IDC Says UC&C Markets Continue Strong Growth and Shift of Market Focus is Obvious in Future Roadmap

KUALA LUMPUR, 3 June 2014 – The recent IDC’s Asia/Pacific Semiannual Collaborations and Video Tracker revealed market shares of major Unified Communications & Collaboration (UC&C) vendors in Southeast Asia have inched up 5.7% to US$221.2 million in 2H13 (second half of 2013), compared to 1H13 (first half of 2013). Other key findings include:

• Factory revenue in 2013 hit US$430.8 million, or a slight 2.1% growth on a year-over-year (YoY) basis due to deterrent factors such as "as-a-service" (UCaaS) ,cloud-based and freemium offerings

• Enterprise telephony continues to play an integral part of the UC&C market, dominating 42.8% of total revenues in 2H13, followed by enterprise collaboration apps (32%), contact center applications & equipments (14.7%) and enterprise videoconferencing solutions (10.6%)

• Although enterprise telephony has recorded the largest proportion from the UC&C market, total market share has dwindled 7.8% compared to 2H12. This short fall was mainly caused by traditional PBX/ key system, analogue and digital phones where IP telephony market continues to propel its strong growth in the region with 6.1% YoY. On the contrary, enterprise collaboration apps, contact center and enterprise videoconferencing solutions have sparked with 2.5%, 1.8% and 3.7% growth respectively

"We see IP telephony will continue stemming in the region as traditional PBX/ key system will soon reach the end of its life cycle, companies will need to equip themselves to get ready to tap the upcoming ‘mega upgrade cycle’ such as IP hardware and IP PBX systems/ lines,” said Tan Hwee-Xian, Market Analyst, Communications, IDC Asia/Pacific. “There are continuing growing interest in the implementation of enterprise collaboration apps, videoconferencing and contact center solutions in the region. However, with widespread availability of "as-a-service" arriving in the marketplace, we are expecting more UCaaS offerings to appear in the market which will be sharpened up as a key UC trend, as observed in Singapore's market."

Breakdowns of UC&C Markets in Southeast Asia

Singapore – Largest revenue, US$56.14 million
Such mature market has declined 5.7% YoY due to proliferation of future workplace technology with cloud base, freemium and "as-a-service" offerings. 62% of enterprises deemed applicable to reduce spending on UC&C/ videoconferencing-related deployments, however perceived applicable to increase used of managed services and move part/(s) of on-premises deployment to hosted/utility-based service. Collaboration apps comprised the highest revenue with 44.1% from total UC&C market, followed by enterprise telephony (36.3%), enterprise videoconferencing solution (7.1%) and contact center solution (3.9%).

Malaysia – Second largest revenue, US$44.4 million
Enterprise telephony continues to be the largest revenue contributor (47.9%), followed by collaboration apps (30.8%), contact center (13.1%) and videoconferencing solution (8%). Despite the market has surged up 23.9% half-over-half (HoH), total UC market for 2013 has bogged down 9% compared to 2012 due to Malaysian 13th General Election which has plummeted UC&C market in 1H13 by 14.5% over the same period of time in 2012. Such drastic downward trajectory has affected 2013 market, causing last year’s market to be less stellar than it was in 2012.

Indonesia – Third largest revenue, US$39.9 million
Similar to Malaysia, enterprise telephony is the largest revenue contributor (46.8%), followed by collaboration apps (30.4%), videoconferencing solution (13.8%) and contact center solution (9%).

In terms of HoH comparison, 2H13 UC&C market has dropped 4.1%. This shortfall was caused by the weakening Rupiah which has once plummeted to over 12,000 per US dollar during its peak (lowest ever since 2009) and has caused both economic curse and windfall for local businesses. Festive season like Hari Raya Aidilfitri has also led to a low IT expenditure in 3Q13 and spurred across to 4Q13 with its lethargy exchange rates.  Despite the shortfall, the market has indicated a strong 9% YoY growth compared to 2H12, notably IP telephony market with a sharp 36% YoY growth, driven  by the presidential election that will be held in 2014 along with local elections which will spur the IP telephony market.

Philippines – US$38.9 million in revenue
UC&C continue to gain impetus in Philippines where it has sustained its stronghold as top contact center hub in Asia Pacific. Total UC&C market has accumulated up to US$38.9 million in 2H13, showing a 24.3% YoY growth, highest among all countries in Southeast Asia. Philippines has also experienced the most severe natural calamity last November with typhoon Haiyan, although the devastation was massive, it was concentrated in the central and eastern provinces where center of BPO in greater Manila was not affected. Enterprise telephony comprised the highest revenue share (40.8%), followed by contact center solution (28.7%), collaboration apps (23.4%) and videoconferencing solution (7.1%).

Thailand – US$32.1 million in revenue
Despite political crisis and economic recession in late 2013, Thailand UC&C market grew in terms of revenues, around 13.3% in 2H13 compared to the same period in 2012 and increased over the 1H13 by 12.8%. Enterprise telephony continues to be the largest revenue contributor in UC&C space (US$12.9 million), followed by collaboration apps (US$7.7million), contact center (US6.9 million) and videoconferencing solution (US$3 million). The political unrest has resulted in delay of many projects delivery, however, there were many deals for UC&C solutions that most key vendors closed in the 3Q13 which resulted in good market performance and has compensated for the slowdown in demand and shipments in 4Q13.

Vietnam – US$11.1 million in revenue
Vietnam is relatively small in UC&C market as total 2H13 has recorded US$11.1 million, representing 50.5% of total revenues generated throughout the year of 2013. The market has experienced 6% YoY growth compared to 2H13 with enterprise telephony continues to be the largest revenue contributor in UC&C space (49%), followed by collaboration apps (24.2%), videoconferencing (19.4%) and contact center solution (7.5%).

IDC is optimistic towards such emerging market as demands on UC&C remained at the high side with 70% of enterprises deemed "not applicable" to reduce spending on UC&C/ videoconferencing-related deployments. This implied that Vietnam will continue to invest on-premise UC&C/ videoconferencing related deployments.

"We believe UC&C industry will continue to grow in the region; however different markets will have different needs. Vendors and service providers, especially local providers should consider the needs of local market as well as their ICT budget when comes to future roadmap to offer the UC&C solutions that could cater the needs of different markets," added Tan.

IDC forecasts UC&C markets in Southeast Asia will worth US$650.6 million by 2018, up from US$433.6 million today. This marked 8.5% of Compound Annual Growth Rate (CAGR), although there are signs of market growth slowing down in traditional on-premise market in the region.