Cisco see Drop in Videoconferencing Revenue

News Article - Thursday, 22 November 2012 12:45

By: Kerry Butters Category: Connectivity

Whilst videoconferencing is set to be the next big thing as faster connections and more collaboration takes place, market leaders Cisco, who in Q2 last year held a 49.3% market share, have reported a loss in revenue, despite increasing interest from enterprises.

This is due, it has been reported, to the "uncertain global economy and reduced spending in the public sector”, which according to IDC is driving down revenue in the market. This has fallen overall by 6.9% in the first quarter of this year.

Analysts IDC says that the immersive telepresence space also took a hit, falling 38.4% "from the same three months last year”.

"Several of the video vendors pointed to the currently difficult macroeconomic situation, as well as a cutback in spending in key areas such as the public sector, including government and education, as reasons for the weak quarterly results," IDC’s Rich Costello said in a statement.

"Although these factors are expected to persist and influence results somewhat in the second half of 2012, interest in video continues to grow among organizations, especially those with good use-case requirements."

However, not all vendors had such a bad quarter, IDC point out, competitors Polycom saw a rise in revenue, although growth was down 4.3% from the second quarter of last year. The lack of stability in the market could be a result of shifting trends, such as those presented by BYOD, meaning vendors are having to concentrate more on software, especially that aimed at tablets and smartphones.

"Despite the overall weak 2Q12 performance in the worldwide enterprise video conferencing market, we still see adoption being driven by video integrations with vendors' UC and collaboration portfolios, and with the increasing use of video among small workgroup, desktop and mobile users," Petr Jirovsky, senior research analyst for IDC's Worldwide Networking Trackers unit, said in a statement.

"Video as a key component of collaboration continues to place high on the list of priorities for many organizations."

However, IDC expects the market to ultimately expand and predicts an annual growth rate of 14.6% by 2016.

Melissa Fremeijer, EMEA senior research analyst for unified communications and collaboration at IDC, said: "Given the trending of an increasingly distributed workforce within a globally interdependent economy, the business case for videoconferencing has never been clearer.

"While the key driver for investing in videoconferencing has initially been the need to reduce travel costs, we find that increasingly companies are interested in the benefits of enhanced team collaboration and effectiveness of meetings."

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