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BroadSoft: Cloud UC Overtaking On-Premises Offerings

A survey by the UCaaS provider found that by 2020, cloud-based UC will account for about 41 percent of the overall market.

cloud UC

The cloud-based unified communications market will grow rapidly over the next several years, particularly among small and midsize companies, according to a survey released this week by BroadSoft.

The vendor, which provides unified communications-as-a-service (UCaaS) offerings, surveyed 129 service providers and industry leaders during its BroadSoft Connections user show in October 2015 to get a better gauge on what is going on in the cloud UC segment of the industry. What BroadSoft officials found is that cloud UC market penetration will jump almost six times between 2015 and 2020, when it will account for about 41 percent of the overall UC space. It has about 7 percent of the market today.

For small businesses—those with fewer than 100 employees—UCaaS will make up 48 percent of the market by 2020, up from 10 percent currently. For midmarket businesses (100 to 999 employees), market penetration will grow from 5 percent in 2015 to 37 percent in 2020, and in the enterprise segment, it will be 20 percent by the end of the decade, up from 6 percent today.

"Enterprise UCaaS is proving disruptive due to its superior value proposition—reduced complexity, lower total cost of ownership, and greater productivity and mobility for the increasingly millennial and distributed workforce," Taher Behbehani, chief marketing officer at BroadSoft, said in a statement.

The growth of UCaaS at the expense of on-premises is clear, Behbehani said, noting that 90 percent of survey respondents rated cloud UC and hosted PBX as their preferred strategy, while 10 percent are still pushing on-premises PBX.

BroadSoft's survey results echo what industry observers are finding. IDC analysts have said that the cloud communications market will grow from $123 million in 2013 to $7.5 billion in 2018, while IHS Infonetics in March 2015 said that in its own survey, more than half the respondents said they will be running at least some of their UC services over private or public clouds by 2016.

In another finding from the BroadSoft survey, 42 percent of respondents said that more than half of the UC interactions for businesses of all size in 2020 will happen over mobile devices, such as smartphones and tablets, while a third of all small businesses will opt for mobile-only UCaaS and hosted PBX offerings, essentially eliminating the need for desk phones.

In addition, 82 percent of respondents said the importance of email as a communication tool will be overtaken by the growth of OTT (over-the-top) integrated messaging and collaboration applications. Eighteen percent said email will still be a key business collaboration model.