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UCaaS Magic Quadrant shows maturing, fragmented market

The latest Magic Quadrant for UCaaS shows a maturing market with capabilities that exceed on-premises UC and UCaaS providers with greater global reach.

Unified communications as a service now offers capabilities that exceed on-premises unified communications, according...

to Gartner's latest Magic Quadrant report for UCaaS.

Gartner's 2017 UCaaS Magic Quadrant indicated the market has matured to the point where large enterprises, especially those with global locations, should seriously consider UCaaS products, said Daniel O'Connell, a Gartner analyst and co-author of the report.

"It's no longer an SMB-only play," he said. "UCaaS is something to consider for all organizations."

UCaaS platforms include voice and telephony, conferencing, messaging, presence, desktop and mobile clients, and communication app integrations, such as contact center, team collaboration and business analytics.

All the vendors in Gartner's report target midsize enterprises -- between 1,000 to 5,000 employees -- with a track record of customer success. Some midsize enterprises deploy UCaaS for the features and capabilities, user experience and flexibility of the cloud. Other companies deploy UCaaS to cut costs by consolidating communications to a single vendor, according to the UCaaS Magic Quadrant.

Large enterprises with more than 5,000 employees have traditionally shunned cloud-based UC in favor of on-premises deployments. But, more recently, cloud UC adoption has grown, as enterprises are becoming concerned that on-premises investments could be obsolete in a few years, compared with cloud deployments, the report found.

O'Connell said many UCaaS platforms today are global and support locations in North America, Europe, Asia-Pacific and Latin America.

It's no longer an SMB-only play. UCaaS is something to consider for all organizations.
Daniel O'Connellanalyst at Gartner

According to the report, enterprises can buy UCaaS platforms from four types of providers:

  • Communications service providers. These are legacy network services providers, such as Verizon, AT&T and Orange Business Services, which historically focus on voice and data services. They support UCaaS with UC stacks from vendors such as Microsoft, Cisco and BroadSoft.
  • Technology vendors. BroadSoft, Google, Microsoft and Mitel are technology vendors that offer UCaaS platforms that are sold directly to end users.
  • Application specialists. These providers include 8x8, Fuze and RingCentral. They are both the platform and service provider for UCaaS.
  • Value-added service providers. These providers include Masergy and West. They offer UCaaS by running UC technology from vendors like Microsoft, Cisco and BroadSoft in their own data centers and complementing UCaaS with their own value-added services, such as security, integration capabilities and network services.

Organizations should also look at UCaaS providers' ability to support mobile services. "That's where iPhone or Android devices can be the primary handset," he said.

BroadSoft, Masergy debut on UCaaS Magic Quadrant

This year, UCaaS provider BroadSoft debuted on the report because of its BroadCloud platform, which is sold to enterprises primarily via channel partners under the BroadSoft Business brand that launched in November 2016. Historically, BroadSoft has sold its UCaaS platform, BroadWorks, to service providers, including Verizon, AT&T, Masergy and Orange. But the BroadCloud platform is controlled by BroadSoft, rather than embedded in other providers' networks.

"They run the platform in data centers they control," O'Connell said. "And they typically have channels sell it."

This is why BroadSoft ranked in the UCaaS Magic Quadrant, while similar vendors, such as Cisco, which provide UCaaS platforms to other providers, did not.

O'Connell said Cisco's Hosted Collaboration Solution is sold to partners -- such as Verizon, AT&T, BT and Orange -- and is embedded in their networks. Because Cisco's partners run the platform, the vendor is not eligible for the UCaaS Magic Quadrant. But that could change with Cisco Spark.

"The next cloud wave of Cisco is Spark," he said. As Cisco Spark evolves into more of a UCaaS offering, the vendor could see itself on a future report. "They're putting a lot of investment and building a PBX capability, as well."

Masergy also debuted on this year's UCaaS Magic Quadrant, as the vendor matured in terms of revenue, global reach and customer size, O'Connell said.

Shifting the UCaaS ranks

O'Connell said the UCaaS market is seeing traction from vendors like AT&T, Verizon, BT and Orange. Verizon was named a market leader, driven by the vendor's investment in its One Talk mobility platform.

"It's pretty innovative and has a lot of potential," he said. The service, currently available only in the U.S., connects office phones to mobile devices and is based on BroadSoft's PBX environment.

AT&T, named a challenger in the report, has a UCaaS platform based on its Integrated Cloud architecture, which the vendor can package in a software-defined network or network functions virtualization environment, O'Connell said.

"It does look interesting, assuming they can scale this and put it out," he said. "They can combine with not just cloud UC, but integrated routers or firewalls."

Orange was named a market leader, as the vendor is well-positioned for midsize and large enterprises with multinational locations. UCaaS is a core business for Orange.

In the past year, Fuze dropped from the leader to visionary ranking because of customer service issues and complex deployments, O'Connell said. However, he said, the vendor has been "growing nicely," and revenue is expanding in the 40% range.

ShoreTel, Interoute and Vonage were dropped from this year's UCaaS Magic Quadrant because the vendors did not meet certain criteria, such as maturity in global markets. Additionally, Mitel is acquiring ShoreTel.

Other market leaders in this year's report include RingCentral, 8x8, BT and West. Meanwhile, Microsoft and Google were named challengers, and Mitel was named a visionary. 

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