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Cloud over moribund videoconferencing sales

If next-gen workers want video where are the global sales?

Quarter after quarter it's getting increasingly difficult to find new words to describe how terrible the market for videoconferencing and telepresence equipment has become.

It's likely no surprise to providers peddling these wares that sales remain in a double-digit tail spin with little sign a recovery is afoot.

IDC's Worldwide Enterprise Videoconferencing and Telepresence Equipment QView report tells the sad tale. Overall videoconferencing equipment revenue for Q1 came in at $473.5m, a 20 per cent drop sequentially and a 16 per cent decline year over year.

Regionally, only Latin America managed to inch ahead, seeing a modest 1.8 per cent lift in revenues from last quarter, though it still dropped five per cent from Q1 of 2013.

All the other major regions showed sequential and annual revenue declines Q1 with North America down 13.4 per cent year-over-year. EMEA was down 19.8 per cent and Asia-Pacific dropped 16.4 per cent.

"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," said IDC analyst Rich Costello, who specialises in enterprise communications infrastructure.

"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."

On the vendor front Cisco Systems maintained its top position with about a 40 per cent share of the withering market despite a Q1 drop in associated revenues of 27.8 quarter over quarter and 22.4 per cent from last year.

Polycom stayed in second place with 29 per cent market share and a more palatable reduction in Q1 revenues in the space of 7.3 per cent sequentially and 8.4 per cent year over year.

The segment's biggest loser was Huawei, which saw sequential revenues drop 42 per cent and a 1.9 per cent fall from a year ago. Huawei holds third position in the market with a share of just under eight per cent.

The ongoing brutal market for videoconferencing and telepresence wares belies what seems to be an undercurrent of support for the capabilities of such systems at least -- if not their actual purchase and implementation.

Six months ago a study, admittedly co-sponsored by Cisco along with Redshift Research, seemed to indicate that unified communications and video conferencing could be poised for a major boost in the workplace as younger workers rise through the management ranks and bring their preferred methods of communicating and collaborating with them.

According to Cisco and Redshift, this next generation of executives under age 35 will rely on business-class video to connect with teams, colleagues, suppliers and customers, and to deliver products and services.

Some 1,300 young business leaders were polled, with three out of five saying they expect increased use of video in their businesses in the next five to 10 years. Of those, 87 per cent said video holds positive benefits for the organisation such as improved performance for tele-commuters and in attracting top talent.

Many also said they would choose to work for a more video-enabled organisation over one with limited investment in video communications because the former demonstrates it "cares about using technology to fuel business growth".

In addition, 94 per cent of survey respondents in organisations with fewer than 400 employees said video is a key tool in overcoming language barriers in the increasingly global workforce.

So where's the motive force these young video-hungry decision makers were supposed to create? According to analysts, it may just not have started yet, and some of it is being shunted to software-based services and the cloud.

"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 organisations," said IDC research manager for worldwide networking trackers Petr Jirovsky.

"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."

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