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Demand for cloud video conferencing drives market consolidation

The popularity of video is driving consolidation in the cloud video conferencing market as vendors look to round out their portfolios and meet growing enterprise demand for video.

Cloud-based video conferencing is skyrocketing in the enterprise as employees comfortable with video in their personal lives demand the same capabilities at work. With growing demand for cloud video conferencing capabilities, a number of vendors have entered the market, ranging from stand-alone service providers to cloud communications providers expanding their service portfolios.

Revenue in the cloud web and video conferencing market reached $2.75 billion in 2017 and is continuing to grow, according to Frost & Sullivan analyst Alaa Saayed. But, as the market grows, so does the competition.

"Cloud video has shifted from a niche, new technology to a mainstream commodity," said David Maldow, founder of market research firm Let's Do Video. "Customers will start looking for these solutions from established big names rather than new, small, disruptive market entries."

Growing demand for all-in-one cloud-based communications and collaboration licenses is affecting enterprise demand for stand-alone cloud web and video conferencing services, according to Saayed. Organizations are moving toward converged platforms that make it easier for users to switch between different modes of communication, making the market ripe for consolidation.

Evaluating the current vendor landscape

The cloud video conferencing market has seen a flurry of activity in the last few years as vendors have attempted to strengthen their service portfolios to meet changing business needs. Most notably, startups Pexip AS and Videxio announced in 2018 that they would merge under the Pexip brand; LogMeIn completed its acquisition of Citrix's GoTo portfolio in 2017; and in early 2018, Viju and VisionsConnected merged to form Kinly.

Today's cloud video conferencing market includes providers that range from established vendors, such as Microsoft and Cisco; to stand-alone providers, such as Zoom and BlueJeans; to market-adjacent providers, such as Slack and Flock, which offer video conferencing within their platforms.

Established vendors like Microsoft, Cisco and Google are disrupting the enterprise communications and collaboration market by building their own all-in-one ecosystem of endpoints, apps and tools, which threatens existing service providers, Saayed said.

"Smaller providers can become attractive acquisition prospects for larger, more established companies due to unique patents or easily transferable customer bases," Maldow said.

Telephony-centric vendors are also moving their stand-alone communications portfolios to all-in-one unified communications-as-a-service licenses. Many major cloud service providers are repositioning their services to fit today's employee needs, which makes market consolidation inevitable, with vendors acquiring or merging with other providers, Saayed said.

"The remaining participants will be those that deliver a tightly integrated platform or those that deliver a point solution that complements the tightly integrated platform," he said.

For organizations evaluating cloud video conferencing options that are concerned if their chosen vendor is at risk of being acquired, Maldow said to focus on employee workflows first.

"You don't want to change the way your team works due to your choice of vendor," he said. "It doesn't help you to choose a vendor that appears less likely to be acquired if your people won't adopt and use their products."

This was last published in February 2019

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How do you think consolidation will affect the cloud-based video conferencing market?
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Cisco is dominating the enterprise market in terms of revenue with its software and hardware solutions. Microsoft is still dependent on third party solutions for its hardware need. there are players such as LifeSize, Zoom, Pexip, ClearOne will play a major role in bridging the gap of SME segment.
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Hi Gzachariah, 

Thanks for your insight! I can definitely see a lot of potential for competition and consolidation around the vendors targeting the SME market.
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