Zoom overtakes Cisco in Unified Communications market: IDC

Revenues in the Unified Communications & Collaboration (UC&C) market experienced a 7.2 percent increase, reaching $15.4 billion in the first quarter of 2023, IDC report said.
What is Employee MobilityThe report also predicts that global UC&C revenue will grow by 8.2 percent to reach $64.2 billion by the end of 2023.

In terms of volume, the UC&C market expanded by 7.7 percent in 1Q23, with 587.6 million units/lines/licenses/seats. However, there was downward pricing pressure per unit sale.

Jitesh Gera, research manager for Unified Communications and Collaboration at IDC, noted businesses are investing in cloud-based UC Collaboration and UCaaS solutions, while moving away from traditional hardware-based, premise-based IP PBX/UC systems.

The success of videoconferencing systems and cloud-based UC collaboration vendors depends on interoperability and integration, which are equally important for their clients’ outcomes. The cloud-based approach, especially when combined with AI capabilities, provides enterprises with the ability to drive value quickly and cost-effectively.

In the Communications Platform as a Service (CPaaS) market, revenues increased by 10.2 percent but experienced a sequential decline of 3.5 percent to $3.6 billion in 1Q23 due to economic uncertainty and an elongated sales cycle.

CPaaS encompasses messaging, voice, video, and email as key segments. Messaging accounted for the largest share of CPaaS revenues at 67 percent, followed by voice at 15 percent. For the full year 2023, CPaaS revenues are projected to grow by 13.3 percent year over year, reaching $15.7 billion.

UC&C vendors

In the UC&C vendor landscape, Microsoft expanded its dominance by achieving a 22 percent revenue increase to $6.6 billion in 1Q23. As a result, it gained 510 basis points in market share, representing 42.6 percent of revenues for the last quarter.

Zoom experienced a 1.8 percent revenue growth, reaching approximately $1 billion, and surpassed Cisco to secure the second-place spot in terms of market share, accounting for 6.8 percent (a decrease of 40 basis points).

Cisco, on the other hand, witnessed a significant decline of 16.1 percent in its 1Q23 UC&C revenues, amounting to $911 million, and its market share dropped by 160 basis points to 5.9 percent.

CPaaS vendors

Regarding CPaaS vendors, Twilio, Sinch, and Infobip collectively accounted for nearly half of the CPaaS revenues in 1Q23. The competitive landscape in this market is rapidly changing, with smaller players exhibiting much faster growth than the industry leaders.

For example, Route Mobile achieved a growth rate of 48 percent, while Vonage also experienced above-average market growth in the last quarter.

Twilio secured a 23.4 percent market share (a 120 basis points increase year over year) and generated $847 million in revenue in 1Q23.

Sinch, however, experienced a 4.4 percent revenue decline, amounting to $590 million, and its market share decreased by 250 basis points to 16.3 percent of the worldwide CPaaS revenues in 1Q23.

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