Conferencing Becomes an Important Business Tool in Difficult Times

By: Lucy Hipperson, Ovum
(Business News & Technology News, 6 Nov 2008)

When you need to cut costs in a tightening market, cutting travel expenses may be a necessary option to take. But enterprises need to maintain relationships with customers and suppliers, and conferencing helps fill the travel gap. Ovum's latest annual global business conferencing market forecasts show further growth, but usage patterns are shifting. We forecast continued growth overall for audio to 2012, but with revenues in some regions flattened by price competition. The growth/change story is not just in video conferencing, but in integrated conferencing—web plus audio or video—too.

Video conferencing becomes more than a "nice to have"
Across the board, we forecast the most significant volume growth in video conferencing markets, which we expect will increase from $923 million in 2007 to $1.88 billion in 2012. We see the largest growth rate in desktop video. Users may be wowed by telepresence, both in terms of quality of solution and price, but many want a lower-cost solution and desktop video falls into this category. Ovum forecasts a CAGR of 22 percent for desktop video revenues over the 2007 to 2012 period. Desktop video provides high-quality HD video to enable face-to-face meetings without the need for a dedicated room. It also can enable teams to work in a collaborative environment without the need to travel.

In a tightening market, enterprises will think even harder before spending large amounts on implementing telepresence solutions. However, vendors and services providers are being smart about how they sell video conferencing and are now offering tools to demonstrate the return on investment.

Audio conferencing growth continues in emerging markets
Ovum forecasts audio conferencing revenues to continue to grow in the next five-year period, but slowly, with audio revenues of $3.4 billion in 2007 reaching $4.2 billion in 2012. In North America, market growth for audio conferencing is slowing and revenues have suffered as a result of very competitive audio conferencing tariffs. However, in emerging markets we see faster growth due to wider organic adoption.

We see the largest volume growth in audio conferencing revenues in the China/India region, with a CAGR of 10 percent over the next five years. Adoption up to this point has been slower than expected, but we forecast that due to the scale of the market organic adoption will drive this growth. For Eastern Europe and Latin America we forecast a CAGR of 9 percent.

Audio conferencing provides one of the most cost-effective solutions to enable collaboration of two or more participants on a call.

Integrated conferencing brings collaboration to audio conferencing
As a standalone solution, web conferencing has not been adopted as readily as expected. However, we forecast the demand for integrated conferencing to be significantly larger in five years, growing from $63 million in 2007 to $480 million in 2012.

We see integrated conferencing—audio plus one or more service such as web or video—quickly replacing web conferencing. As service providers launch collaborative working solutions which enable end users to access all services (audio, web and video) via one web portal, we expect demand will grow.

Highly competitive tariffs have had an adverse effect on web conferencing, which has led some service providers to discontinue their services. Instead they see greater value in offering integrated conferencing bundles which include audio, web and video.

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