I’m tired of the analysts throwing out unsubstantiated forecasts. It’s like they can’t read an S-1 filing or an earnings transcript.
UCaaS (unified communications as a service) is already shifting to CPaaS (Communications Platform as a Service) , which is basically what Twilio does. Vonage started this shift when it acquired Nexmo. Now Telestax and many others are jumping into the CPaaS game. (Probably because most businesses don’t want UCaaS; they want reliable dial-tone and maybe a few other functions. Texting to landlines is a CPaaS function. Adding voice and texting (SMS) to apps like Uber and Lyft is done with CPaaS.
I wasn’t joking about CPaaS replacing UCaaS. Look at the number of CPaaS providers: Twilio, Zang (by Avaya), Kandy (by Genband), Vonage, Zilkr, Teletax. And now Bandwidth.com swings to CPaaS just prior to filing its IPO.
When you consider that of the 15 million cloud seats analysts proport to Broadsoft, more than one-third are SIP Trunks from LECs like XO and Windstream. Comcast is a big Broadsoft customer but most of its voice lines are SIP trunks (think business and residential phone lines).
“New Q2 data from Synergy Research Group shows that the UCaaS market is accelerating at an annualized rate of 29%, as strong UCaaS adoption continues to drive the market. Retail UCaaS services account for well over 80% of the total market, though the smaller wholesale UCaaS segment is growing considerably stronger at 45%. UCaaS market is now generating revenues exceeding $400 million per quarter and approaching $2 billion annually. RingCentral is the market leader based on quarterly revenues and subscriber counts, followed by 8×8, Mitel, Broadsoft, and Vonage.” [source]
Synergy, are sure UCaaS is growing at 29%?
8×8 is getting 20% growth; Vonage is at 23%. Both are slowing down because it is hard to keep that sales machine going.
RingCentral was the largest market share gainer over the last year in the UCaaS industry according to Synergy Research. Yet Software Subscriptions Revenue up 28% year-over-year to $110 million. So how do you get 29%???
Avaya has been in BK. Shoretel got bought by Mitel. Cisco gave up on HCS and is betting on Spark and CallManager. And those were your market leaders per your chart.
And then Synergy goes on, “RingCentral has taken the lead in terms of quarterly revenues and subscriber counts in the competitive Unified Communications as a Service (UCaaS) market, followed by 8×8, Mitel, Broadsoft, and Vonage. It’s a market that is rapidly approaching $2 billion annually.” It’s more than $2B since Vonage + RingCentral + 8×8 + Mitel will give you $2B in revenue. That doesn’t include BSFT or Cisco. Or the other 2000 UC providers.
Or even the 400+ Providers reselling BSFT like these guys:
CenturyLink, Windstream, Altice, Charter, Comcast, AT&T, Verizon (in many products including One Talk and VCI), Bell Canada, C Spire, IPFone, PBX-Change, Coredial (wholesale), Masergy, Bluip, Doublehorn, Nextiva, Evolve IP, Vonage, Sotel, Stage2, DSCI/TPX, Momentum Telecom (wholesale and more than two-thirds SIP Trunks), ALTUS (Tenn), Inteliquent (ANPI), Onvoy/Voyant, Broadsmart (magicjack), XO, Michigan-based INVOIP, Access Point, Granite Telecom, MegaPath,
Birch, Telstra, Frontier, Shaw (Canada), MetTel and Vocal IP Networx to name some of them.
And people pay for the guidance from analyst firms. The folks over at UC Strategies had a field day with the Gartner MQ for UCaaS. There should be some big disclaimers on these reports because they are but a sliver of the market reality. Buyer beware!
NOTES:
Mitel revenue is $800M
RC revenue is $475M
Vonage Biz UC is 49% of $252m = $123 x 4 = $492M
8×8 is $250M
Nextiva at $120m
Evolve IP at $70m
Just to name a few of the numbers that are publicly available. Add in revenues from Fuze, BroadCloud, Jive, etc.
Want more info like this? Purchase my 2017 Hosted PBX Market Report. If you have questions, call my office at (813) 963-5884
The report contains: (1) How big is the market (a look at forecasts); (2) About the UCaaS buying process; (3) Overview of over 20 UCaaS providers with numbers where I can get them and some interesting stats; and (4) My view of the market.