What's Driving the Exponential Growth of Software Communications and Collaboration Clients?

Over the last ten years, there has been a widespread adoption of all types of software communications and collaboration clients and applications within businesses around the world. Simply stated, while only 5% of global business users had any type of software communications back in 2006, today the number is close to a whopping 40%. The huge increase in penetration is due to a perfect storm of consumerization, cloud, software maturity, user adaptability to software-based communications, and the proliferation of vendor offerings.
Ten years ago, software communications technologies were limited to what we knew as basic softphones, first-generation UC clients, conferencing clients, and instant-messaging-centric clients. These clients were typically desktop-centric, IT-focused, thick clients installed and provisioned on the customer premises with basic GUI designs and feature sets. Today, the picture is totally different.
Software communications and collaboration solutions have not only evolved over the years, but have also been redefined in terms of functionality, form factor, and overall business model. New generations of software communications solutions are consumer-like, Internet-provisioned, and employee-focused services that are optimized to be used on-the-go and downloaded to or consumed on any type of employee device. Furthermore, the delivery of software communications is no longer tied to a “client” or “app”, but has been considerably extended to also include the embedding of voice, video, and messaging capabilities into businesses applications.
How does the software communications and collaborations landscape look today and what is its potential? What follows are the growth highlights of each type of software communications and collaboration technology.
Desktop Call Control-centric UC Clients: Desktop call control-centric UC clients are software GUIs provided by call-control vendors, such as Alcatel-Lucent Enterprise, Avaya, BroadSoft, Cisco, Microsoft, and Mitel, among others. Such clients are deployed on an enterprise desktop PC or Mac computer or laptop. The major distinguishing characteristic of these types of clients is that the foundation of the communications and collaboration services is the corporate telephony system or PBX. Our latest reports show that the market is expected to grow at a CAGR of 12.1% from 2015 to 2022 in terms of client license shipment.
Mobile Call Control-centric UC Clients: As their desktop counterparts, these clients are provided by call-control vendors and act as natural extensions of corporate telephony to the mobile device. While the first generations of services were basic fixed mobile convergence (FMC) solutions, with the evolution of UC all major enterprise communications vendors have successfully extended their desktop UC client experience to the mobile world with advanced mobile UC applications. We expect a CAGR of 15.8% from 2015 to 2022 in terms of client license shipment.
Conferencing Services Clients: These are voice, video, and web conferencing clients coming from conferencing services providers such as Arkadin, Blue Jeans, Citrix, InterCall, Level 3, PGi, Zoom Video Communications, and Videxio, among others. In this space, the use of visual conferencing clients continues to grow. What was once a checkbox on an RFP now holds serious weight in decision making.
Research has shown that the revenue share of visual (web and video) collaboration services will grow from 43% of the total conferencing services market in 2015 to almost 65% in 2022. Active Host/Full Deployment type models are opening conferencing services to more users than previously when these services were reserved for selected groups due to cost. While hosted web conferencing services are expected to continue to grow in terms of revenue at around 10% CAGR from 2015 to 2022, the largest opportunity holds in the hosted video conferencing services or VCaaS market, which will grow at more than 20% within the forecast period.
Messaging-centric Clients: About three years ago, new messaging-centric team collaboration clients and applications emerged overshadowing the more utilitarian concept of the traditional UC clients and interfaces. Messaging-centric clients and apps seek to deliver several key benefits, including improved user experience, collaborative team spaces, integration of real-time with non-real-time communications; agile product updates; gamification; and access to anytime/anywhere information.
Today, notable examples of these messaging-centric clients include Slack, HipChat, Redbooth, and Bitrix24, from independent collaboration vendors and Circuit by Unify, Spark by Cisco, Glip by RingCentral, and Rainbow by Alcatel-lucent Enterprise from call control vendors.
We estimate that while there are around 8 million daily active users of messaging-centric clients today, the number is expected to considerably grow as more millennials penetrate the workspace and standard office workers get more accustomed to using these types of persistent group conversations.
The Skype Effect: The Skype for Consumer version has been around for more than a decade, and we estimate that there are around 116 million business workers using Skype for Consumer to conduct business, especially within the small- and medium-sized businesses (SMB) sector. Since the launch of Skype for Business, Microsoft’s latest release of its flagship enterprise UC solution previously branded as Lync, the vendor has been encouraging businesses to move to the new platform. In spite of this, however, we have noticed that various businesses continue to use Skype for Consumers, especially within organizations with no perceived need for business-grade functionality, including administrative roles, large conference meetings, deeper integration with Outlook and Office, or PBX replacement.
Nevertheless, we expect the installed base of business users using Skype for Consumer to decrease mainly due to the increase of the installed base of Skype for Business as well as due to competitive pressures from other new or existing collaborative solutions.
Communications APIs: Communications platform-as-a-service (cPaaS) providers, such as Twilio, Plivo, Flowroute, and Vonage/Nexmo, have been providing APIs helping businesses and developers to increasingly embed communications features such as voice, video, and short message service (SMS) text messages within their applications, web sites, and business processes.
With communications APIs, a separate communications client is no longer needed since communications capabilities become building blocks that can be exported or embedded within other business-related applications or processes, instead of being deployed as siloed communications solutions. The growing use of Communications APIs by IT developers is driving the use of software communications and collaboration among businesses, mainly in the contact center space. Communications APIs are enabling businesses to build cloud contact centers from the ground up or move existing contact centers faster to PC-based communications in the cloud. While we have not yet quantified the market of cPaaS, we acknowledge that the addressable market is large and the business model can be disruptive for more traditional UCC solutions.
What Software Communications Means for Business
Emerging technologies are considerably reshaping the way organizations and business users communicate. Ten years ago, most of the businesses communications were conducted via the PSTN with the use of business desk phones. Today, more and more business users conduct their calls via software communications and collaboration tools. The phone is still there to help, but traffic has been considerably shifted to these evolving forms of software communications. With the massive proliferations of different types of software communications clients, applications, and solutions, it is likely that more business users will shift their daily conversations to these types of software-centric experiences.