Why Consolidation Could Help the UC Industry
Over the last year, both vendors and end users have noticed accelerated consolidation in the unified communications (UC) and conferencing markets. Last year we saw leading brands like Cisco and Avaya invest in video conferencing, cloud API and collaboration software. And at the start of 2016, Microsoft took over UC management provider Event Zero to strengthen Skype’s business capabilities.
Similarly, we’ve seen end user consolidation as organizations attempt to streamline the UC solutions their employees use. In fact, the number of large companies planning to merge UC applications under one vendor has risen 20 percentage points within the past two years, according to Nemertes Research.
Amidst this wave of consolidation some skeptics believe the available solutions will stagnate while the behemoths left standing feel less inclined to push boundaries.
This apprehension can be put to rest. Consolidation is a natural and necessary phase for any industry or organization, having successfully occurred in multiple industries before, including diverse sectors like automotive, healthcare, music and personal computing. For even more specific proof, here are three reasons why consolidation in the UC market will be beneficial:
- Higher Quality Choices: When competitors merge overlapping products and services, UC customers benefit. This not only minimizes concerns about the legitimacy of a vendor, but also the uncertainty around support or scale. IT leaders typically prefer established vendors with financial stability and a consistent track record. By decreasing noise in the marketplace, consolidation leaves customers with only the highest quality options.
- Thriving Market: Analysts have forecasted the UC market will surpass $95 billion worldwide by 2023. Demand for UC infrastructure, applications and managed services is rapidly growing. In fact, the string of recent mergers and acquisitions is likely a byproduct of a thriving, innovative and overly crowded market. The claim that fewer vendor options will hinder creativity in the UC industry is far from the truth. UC providers still have plenty of user experience pain points to solve and technical improvements to make. Many of the vendors that folded or became the target of acquisitions didn’t have the resources to address these shortcomings on their own. Customers at organizations of all sizes continue to face issues around the security, scalability and interoperability of UC tools. These user challenges will need to be addressed in order to keep pace with customer demand. Luckily, it’s the vendors remaining after the consolidation process that typically have enough time, money and stability to invest in solving these problems.
- Untapped Opoprtunity: When it comes to vertical-specific UC solutions, the possibilities are endless. Vendors striving for differentiation from their competitors are sure to capitalize on these markets as the interest and demand expands, and none of them will want to settle for second best product portfolio or a product imitation of their competitors. Successful vendors will thrive because of their internal active strategy, not by reacting to a competitor’s product line. Merger and acquisition activity alone will not deter the proactive thinking and product development of these innovative companies.
As the UC market matures and experiences further consolidation, customers will enjoy a less crowded market with fewer but better choices. The vendor community must challenge itself to maintain its innovative edge as it continues to explore new market opportunities.
Edited by Maurice Nagle