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Web Conferencing Stays Strong in a Down Market
Melanie Turek, Industry Director
North America ICT PracticeNorth America ICT Practice
March 17, 2011
Frost & Sullivan’s Growth Consulting can assist with your growth strategies
Functional Expertise� Experience in strategic consulting and market research, including market-leading research on unified
communications and scores of growth consulting projects with dozens of global clients. Particular expertise in:
- Market Research for Unified Communications and Collaboration
- Generating SWOT Analysis, Market Sizing & Market Analysis
- Consulting on Global Strategic Projects on Market Entry, Product Placement, Recommendations for Development and Growth
- Consulting on Sales & Marketing Initiatives, including White Papers, Webcasts and Live Events
Industry Expertise� Experience base covering a broad range of sectors, leveraging long-standing relationships with leading industry
participants’ senior executives and customer organizations:
- Conferencing
- Instant Messaging & Presence
- Unified Communications
Today’s Presenter: Melanie Turek
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- Unified Communications
- Social Networking
What I bring to the Team
� Technical expertise and in-depth understanding of the Unified Communications & Collaboration sector
� Efficient and skilled analytic capabilities
� Fast-paced, fact-based & pragmatic delivery of high-impact business recommendations
� Market leading mar-com deliverables, including papers, webcasts and in-person speaking events
Career Highlights
� Joined Frost & Sullivan as a Principal Analyst to jump-start UC Practice in 2006
� Founding Partner of Nemertes Research Inc.
� Senior Managing Editor at InformationWeek Magazine
Education
� BA with Honors from Harvard College, Cambridge, MA, USA
� Nationality: American
Melanie TurekIndustry DirectorUnified Communications and Collaboration
Frost & SullivanNorth AmericaSteamboat, CO
Agenda
Web Conferencing Market Overview
Premises-Based Market Highlights
Hosted Services Market Highlights
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End User Survey Data: Web Conferencing
Best Practices & Recommendations
Questions & Answers
Market Definitions
Premises-Based Web Conferencing: Available as a licensed product, organizations can install the web conferencing software on their own servers.
Web Conferencing Hosted Services: Also referred to as SaaS (Software as a Service), hosted services are a provisioning model where software is hosted by vendors in their data centers and provided to customers via the Internet.
Web Conferencing Managed Services: Designed either for collocation or provisioning at the customer's site and managed on-site or off-site by a managed service provider.
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service provider.
Note: Since premises based web conferencing is increasingly being integrated as part of a bigger UC solution, it ischallenging to isolate revenues for web conferencing software. Revenues in this research are not based on total revenuesfrom UC solutions such as IBM Sametime and Microsoft OCS/Lync, but only a portion that reflects estimated webconferencing usage based on a combination of vendor provided and user level information.
SaaS Vendors
Market Segmentation
Clientless Remote Support
Web Collaboration
Webcasting
Standalone
On-premises Web
Conferencing Software
Web Conferencing
Services
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Resellers
Webinars
Web Meetings
Standalone Web
Conferencing
Web Conferencing integrated into UC
Products
Source: Frost & Sullivan
• Geographic region covered - Global (North America, Europe, and Asia Pacific).
• Base year for this research service is 2009 and the Forecast Period is 2010-2015.
Research Methodology
In-house Information and
External Resources
Vendors/ Channel Partners/
Secondary Research
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Vendors/Service Providers
(Direct Sales)
Data Collation, Analysis, and Strategic Review
Channel Partners/Resellers
(Indirect Sales)
Final Research Service
Primary Research
Source: Frost & Sullivan
On-premises Versus Hosted Web Conferencing
• The overall trend toward outsourcing of IT and shift to SaaS and cloud computing is forcing ITdepartments to reevaluate how they implement their email and collaboration solutions.
• We expect the market for on-premises web conferencing solutions to remain strong, especiallyamong enterprise users, leading to rapid adoption.
• As the number of web conferencing applications increase, so do the demands it places onorganizations’ resources. Currently, the debate is shifting from software versus services tomore of a flexible deployment model leading to hybrid solutions as well as private clouds tomeet the varying needs of customers.
Key Considerations for Web Conferencing Deployment Models
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CapabilityIn-house resources in IT,
event/meeting management
VolumeFrequency, scale and type
of conferencing
SecurityNeed for security, control
CostInvestments the
enterprise is willing to make
Key Considerations for Web Conferencing Deployment Models
Source: Frost & Sullivan
Premises-based vs. Hosted Web Conferencing
On-
premises
19.3%
2009 2015
Web Conferencing Market: On-premises Versus Hosted Revenues (World), 2009 and 2015
On-
premises
27.8%
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Hosted
80.7%
Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
Hosted
72.2%
Web Conferencing
2009 (%)
2015 (%)
Hosted 80.7 72.2
On-Premises 19.3 27.8
Total 100.0 100.0
Major Findings
•The market for UC solutions is currently embryonic and is expected to gain steam, which will push on-premises web conferencing.
• As the North American market matures, strong growth will be driven by regional adoption.
• Mobility is hot and will remain a key focus in 2011.
• Video usage is gaining unprecedented attention.
• Social media integration is fast evolving to become a meaningful business
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• Social media integration is fast evolving to become a meaningful business differentiator.
• With the Move to UC the purchase decision is increasingly shifting to IT.
• As products mature, more open API’s and application integration opportunities are emerging.
• Channel opportunities are emerging at a fast pace.
• On-premises web conferencing solutions have a significantly smaller penetration among SMBs.
Web Conferencing and Collaboration - Growth Momentum
� Growth Stats 2009
• On-premises web conferencing software revenues grew by 14.6% in 2009, reaching $263million globally. Revenues are expected to reach $1.13 billion in 2015, supporting awidening user base, with a projected revenue growth of 27.6 percent (CAGR 2009-2015).
• Hosted services revenues are expected to reach $2.85 billion in 2015, supporting awidening user base, with a projected revenue growth of 17.2 percent (CAGR 2009-2015).
• Revenues for web event services (webinar and webcasting) reached $226.8 million in 2009representing a 16% growth over the prior year.
• Global web-based remote support market reached $209.3 million in 2009, growing by 18%
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• Global web-based remote support market reached $209.3 million in 2009, growing by 18%over 2008.
Web Conferencing and Collaboration Market *Web Conferencing and Collaboration Market *
A $1.70 billion market in 2009 forecast to reach $ 4.12 Billion by 2014
- 5 Year CAGR is 19.4%
*Includes global web conferencing hosted services, on-premise web conferencing, web events, and remote
support markets. Frost & Sullivan offers in depth analysis on each of these markets.
Key Trends
• Shifting channel strategies –
• As UC vendors bundle web conferencing with their core UC offerings, there will be a bigger emphasis on channel partner sales.
• Web conferencing vendors continue to leverage conferencing service providers (CSPs) as a key channel to reach a wider base of customers.
• The current web conferencing attach rate to audio conferencing services is in the range of 8 to 10 percent.
• CSPs will continue to represent a key channel to open up future growth opportunities for upselling web conferencing.
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opportunities for upselling web conferencing.
• Emerging competition –
• Skype is entering the conferencing market with its recent agreement with CitrixOnline. That, along with new efforts by Google to enter the market (despite itsfailure to gain traction with Google Wave) will present an alternative to SMBs.
Small and Mid-sized Businesses - A Key Target Market
SMBs 53.7%
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Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
Large Enterprises46.3%
Pricing Analysis: Premises-based Web Conferencing
Premises-Based Web Conferencing Software Market: Average Selling Prices (World), 2009
Pricing Plan Average Selling
Prices US ($)
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Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
($)
User CAL pricing $64
Concurrent user or Per Port Pricing
$300
Average Selling Prices: SaaS Web Conferencing
Average Selling Prices
US ($)
Usage based pricing 12 cents/minute
Pricing Plan
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Source: Frost & Sullivan
Usage based pricing 12 cents/minute
Named User Pricing $31/month/named user
Concurrent/ Port price $67/month/port
2010 End User Survey
Web Conferencing Results
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End User Survey Scope
2010 North America Communications & Collaboration Products and Services
200 companies across US & Canada
Company Size:• 21% >500 employees; 5% >10k;• 79% <500; 33% <100
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Industries:• Healthcare, Financial Services, Hospitality, IT/Telecom, Retail, Public Sector
• Each approx 16.5% of total
Budget allocation:• Half of participants say IT budget (servers, storage, networking) <30% of total expenditure • Half of participants say UC&C budget is <20% of total expenditure
Status of deploying UC: • 30% have already; 28% in process; 4% planning/evaluating; 18% have no plans
Conferencing
Use Importance 12 month plan Drivers
Audio 65% extensive company-wide
32% mainly senior management
60% very
34% somewhat
51% increase use
42% maintain use
Reduce cost
Improve work/life balance
Enhance mobility
Improve collaboration
Web 65% extensive
30% mainly senior management
60% very
33% somewhat
52% increase use
40% maintain use
Improve work/life balance
Reduce cost
Increase collaboration
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management Increase collaboration
Accelerate decision making
Video 54% extensive
40% mainly senior management
62% very
35% somewhat
49% increase use
45% maintain use
Accelerate decision making
Improve collaboration
Reduce travel
Enhance mobility
Tele-Presence
67% extensive
27% mainly senior management
58% very
38% somewhat
54% increase
40% maintain
Environmental goals
Single point of access
Accelerate decision making
Increase collaboration
Most Important Benefits of Communications and Collaboration Tools:Web Conferencing
Most Important Benefits of Web Conferencing
Base: Users, N=105
25%
15%
15%
47%
47%
42%
Improve collaboration and productivity across
geographically dispersed teams
Enhance employee mobility
Reduce costs
#1 Rankings Total of Top-Three Rankings
Key Take Away: Web conferencing is being utilized to improve collaboration and productivity across geographically dispersed teams, enhance employee mobility and reduce costs.
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“Source: Frost & Sullivan"Q15. For each of the tools used in your organization’s daily operations, which are the three (3) most important benefits?
Note: Multiple mention question.
11%
10%
9%
9%
5%
2%
36%
31%
30%
37%
20%
10%
0% 20% 40% 60%
Accelerate decision making
Reduce travel
Improve customer service
Single point of access to multiple communications
applications
Help improve employees' work/life balance and general
welfare
Help advance our corporate environmental goals
Factors Influencing the Decision to Delay Implementation / Not to Implement: Web Conferencing
Factors Influencing Delaying Implementation / Not Implementing Web
Conferencing
Base: Non-Users
33%
23%
23%
23%
8%
12%
Quality/application performance issues
Lack of user training, which leads to limited adoption
Difficult to implement and integrate with existing infrastructure
Delay implementation (N=43) Do not plan to implement (N=52)
Key Take Away: The reasons for delaying implementation of web conferencing are mainly quality and application performance issues. The perception of web conferencing providing low value/usefulness to the company is a key restraint for those not considering its implementation.
Delay implementation: Plan to
implement the tool in the coming 2-3
years.
Do not plan to implement: Either do
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“Source: Frost & Sullivan"Q36. What is prompting your decision to delay implementation of web conferencing?
Q37. What is prompting your decision to not use at this point?
23%
21%
21%
19%
16%
16%
14%
14%
7%
12%
21%
13%
13%
10%
2%
46%
6%
10%
0% 20% 40% 60%
We have other technology investment priorities
Cost (not cost-effective for our company)
Security issues
General economic environment
Difficult to manage
Dissatisfied with current vendor support and/or product/portfolio
roadmap
Not useful for our company (low value for our company)
Not user-friendly (difficult to use)
Current solution does not fit with our vision for the evolution of our IT
and communications infrastructure
Note: Multiple mention question.
Do not plan to implement: Either do
not consider the tool, or consider, but
without any time frames.
Best Practices and Recommendations
Vendors
• Have a video plan
• Pay attention to social media
• Don’t ignore UC
• Premises and SaaS options are
End Users
• Consolidate for better pricing
• Integrate with other enterprise communications
• Evaluate deployment models
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key
• Pricing pressures will continue
• Get to know IT
• Train, train, train
• Model from the top down
Next Steps
� Request a proposal for or Growth Partnership Services or Growth Consulting Services 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 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com)
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� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)
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For Additional Information
Mireya EspinozaGlobal Director
Corporate Communications
(210) 247-3870
Angie Montoya
Global Analyst Briefing Coordinator
Marketing
(210) 247-2435
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Elka Popova
Research Manager
Unified Communication
(416) 495-2699
Craig Hays
Sales Manager
Information & Communication Technologies
(210) 247-2460
