Video Conferencing Spending to Hit $5 Billion in 2015: Infonetics

Spending on video conferencing and telepresence technologies will grow as businesses look to drive down costs and increase productivity. Right now, Cisco and Polycom are leading the charge.

Revenue in the burgeoning video-conferencing and telepresence market grew 18 percent, to $2.2 billion, in 2010, and will hit the $5 billion mark by 2015, according to market research firm Infonetics Research.

The trend is being driven by enterprises that are looking for better ways to communicate to their employees, particularly as workforces become increasingly mobile and distributed, according to Infonetics analyst Matthias Machowinski. Businesses also see video conferencing as a way of driving down travel expenses, a trend that became especially acute during the global recession, when companies were looking for any way to shave costs.

"Communicating via video continues to be one of the top trends in telecom, as evidenced by strong growth in the enterprise video market," Machowinski said in a statement. "Businesses worldwide are looking for richer means of communications with their employees, partners and customers, and enterprise video conferencing and telepresence solutions are a natural fit. The biggest winners in the enterprise communications market will be those who offer solutions that are multi-modal, visual (e.g., video-based) and support the collaboration requirements of globally distributed organizations."

According to the March 24 report, Cisco Systems-particularly after its $3.4 billion acquisition of telepresence rival Tandberg last year-is the top provider of video-conferencing and telepresence technology, garnering about half all the revenue in 2010. Polycom is solidly in the second spot for revenue, but leads in units shipped, according to Infonetics.

The two companies have aggressively built out their video-collaboration offerings and have expanded their reach through both new products and partnerships. Cisco in February expanded its video-conferencing offerings with a host of new and upgraded devices, with company officials saying that enterprises will continue to embrace video collaboration as they look to increase employee productivity and reduce travel costs.

"Will it eliminate travel? No," Guido Jouret, CTO of Cisco's Emerging Technology Group, said in an interview with eWEEK at the time. "Will it take a significant bite out of it? Yes."

Cisco officials have predicted that by 2014, more than 90 percent of all Internet traffic will be video-based, and that video will play a significant role in an online-collaboration market that they say could hit $30 billion.

Polycom has actively pursued partnerships as it looks to expand its reach in the market. On March 22, the company announced a partnership with Motorola Mobility to bring its personal telepresence technology to Motorola's Xoom tablet PC. In recent months, Polycom has also announced new or expanded partnerships with Microsoft, Shoretel, Ericsson and Samsung.

In their report, Infonetics analysts also said that multi-purpose room systems-due to their versatility-would account for most of the enterprise video-conferencing equipment businesses purchase. In addition, immersive telepresence systems will have the highest growth rates of all video-conferencing equipment.

Infonetics' report came out about the same time as a study by Forrester Research, in which analysts said that enterprises as well as small and midsize businesses are investing in collaboration technology-including video conferencing and telepresence systems-but are not yet seeing the full benefits from the products. According to Forrester analyst T.J. Keitt, the businesses are seeing reduced travel costs and improved communications, but need to more closely align their collaboration technologies with business processes to get more benefits, such as improved project management and faster decision making.

The Forrester study found that 29 percent of enterprises surveyed are investing in new or upgraded room-based video-conferencing systems, a trend that would bring the total number of implementations to 62 percent of businesses in the next couple of years. That, combined with the growth of desktop video deployments, illustrates the emphasis businesses are placing on video, Keitt said in the report.

Thirty-three percent of respondents to Forrester's survey said they plan to implement desktop-video-conferencing technology.