Communications as a Service (CaaS) Featured Article

UCaaS Now $4 Billion Market and Growing

By Casey Houser
Contributing Writer

The most recent research from Synergy (News - Alert) Research Group reveals that the unified communications-as-a-service (UCaaS) market continues to push forward and represents $4 billion in annual revenue with the market growing at an annual rate of 16 percent per year.

The business suite segment of the overall market is carrying this growth. However, that segment shares its technological development with its counterpart, the market of standalone products – each of which sport a number of distinct enterprise leaders in product creation. Jeremy Duke, the founder and chief analyst at Synergy, has more on that point and his expectation that there will be no deceleration in the market within the next few years.

“UCaaS continues to be a force for change within the business communications market,” Duke said. “There has been a rapid rise of some disruptive new vendors and I do not expect the pace of change to slacken. Now some vendors are broadening their product offerings to provide more comprehensive solutions.”

The vendors that currently lead the pack in the business suite segment are RingCentral, 8x8 (News - Alert), Vonage, ShoreTel, and Mitel.  The standalone segment is driven primarily by Cisco, Citrix, Microsoft, inContact, and Genesys. As one example of this prowess, ShoreTel (News - Alert) is even making the jump from providing premise-based UC to making it easy to switch to the cloud. The company’s new Connect software, launched just this year, is indicative of this transition not just by ShoreTel but all of the leading solutions providers in the UCaaS market.

There appears to be a bit of a trade-off when considering the two sides of the UCaaS market. The standalone products represent about two-thirds of the overall market, but that segment has shown slower growth. Business suite product developers are seeing more growth in their combined revenue but are playing catch-up. As the move to the cloud increases, how much the numbers will change in 2016 will be interesting to watch.

What is clear for the time being is that sales in the U.S. account for a large part of market revenue. It represented 71 percent of revenue in Q3 2015, and it and other markets are seeing a huge demand for videoconferencing. For businesses, there may be no better time to make the jump to the cloud. Many prominent service providers are making a name for themselves here, so there are a host of choices and certainly something to fit all businesses’ needs.