Global UC&C and CPaaS Markets Show Strong Growth in 2Q23, Predicting Record Full-Year Revenues

In the second quarter of 2023 (2Q23), the Unified Communications & Collaboration (UC&C) market witnessed a 6.9 percent year-over-year revenue increase, reaching $15.9 billion globally, IDC said.
Online learning in education for studentsFurthermore, the Communications Platform as a Service (CPaaS) market also showed robust growth, with revenues surging by 13.2 percent year over year to $3.8 billion in the same period, International Data Corporation (IDC) Worldwide Quarterly Unified Communications and Collaboration Tracker said.

The UC&C market is projected to sustain its momentum throughout 2023, with an anticipated 8.6 percent year-over-year revenue increase to a staggering $64.7 billion for the full year. This projection signifies an upward revision of approximately $500 million from the previous quarter’s forecast.

The UC&C market’s volume, in terms of units, lines, licenses, or seats, increased by 11.4 percent year over year in 2Q23 to 620.7 million. Despite this growth, the gap between value and volume growth rates expanded, indicating sustained pricing pressure per unit sale.

Jitesh Gera, research manager for Unified Communications and Collaboration at IDC, noted, “Remote collaboration needs continue to grow and evolve with the changing dynamics led by the return to work, coupled with new innovation from vendors, especially on the AI front.”

Public cloud Unified Communications as a Service (UCaaS) solutions integrated with telephony have maintained strong demand as businesses seek to unify employee and customer communication channels. The hardware market is undergoing transformation as vendors focus on developing innovative meeting room equipment to offset declines in IP telephones and enterprise videoconferencing systems.

In the CPaaS market, revenues surged by 13.2 percent year over year and 4.6 percent sequentially to $3.8 billion in 2Q23, rebounding from a previous sequential decline. Messaging remained a dominant force, constituting 67 percent of the CPaaS market in 2Q23.

Microsoft showcased significant growth in the UC&C market, experiencing a 20 percent year-over-year increase in revenues to $6.8 billion in 2Q23, securing a 42.8 percent market share.

Zoom’s UC&C revenue grew by 2.5 percent year over year to $1.1 billion, maintaining a 6.8 percent market share.

Conversely, Cisco experienced a 19.3 percent year-over-year decline in UC&C revenue to $951 million in 2Q23, while slightly increasing its market share to 6 percent.

In the CPaaS realm, Twilio maintained its leadership position with a 24.1 percent market share, experiencing a revenue increase of 15.8 percent year over year to surpass $913 million in 2Q23. Sinch secured the second position with a 15.8 percent market share and revenue growth of 0.8 percent year over year to $600 million in 2Q23.

Looking ahead, the UC&C and CPaaS markets are poised for continued growth and innovation, fueled by evolving collaboration needs and advancing technologies, further reshaping the landscape of global communication and collaboration solutions.