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Unified Communications and Collaboration Trends

Modern business communication and collaboration solutions are an essential platform for a distributed workforce. The global COVID-19 pandemic has brought these platforms to the forefront of digital transformation. Together, they'll form a foundation for many 'digital workspace' deployments.

These multifaceted offerings aren't deployed because they're the best technology. They're used to drive meaningful advances in employee productivity, agility, and flexibility that are proven to help achieve desired business outcomes.

The Unified Communications & Collaboration (UC&C) market grew 29.2 percent year-over-year and 7.1 percent quarter-over-quarter to reach $13.1 billion in the fourth quarter of 2020 (4Q20), according to the latest worldwide market study by International Data Corporation (IDC).

IT vendor revenue growth was also up by an impressive 24.9 percent for the full year of 2020 to reach $47.2 billion. Regardless, not all the IT vendors benefited from the growth in global market demand.

Unified Communications & Collaboration Market Development

How business was conducted changed dramatically in 2020 due to the COVID-19 pandemic, driving companies of all sizes to consider and adopt scalable, flexible, cloud-based offerings as part of their UC&C enabled 'digital workspace' solution.

Several IT vendors and managed service providers also saw exponential growth in the number of video and collaboration end-users in 2020, as more knowledge workers stayed home and worked online.

Besides, the study uncovered interest in live video meetings, online collaboration, Unified Communications-as-a-Service (UCaaS), and better mobile applications.

IDC reported the following UC&C market findings:

Hosted Voice or UC Public Cloud (UCaaS) grew 26.1 percent year-over-year and 6.8 percent sequentially in 4Q20 to reach nearly $4.6 billion in revenue. For the full year of 2020, public cloud UCaaS revenue increased 21.2 percent to reach $16.4 billion.

UC Collaboration (including video conferencing software and cloud services) increased 48 percent year-over-year and 5.1 percent sequentially to reach almost $6.2 billion in revenue within 4Q20. For the full year of 2020, UC Collaboration revenue increased 45 percent to reach $22.1 billion.

Meanwhile, revenue for internet protocol (IP) phones declined 20.4 percent year-over-year but grew 20.3 percent sequentially in 4Q20. For the full year of 2020, IP phone revenue declined 22.8 percent to reach $1.9 billion.

Shipments of IP phones also declined 23.1 percent year-over-year but increased 14.7 percent sequentially. For the full year of 2020, shipments of IP phones were down 22.2 percent.

Enterprise videoconferencing systems (i.e., videoconference room endpoints) surprisingly increased 26.1 percent year-over-year and 36.5 percent sequentially to more than $827 million in 4Q20. For the full year of 2020, revenue increased 12.4 percent to reach almost $2.6 billion.

"In 2020, COVID-19 caused many businesses and organizations to re-think their plans for leveraging digital technologies and accelerated interest in and adoption of solutions such as team collaboration, team messaging, videoconferencing, and UCaaS, among other technologies," said Rich Costello, senior research analyst at IDC.

In 2021, IDC analysts expect positive growth across these key UC&C segments to continue, with slightly more modest rates. IDC also shared the following geographic market insights from 2020:

  • From a regional perspective, the UC&C market saw positive numbers across the board in 4Q20 and for the full year 2020.
  • In North America, UC&C revenue was up 3.1 percent quarter over quarter and 30.1 percent annually in 4Q20 to almost $6.3 billion. For the full year of 2020, revenue was up by 26.1 percent to reach $22.9 billion.
  • Asia-Pacific (including Japan) revenue was up 14.9 percent sequentially and 36.9 percent year-over-year to more than $2.4 billion in 4Q20. For the full year of 2020, revenue was up 28.1 percent to reach almost $8.4 billion.
  • Europe, the Middle East, and Africa (EMEA) revenue was up by 9.5 percent quarter-over-quarter and 23.8 percent annually in 4Q20 to reach $4.0 billion. For the full year of 2020, revenue was up 20.9 percent to reach $14.3 billion.
  • Latin America revenue increased 3.6 percent compared to 3Q20 and 27.3 percent year-over-year in 4Q20 to reach more than $441 million. For the full year of 2020, revenue was up 27.6 percent to reach over $1.6 billion.

Outlook for UC&C Platform Applications Growth

In 2021 and beyond, IDC expects worldwide UC&C growth will be driven by companies across all business size segments (small, midsize, and large enterprise) within the Global Networked Economy.

I believe the definition of 'digital workspace' capabilities will become clearer, as more CIOs and CTOs follow the lead of Line of Business (LoB) leaders that will specify their requirements. These business leaders are the key decision-maker for a preferred solution.

That said, technology-centered or product-centered IT vendors will struggle to gain market share. In contrast, those savvy vendors that can demonstrate how to apply these platforms -- in the most effective way -- will advance rapidly past their competitors.

Also, incumbent IT vendors likely have a challenge if their SaaS pricing is seen as excessive by current customers or new sales opportunities. More organizations focus on the cloud end-user subscription price, in comparison to the perceived cost of an equivalent on-premises solution.

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