Cisco, Polycom Lead Dismal Quarter for Video Conferencing

Delayed customer buying decisions, lower-cost systems and more software-centric products were among the reasons for the poor performance.

video conferencing

Total worldwide enterprise video equipment market revenue in the first quarter of 2014 reached $473.5 million, but the total number of video units sold in the period was down 13.3 percent quarter-over-quarter and 6.2 percent year-over-year, according to a report from IT research firm IDC.

The company's Worldwide Enterprise Videoconferencing and Telepresence Equipment report again showed overall declining results for the first three months of the year, with video conferencing equipment revenue decreasing 20 percent quarter-over-quarter and 15.9 percent year-over-year.

"As dismal as these quarterly numbers are, video as a key component of collaboration continues to place high on the list of priorities for many organizations," Petr Jirovsky, research manager for IDC's Worldwide Networking Trackers, said in a statement. "IDC believes that among the challenges customers are currently trying to work through are a market transition and determining exactly what, when and how to provision their video deployments as more software-centric and cloud-based service offerings become part of the enterprise video market landscape."

While Cisco remains the leader in enterprise video conferencing equipment with a 40.1 percent share of the worldwide market, first-quarter results showed decreases of 27.8 percent quarter-over-quarter and 22.4 percent year-over-year in video-equipment revenue.

Polycom, which ranks second in enterprise video conferencing equipment with a 28.9 percent share of the worldwide market, saw a less drastic quarterly decline of 7.3 percent and a year-over-year decline of 8.4 percent.

Huawei, which, with a 7.8 percent share of the worldwide enterprise video conferencing market, remained in third place, saw a steep 42 percent quarter-over-quarter decline in revenue and a modest 1.9 percent drop in yearly revenue.

"We continue to see the impact of delayed customer buying decisions, lower-cost systems, more software-centric products and competitive cloud-based video service offerings on the worldwide enterprise video-equipment market," Rich Costello, senior analyst for enterprise communications infrastructure at IDC, said in a statement. "The weak vendor results are also indicative of the ongoing transition from a primarily hardware-based reporting model to one impacted by the interest in and growth of video subscription services. On the bright side, most or all of these vendors are now offering cloud-based video alternatives to customers, too–in addition to their own lower cost, premises-based systems."

The report also found video-infrastructure equipment, including multipoint control units (MCUs) and other video-related infrastructure products, declined 29.2 percent quarter-over-quarter and 13 percent year-over-year.

The market was pretty lackluster worldwide, according to the report, with only the Latin American region, with 1.8 percent growth, showing positive quarter-over-quarter revenue growth in the first quarter.

All the other major regions showed quarter-over-quarter revenue declines, and revenue in the North American market fell 13.4 percent year-over-year.