructure* - CAGR (2009- 2015) in revenues of 18.2 percent. *Draft numbers 2007 2008 2009 2010 2011 2012 2013 2014 2015 All figures are rounded. Source: Frost & Sullivan 12
  • 13. Next Steps Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. ( 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth, September 2010, Silicon Valley, California ( Register for the next Chairman’s Series on Growth: Accelerating Growth through Vertical Market Expansion: A How-To Primer Tues, April 6, 2010, 2 pm ET ( Register for Frost & Sullivan’s Growth Opportunity Newsletters and keep abreast of innovative growth opportunities ( 13
  • 14. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by taking our survey. 14
  • 15. Frost & Sullivan on Twitter Follow Frost & Sullivan on Twitter 15
  • 16. For Additional Information Jake Wengroff Craig Hays Global Director Sales Manager Corporate Communications Information & Communication (210) 247-3806 Technologies (210) 247-2460 Roopam Jain Principal Analyst Videoconferencing (973) 379-4622 16