For the past several years VoIP Logic (News - Alert) has been conducting a survey of VoIP service providers to improve our knowledge of the market we serve. Strategically, I see the broad trends of a shifting landscape – toward cloud services, toward mobility, and toward increased competition. But the survey really helps me to understand the decision process of our more precise target audience of smaller and medium-sized operators focused on hosted PBX (News - Alert), unified communications, and other business communications services. Below, I’ll present some of the compelling data from the survey conducted in 2015. As always, you can download a full copy of the report with your faithful completion of our annual survey at VoIPLogic.com/survey.
The gist of this exercise in market research is to understand the demographics, technology and sales strategy employed by hosted PBX/UC operators. We try to answer questions about what variables are most important in their go-to-market strategies, what specific vendors provide the best technologies, what types of technology are in greatest demand, and how service providers are allocating their valuable capital resources to maximize return.
Overall, there is a strong trend toward maturity in the hosted PBX market. Indicators show that the increasing hosted communications market size is accelerating the pace of service launches and a dynamic and rapid evolution of technologies toward collaboration and integration appears to be rewarding operators and manufacturers that are forward- looking in designing their service offerings. Here are some interesting results in each category.
Our survey polled almost 400 respondents, of which more than 70 percent self identify as hosted PBX/UC service providers. In terms of the size of operators – both as a function of revenue and as a function of employee count – we saw growth in the middle of the market (revenue between $5 million and $25 million). Interestingly, as it pertains to tenure of operators in the market, we saw growth on both ends of the spectrum with more new market entrants (operators in business less than 4 years) and more established companies (those in business greater than 14 years) beginning to sell hosted business communications services. Backing up this trend is significant growth, year-on-year from 2014, in the services offered by our surveyed sample – SIP trunking led the way with 8.9 percent more operators offering these services, followed by hosted PBX/UC with 6 percent growth.
Sales and Marketing
The indicators for sales and marketing point strongly toward the market maturity for the sale of business communications services in many of the variables we track. First, we see a marked increase in the use of direct sales to reach targets and a decline in low-touch methods like web-based selling. On further investigation it appears that many companies that do continue to actively use their websites to make initial contact have instituted web Instant Messenger and other methods to convert online leads into direct touches via chat and phone calls quickly – a higher cost sales method but one with a better success ratio. Second, on the crucial question of which variables are most important to sales success, price jumped to the top of the list. Bundling with other communications services and cutting edge features also grew in importance – indicating a continuing evolution of service packaging favoring innovation. Most notable were the countervailing movement in the value of brand – up significantly in importance, and the value of existing customer relationships – down significantly in importance. As service providers grow, they are measured on what they have done in their markets rather than who they know.
In the set of questions related to technology the trends that emerged can also be read as emblematic of a growing and maturing market in hosted PBX/UC. For starters, the most important variables as they relate to operational success saw an increase in emphasis on scalability and, again as in sales variables, in cutting edge features – both ways to support an increasing and diverse set of customer requirements, and a significant decline in the importance of uptime and the use of well-regarded technology. I read these latter declines as more of an acceptance that the technology works rather than being a point of differentiation, they are now table stakes and expected.
Some of the other factors that point to this latter trend in service provider expectations are, in general, a de-emphasis in operations on linking success to known reliable methods and brands. Specifically, as it pertains to which telephones are most highly valued, Yealink, Grandstream, and Aastra saw strong year-on-year growth in service provider perception while Polycom (News - Alert), Cisco, and Panasonic (more visible consumer brands) all saw a decline in perception. Overall, Polycom still has a considerable market lead in perceived value with 38 percent share, but Yealink has moved into second place in our sample with 15.6 percent, edging Cisco (News - Alert) (at 15.2 percent) out of this position.
The hosted PBX/UC market is a dynamic place to operate a service provider business. While the market size is growing, there is still a long way to go to even exceed 50 percent adoption – stats I have seen (from Infonetics and others) indicating that we are currently still in the neighborhood of 20 to 25 percent penetration in the U.S. market with smaller numbers globally. While winners (and roll-ups) are emerging, there is still a long way to go and strategic decisions for you and I to make before our market achieves its potential. I have touched on some of the trends from our 2015 study, but the data runs much deeper, and you will draw your own conclusions as they affect your specific business factors from a full review of our results if you opt to download them.
Edited by Kyle Piscioniere