Unified Communications Market Size, Share & Trends Analysis Report By Product (Hosted, On-premise), By Solution, By Organization Size, By End Use, By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The global unified communications market size was valued at USD 78.33 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 20.5% from 2021 to 2028. Enterprises have transitioned to Unified Communications (UC) solutions to reduce operating expenses, increase revenues, and strengthen customer relationships. UC enhances the decision-making process by integrating various communication tools into a single platform. Thus, unified communications solutions are typically deployed to foster cross-functional activities and yield positive results.

An increase in the mobile workforce coupled with the growing trends of Bring Your Device (BYOD) and hybrid workplace model is expected to positively influence the global market over the next eight years. Smart devices replace the traditional work culture of using desktop computers as a primary means of business communications. Mobile devices support UC, allowing employees to stay connected from anywhere at any time. Thus, employees need not limit themselves to the single desktop workstation but can work from remote places, ensuring high productivity.

Unified communication is a field that has been evolving for more than a decade. The technology promises an influx of new, integrated communications devices that allow organizations to achieve numerous benefits such as collaboration, streamlining business processes, and lowering business communications' overall cost. Vendors specializing in UC services emphasize simplifying their solutions, making them easier to purchase, deploy, and manage. There has been an increased focus on using past user experience as a critical tool for developing new solutions and enhancing the existing ones.

Business communications are rapidly evolving and organizations are looking for ways to control cost, manage complexity, and improve productivity. This has resulted in the increasing adoption of UC solutions, mainly delivered in a hosted or cloud-based Unified Communications as a Service (UCaaS) model. Organizations are redefining their business models to achieve agility and flexibility in business and improve overall productivity. In the ever-changing business environment, the integration of real-time telephony systems, data, and video communications becomes an essential part of business activities. Thus, organizations adopt these solutions to improve collaboration and communications internally with remote workers and externally with partners, clients, and suppliers.

Many companies are opting for customized solutions as they enable companies to select specific communication tools that suit their needs using the Bring Your Carrier (BYOC) strategy. With the rising demand for unbundled UC packages, UC vendors are expected to drop the one-size-fits-all approach over the coming years. Clients are expected to choose best-in-class solutions with unified communication platforms or applications integrated with APIs.

Impact of COVID -19

The highly contagious nature of the ongoing COVID-19 pandemic and its increasing number of cases have led organizations to halt their on-premise operations and offer work from home facilities to their employees. This has encouraged large enterprises and SMEs to leverage unified communications technology to ensure seamless communication between team members and co-working teams. COVID-19 has also encouraged organizations such as educational institutes, government agencies, and healthcare providers to adopt robust business communications tools, which is expected to cause a paradigm shift in communication methodologies in the future.

The need for web and video conferencing services has resulted in the increased adoption of unified communications tools, offering revenue growth prospects. This has enabled several service providers to tap into newer avenues and improve revenue generation and market penetration during the lockdown period. For instance, Zoom Video Communications, Inc. doubled its revenue in the first quarter of 2020 compared to the first quarter of 2019, which can be primarily attributed to the rapid adoption of its web conferencing solution. Additionally, service providers such as Cisco Systems, Inc. have also started enabling healthcare providers to set up war rooms equipped with interactive video communication devices to improve COVID-19 response efforts. The rise in demand for telehealth and contactless healthcare and communication services amongst doctors and patients offers an impetus to the market growth.

Product Insights

The on-premise segment dominated the unified communications market in 2020 and accounted for over 50% of the global revenue share. However, the sales of the new on-premise unified communications system and licenses are expected to continue to decline over the period owing to the deployment complexity and challenges in managing a modern full stack UC platform. Besides, firewalls and session border controllers need to be configured for access to remote users. Thus, the demand for on-premise UC solutions is expected to decline over the forecast period.

On the other hand, the hosted UC segment is expected to record the highest CAGR due to lower capital expenditure, operating expenses, and total ownership costs. Enterprises are shifting toward hosted UC solutions for scaling up their storage capacity owing to the simple and predictable operating cost model. The hosted solution provides a single UC platform that can deliver collaboration and communication solutions across multiple channels. Hybrid unified communications is another integrated solution that combines cloud and on-premises communication services. The hybrid solution provides flexibility to share parts of the communication on the cloud or on-premise platforms.

Solution Insights

The instant and unified messaging segment dominated the market in 2020, accounting for over 34% revenue share. This can be attributed to an emerging need among businesses to engage in quick communications between peers and get real-time notifications of scenarios in mission-critical situations. Unified Messaging (UM) manages regular text messages, fax, and voice messages, all collaborated in a single platform that users can access via a telephone or PC. UM is usually convenient for mobile business users as it allows them to reach colleagues and customers easily.

Voice is still the preferred mode of communication among enterprises. However, businesses are also widely demanding video and messaging services to enable more expansive communication. This has increased the demand for audio and video conferencing solutions in enterprises. As a result, web and video conferencing providers such as Avaya Inc.; Microsoft Corporation; Cisco Systems, Inc.; and Highfive are offering proprietary video conferencing room services. Moreover, the 5G technology is expected to enhance the VoIP system by providing 4K videos to improve sales calls, video conferencing, recruiting, and other daily activities.

Organization Size Insights

Large enterprises accounted for a revenue share of over 79% in 2020. Tech-savvy employees demand an advanced level of communication at work to increase efficiency and productivity. Furthermore, the growing millennial population at workplaces and the requirement of multi-channel are driving the growth of the market. Large enterprises are continuously updating their communication infrastructure to attract the right talent. Thus, with the new generation of workers, the demand for UC is expected to grow in the coming years.

Many vendors have shifted their focus to Small and Medium-sized Businesses (SMBs), which earlier did not comprise the primary market due to the high cost of on-premise equipment and lack of awareness about UC's potential benefits. The new subscription-based cloud UC services are highly suitable for SMEs, giving them access to the latest technology with a lower cost of ownership. As a result, cloud-based services such as Office 365, Skype for Business, and hosted CRM solutions are widely deployed in SMEs. Moreover, UC service providers have developed solutions that provide callers' communication history and details of meeting participants, including calls, audio, and video conferences and e-mails. Initially, UC was considered an independent application area; however, UC services have been offered as part of the vendors' larger applications and work areas in recent times.

End-use Insights

The enterprises sector accounted for the largest revenue share of 49.23% in 2020. Factors such as increasing business operations and a higher number of cross-functional teams and remote workers have facilitated corporations to deploy unified communication solutions at the enterprise level to ensure seamless communication practices. The obligation to engage in quick meetings and update co-workers about essential strategies has resulted in the faster acceptance of unified communication solutions. Furthermore, features such as video conferencing, VoIP calling, broadcasting and webinars, and screen & file sharing help to enhance business operations and save time.

The government sector captured a significant market share, accounting for over 25% of the global revenue in 2020. The government sector is widely deploying video conferencing tools for effective communications between remote offices of different departments. The modern government phone system provides a separate conference bridge to every user, making UC an ideal platform to host virtual meetings, instant messaging, and mobile e-mailing. Government initiatives regarding digital transformation are expected to boost industry growth over the forecast period. For instance, the Indian government's Digital India initiative aimed to connect 250,000 villages with high-speed connectivity by 2019, which has promoted the growth of the UC market. The smart city program promotes citizen engagement activities through Government-to-Citizen (G2C) services, boosting the use of unified communications solutions.

Regional Insights

Europe dominated the market for unified communications in 2020 with a revenue share of 35.04% and is estimated to dominate the market over the forecast period. The increasing UC demand in the region has given numerous vendors the opportunity to establish their businesses. For instance, in January 2019, Yamaha Corporation, one of the prominent UC vendors in Japan, founded its business function in Europe, focusing on prime countries such as Germany and U.K. In September 2019, Panasonic Corporation also launched its first European cloud-based UC services in France and Spain. Before this launch, the company partnered with Blue Face Ltd., an Ireland-based UCaaS solution provider, to develop UC solutions.

Asia Pacific is expected to exhibit the highest CAGR over the forecast period. The growth can be attributed to the increasing emphasis on collaboration and cost-cutting practices to ensure better resource utilization in the region. Sectors such as Banking & Financial Services (BFS), Business Process Outsourcing (BPO), government, telecom, logistics, and hospitality have turned to unified communications to enable efficient services. As a result, the Malaysian Administrative Modernization and Management Planning Unit (MAMPU) has started MyGovUC services, solely focusing on unified communications and collaboration services for the public sector.

Key Company & Market Share Insights

Companies such as Microsoft Corporation and Mitel Networks Corp. have extensive flagship offerings in the market, providing consistent end-user experience across various sectors. Moreover, the market has witnessed several product launches and merger & acquisition activities in the last few years. For instance, in October 2019, Avaya Inc. announced a strategic partnership with RingCentral, Inc., a U.S.-based communication and collaboration solutions provider. The partnership was aimed at jointly developing UCaaS programs by leveraging the expertise of both companies.

Moreover, many companies are focusing on increasing their subscription revenue by combining increased Average Revenue Per User (ARPU) and user expansion. To increase ARPU, companies are serving a higher number of enterprise accounts. Furthermore, innovation and product differentiation are few other factors helping key players to capitalize on the market share. For instance, RingCentral, Inc.’s cloud-first approach to communication technology has put the company in the innovator category. Some of the prominent players operating in the global unified communications market are:

• Cisco Systems Inc.

• Avaya, Inc.

• Alcatel-Lucent

• IBM Corporation

• Plantronics Inc.

Unified Communications Market Report Scope

Segments Covered in the Report

This report forecasts revenue growths at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2028. For this study, Grand View Research has segmented the global unified communications market report based on product, solution, organization size, end-use, and region:

• Product Outlook (Revenue, USD Billion, 2018 - 2028)

  • Hosted

  • On-premise

• Solution Outlook (Revenue, USD Billion, 2018 - 2028)

  • Instant & Unified Messaging

  • Audio & Video Conferencing

  • IP Telephony

  • Others

• Organization Size Outlook (Revenue, USD Billion, 2018 - 2028)

  • SMEs

  • Large Enterprises

• End-use Outlook (Revenue, USD Billion, 2018 - 2028)

  • Enterprises

  • Education

  • Government

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Billion, 2018 - 2028)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

    • New Zealand

  • South America

    • Brazil

  • Middle East and Africa