Growth Opportunities and Challenges in the Web Collaboration Market

Growth Opportunities and Challenges in the Web Collaboration Market

Roopam Jain

Principal Analyst - Unified Communications

Krithi Rao

Industry Analyst – Unified Communications

August 27, 2009

2

Focus Points

� Market Segmentation – How Do We Cover Web Collaboration?

� Market Overview- Continued Growth Momentum

� Key Drivers for Growth

� The Evolving Business Case for Web Collaboration

� Trends in Web Conferencing Markets

� Webinar/Web Events - Key Trends and Growth

� Remote Support Market – Key Trends and Growth

� Q&A

3

Web Conferencing & Collaboration - Market Segmentation

Web Conferencing On-Premise

Software

Web Conferencing Services Clientless

Remote Support Solutions

Reseller Sales

SaaS vendors’Sales (direct to

users and through Resellers)

Web Collaboration

Source: Frost & Sullivan

Webinars

Web Meetings

Webcasting

4

Web Collaboration - Continued Growth Momentum Despite Recession

� Web Collaboration Growth Stats 2008

� Global web conferencing SaaS revenues grew by 17% reaching $989.4 million in 2008. The cost savings message is resonating well in a tough economy.

� Revenues for Web Events (webinar and webcasting solutions) reached $173.2 million in 2008. Webinars represent ~10% of web conferencing revenues.

� Web conferencing on-premise software has seen slower uptake and reached $214.6 million in 2008, growing by 10.4% over the previous year. Unified Communications will accelerate adoption of on-premise web conferencing over the next several years.

� Global web-based remote support market (an adjacent market since several web conferencing vendors also offer attended remote support) reached $176.9 million in revenues in 2008, growing by 27.4% over 2007.

Total Web Collaboration Industry *Total Web Collaboration Industry *

A $1.5 billion market in 2008 forecast to reach $ 4.5 Billion by 2014

- 6 Year CAGR is 19.6%

*Includes the global hosted web conferencing services, on-premise web conferencing software, web events,

and remote support markets. This study covers the web conferencing hosted services market. Frost & Sullivan offers in depth analysis of each of these markets.

5

Key Factors Impacting Growth in Web Conferencing and Collaboration

GlobalizationGlobalization

Travel Cost Travel Cost

Savings and ROISavings and ROI

Greater Greater

Awareness/Awareness/

Ease of UseEase of Use

Migration to Migration to

UCUC

Web CollaborationWeb Collaboration

Market FactorsMarket FactorsConsumer Video Consumer Video

(Skype, Google)(Skype, Google)

Green ImperativesGreen Imperatives

Web 2.0 Web 2.0

Evolution and Evolution and

Impact of Impact of

GenGen--YersYers

Impact of Impact of

RecessionRecession


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Reduced Travel Costs

Reduced Cost of Ownership

Productivity ImprovementsUC, Collaboration, Presence

Tacti

cal

Str

ate

gic

Web Conferencing Evolution of the Business Case

2012+2007

Competitive AdvantageIntegration with Business Processes


While a lot of the focus in 2009 is on cost savings, business cases, and ROIs, the long term approach to using web conferencing will be strategic, i.e. business process-centric collaboration resulting in process improvements and better business practices.

7

Growing Awareness for Web Conferencing

Awareness of Communications and Collaboration Tools

(N=102)

92%

88%

84%

82%

82%

53%

48%

34%

31%

0% 20% 40% 60% 80% 100%

Video Conferencing

Instant Messaging

Web Conferencing

Audio Conferencing

VoIP

Unified Messaging

Presence Information

Telepresence

Unified Communications


Note: Multiple mention question.

A recent Frost & Sullivan end user survey of C-level execs indicates that awareness for web conferencing is high. While we suspect that the respondents may have mixed their consumer and enterprise video and web communications awareness, it is an overall positive indication for the web collaboration industry.

8

Web Conferencing as a Critical Communication Tool – Importance Still Being Established

Importance of Communications and Collaboration Tools

(N=102)

68%

65%

51%

49%

49%

45%

37%

33%

30%

16%

28%

38%

24%

36%

36%

37%

41%

43%

10%

6%

11%

16%

12%

13%

26%

26%

20%

6%

5%

5%

7%

0% 20% 40% 60% 80% 100%

VoIP

Audio Conferencing

Instant Messaging

Presence Information

Web Conferencing

Video Conferencing

Unified Messaging

Unified Communications

Telepresence

Very Important Somewhat Important Neither Somewhat Unimportant Not-at-all Important


The same survey showed a lower rating for the importance of web conferencing in the enterprise, indicating that the business case for web conferencing as a standard communication tool is still being established.

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NA77.8% in 2008

vs.77.4% in 2007

EU17.8% in 2008

vs.18.6% in 2007

APAC4.4% in 2008

vs.4.0% in 2007

Hosted Web Conferencing Services - Regional Growth

Revenue Growth Revenue Growth NA NA -- 18.6%; EU 18.6%; EU –– 12.8%; APAC 12.8%; APAC –– 29.6%29.6%

NA NA -- strong momentum despite a recessionary economystrong momentum despite a recessionary economyEU EU -- moderate growth, impact of currency fluctuationsmoderate growth, impact of currency fluctuations

APAC APAC -- growth primarily coming from regional vendorsgrowth primarily coming from regional vendors

10

SaaS and On-Premise Markets

� New business models emerge - traditional software vendors redefine themselves and put a stake in the “cloud”

� Recessionary economy triggers SaaS uptake while On-Premise adoption has been slower than expected (SaaS revenues 82% vs 18% On-Premise in 2008)

� Vendors moving from an “either/or” approach to “software plus service” approach

World Web Conferencing Market: Revenues by SaaS vs.

On Premise Software, 2008

SaaS

82%

On Premise

18%

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Key Web Conferencing Trends

• Ease of use and simpler pricing model promote unlimited usage/named user model

• Changing competitive landscape - Collaboration bundles are evolving in the SaaS marketplace; UC vendors beef up built-in conferencing

• VoIP integration and usage has accelerated due to cost efficiencies; pricing pressures will intensify pressure on revenue growth

• Decision shifting to IT - Key stakeholders included in decision making

• Increasing SMB focus; service delivery and pricing are key

• Light weight vendors gain traction - getting rid of “needless complexity” and cutting out on bells and whistles for target markets

• Strong Application Focus – Sales/Marketing, Training, and Support remain key apps

12

Web Events Market

13N619-64

Web Events – Webinars/Webcasting Trends

� Global revenues reached $173.2 million in 2008. Although 2009 will be a year of moderate growth, we project revenues to reach $400 million by 2014

� Organizations will tighten their belts in 2009, and will begin to spend smartly in Q409/Q110

� Web events is gaining traction, albeit not as quickly as the vendors would like

� The technologies needed to support a web event (i.e higher bandwidth, superior video quality) have enabled web event services vendors to evolve their solutions into a legitimate marketing tool

� Lead gen/non-essential corporate training down in Q109, impacting growth

� Product confusion – market should be defined by business behavior, business requirements, customer expectations

� Consolidation will occur as this is very much a fragmented market

� Pricing will come down as competitive pressures from larger web conferencing vendors increase

� A fast emerging market for virtual events

14N619-64

Web Events Market – Understanding the Differences

Many similarities, but different expectations for outcome

Webcasting• Planned event with a set start/end

time

• Streamed live audio/video

• Set agenda/advanced registration

• Presenter to many

• Customized branding

• Highly scalable

• More moderated, controlled environment

• Extensive reporting/post event functionality

Web Conferencing• Ad hoc or scheduling

done on short notice

• Interactive; open dialogue

• No/ limited company branding

• Limited scalability

• Limited reporting/ post event functionality

• Pricing models still evolving

Common traits include: collaborative solution; linear and non-linear; audio/Video/desktop sharing capabilities;

licensing models

The market has not done a good job of educating enterprises on the differences and value add that web events offer, which remains a key challenge for adoption of web events. While smaller collaborative web meetings and larger web events have several features that are similar in nature, the end goal is different.

15

Web-based Clientless Remote Support Market

16

$138.8 Million

$176.9 Million

2007 2008

27.4 %

Market Size

Businesses are being compelled to “do more with less” and improve service and support internally

for employees and externally for customers.

Note: All figures are rounded;


Web-based Clientless Remote Support Software Market: Total Market Size (World), 2007-2008

17

2007 2008 2009 2010 2011 2012 2013 2014

Reven

ues (

$ M

illio

n)

Reven

ue G

row

th (

%)

Revenues ($ Million) Revenue Growth (%)

Revenue Forecasts

With the economy forcing businesses to do more with less combined with the shortage of skilled IT

workers at each location, Frost & Sullivan expects the remote support market to experience high growth.

Web-based Clientless Remote Support Software Market: Revenue Forecasts (World),

2007–2014



� Increasing number of telecommuters, remote workers and mobile workers

� Pricing pressures due to increased competition. Larger web conferencing vendors bundle remote support licenses with other web collaboration licenses causing price pressures.

$176.9 million

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� Primary features –

� Customization (to allow businesses to overlay their own brand on the product, when providing support to customers);

� Integration with other enterprise systems like CRM or helpdesk ticketing software;

� Mobile support, secure “anywhere” support that allows technical support professional to administer support from any PC or mobile device

� Mac support both on the user end and the tech support rep end

Major Findings

As the market need for specialized remote support capabilities increases, we see customers moving

to purpose built remote support products

Web-based Clientless Remote Support Software Market: Revenue Forecasts (World),

2007–2014



$176.9 Million

$366 Million

Dedicated Remote Support

MarketTotal Market Size

(Dedicated remote support products

+ use of web conferencing tools for remote support)

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Web ConferencingWeb Conferencing

Key Market Share Holders - Web Collaboration

Web EventsWeb Events Remote SupportRemote Support

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Conclusions

� Travel cost savings and productivity benefits will continue to be key drivers

� Web conferencing and collaboration represent high growth markets

� Ease of use and pricing will be key growth factors

� SaaS will remain the dominant delivery mode

� Shifting business models for key vendors will result in a fast changing competitive landscape

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Next Steps

� Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. ([email protected])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 13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ(www.gil-global.com)

� Register for the next Chairman’s Series on Growth:

The CEO's Growth Team™: The CEO’s Growth Survey and its Economic

Outlook for 2010 (September 3, 2009) (http://www.frost.com/growth)

� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)

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23

For Additional Information

Jake Wengroff

Global Director

Corporate Communications

210.247.3806

[email protected]

Craig Hays

Sales Manager

Information & Communication Technologies

(210) 247-2460

[email protected]

Elka Popova

Global Program Director, Unified Communications

(416) 792-0160

[email protected]

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