Major vendors under threat as NZ Unified Comms market attracts new players

Major vendors under threat as NZ Unified Comms market attracts new players

As the Kiwi market shifts towards hosted and cloud-based solutions, traditional vendors will face competition from a new breed of cloud-based players.

New Zealand’s Unified Communications (UC) market is emerging from a cycle of weak investments which impacted the market over the last few years.

Cautious spending from both government agencies and businesses delayed IT investments and reduced the number of large scale deployments, as most organisations opted to extend the life of their existing investments.

According to Frost & Sullivan's new report, New Zealand Unified Communications (UC) Market Report 2014, the market recovered from a period of decline to exhibit fractional growth in 2013, though growth rates will continue to be low and opportunities harder to convert for vendors.

The report finds that growth rates picked up in 2014, and is expected to improve to over 3% in 2015 and 2016 with Instant Messaging (IM)/presence and mobility the highest growing segments, followed by enterprise telephony.

Overall, the UC market is forecast to grow at a Compound Annual Growth Rate (CAGR) of 2.6% from 2013 to 2020.

“On-premise deployments will continue to account for the majority of UC revenues in the next five years, although growth rates in the on-premise segment will be much lower compared to the hosted and cloud-based segment,” says Audrey William, Head of Research, Frost & Sullivan Australia & New Zealand.

“On-premise solutions are particularly strong in verticals where there is a greater need for control over the infrastructure, such as government and Banking, Financial Services and Insurance (BFSI) and have sunk significant amounts into their UC infrastructures and would not find it cost effective to switch to a hosted model.”

Top vendors

William says the UC market in New Zealand continues to be a two-tiered market, with the top three vendors - Microsoft, Cisco and Avaya accounting for over 50% of market share, and a large number of vendors competing for the remaining market.

Spark Digital, Dimension Data and Vodafone NZ are the three major channel partners and account for the majority of large deployments in the market.

Of the three, Spark Digital holds a dominant share, advantaged by having telco and systems integration capabilities and will remain a major player in the on-premise and hosted UC market.

New players entering the market will pose greater competitive threat to the established vendors over the next few years. Mitel, ShoreTel and Interactive Intelligence are steadily increasing their footprint; securing customers in the small and mid-market segments and building local market partnerships to grow their footprint.

“In recent years, the UC market has undergone a number of major shifts, such as the move towards integrated applications, video based collaboration, collaboration centric UC and more recently, cloud and mobility based solutions,” William adds.

“However, the combination of mobile devices and cloud-based delivery models is having the most significant effect on shaping the future of UC solutions.

“The growing use of mobile devices within organisations is changing the way that employees collaborate and use applications.

“This has given rise to concepts such as Bring Your Own Device (BYOD) and Activity Based Working (ABW), where mobile devices play a central role.”

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