The worldwide video conferencing market is continuing to struggle in the face of an uncertain global economy and slowing sales of expensive, high-end immersive telepresence systems, according to analysts with market research firm IDC.
IDC's third-quarter numbers, reported Nov. 29, show a trend that has continued throughout the year, as the shift in enterprise video conferencing has been away from massive room-based systems and more toward smaller groups and mobile devices, according to analysts.
"Despite the overall weak 3Q12 performance in the worldwide enterprise videoconferencing and telepresence market, we still see adoption being driven by video integrations with vendors' UC and collaboration portfolios, and with the increasing use of video among small workgroup, desktop and mobile users," Petr Jirovsky, senior research analyst of Worldwide Networking Trackers Research for IDC, said in a statement. "Video as a key component of collaboration continues to place high on the list of priorities for many organizations and we anticipate a return to positive market growth in 2013."
However, while video may rank high on the list of priorities for organizations, it's taking them longer to decide on how they will adopt it, according to Rich Costello, senior analyst for IDC's Enterprise Communications Infrastructure unit.
"As expected, a down year for the overall enterprise videoconferencing and telepresence market continued in 3Q12. This is mostly due to uncertainty stemming from macroeconomic concerns, and a continuing decline in high-end immersive systems," Costello said in a statement. "We also feel that customers are considering more strategic approaches to deploying video technology and applications, leading to longer decision cycles."
Global video conferencing revenue fell 4.8 percent in the third quarter from the same period in 2011 but jumped 7.1 percent from the second quarter. Revenue for larger, multi-codec immersive telepresence systems showed the sharpest decline, with a 35.8 percent year-over-year drop. Sales of other components in video conferencing systems—including gateways and firewalls—dropped 26.8 percent. However, the single-codec segment of the market saw revenue grow 0.4 percent, personal video conferencing jumped 8.7 percent, and sales of video multi-control units (MCUs)—for multi-party video conferences—rose 5 percent.
Video conferencing received a lot of attention from businesses several years ago when the global recession came roaring in, with executives seeing the technology as a way of increasing employee productivity while helping drive down expenses, including travel costs. In recent years, the focus of many organizations and tech vendors has been on mobility, given the rise in the use of mobile devices like smartphones and tablets—and trends such as bring-your-own-device (BYOD)—as well as the growth in the numbers of remote and mobile workers.
Businesses are looking for ways to easily bring video conferencing capabilities to any workers on any devices, and are demanding greater interoperability among vendor platforms.
There also is a trend among vendors toward more software-based solutions. Established players like Cisco Systems, Polycom and Logitech's LifeSize Communications business are aggressively pushing software-based portfolios, while smaller vendors like Vidyo and Blue Jeans Network are building their businesses on platforms that are primarily or totally software-based.
According to IDC, Cisco continues to be the dominant player in the video conferencing and telepresence space, with 43.3 percent of the market. That's better than the 39.3 percent market share in the second quarter, but still down from the 48.3 percent in the third quarter last year. Cisco saw revenue increase 17.9 percent from the second quarter, but that was a weak quarter for the market, and compared to the third quarter in 2011, revenue was still down 14.7 percent, according to IDC analysts.
Polycom saw revenue fall 11.8 percent from the second quarter and 15.2 percent from the same period last year, but is still solidly in second place in the market, with a 25 percent share.
Geographically, Latin America saw a 13.7 percent jump in video conferencing sales in the third quarter, compared with the third quarter in 2011, while the Asia-Pacific region had a revenue increase of 9.7 percent. However, revenue was down 11.5 percent in North America and 10.8 percent in Europe, the Middle East and Africa.