Frost & Sullivan has just released its latest web conferencing research, and we believe that the growing ground swell of demand for online collaboration will continue to fuel growth in the global market. Valued at $725.4 million in 2005, we forecast the market will reach $2.9 billion in 2011. This year and next it’s reaching a pivotal point, as enterprises look to deploy the technology to more users, and vendors pursue new deployment models, partnerships, and pricing structures.
We expect to see several key trends in web conferencing for the next 12-18 months, including integration with other communications applications (in the move toward unified communications), better useability, and more cost-effective pricing. All are combining to help web conferencing establish itself as a ubiquitous tool that’s part of everyday business communications. As a result, we expect the market to experience impressive growth (CAGR - 25.9 percent), representing a significant market opportunity for real time collaboration and unified communications vendors. Here’s a breakdown of the key issues.
Unified Communications. Companies are starting to get seriously interested in tying all their communications technologies together. A complete UC application includes a web conferencing element, although in this context, large-scale webinars are far less important than smaller, more intimate online sessions that enable application sharing and true collaboration. UC tools promise to make online collaboration more mainstream and commonplace, as employees get used to launching sessions with a single mouse click. I expect to see significant growth in the use of, and market for, this more targeted (in session size and scope) web conferencing sector. (We’re also starting to see vendors connect web conferencing to back-end business processes, to enable collaboration right when it’s needed most.)
Meanwhile, of course, companies will still see value in larger, more traditional web conferences, in which information is pushed out to a large audience; indeed, as users get more comfortable collaborating online in smaller groups, they will be more likely to host and attend larger web meetings, too.
Enterprise Deployments. Traditionally, web conferencing has been sold at the departmental level. It’s not unusual in large enterprises to find a dozen vendors supplying web conferencing services to one group or another. That’s changing, as IT gets involved in the decision-making and purchasing process. There are lots of good reasons for enterprise standardization, including cost efficiencies, streamlined support and end-user training, and the ability to drive usage throughout the organization. It’s also good news for vendors, who have the potential to tap many more users in the months and years to come—but it also means they need to adjust their sales (and product) strategies accordingly.
On-Net Applications vs. Hosted Services. As more companies deploy web conferencing as part of an overall UC strategy, and as they look to do so enterprise-wide, they are moving away from using hosted services to installing and managing web conferencing applications on the network. But don’t ring the death knell for hosted services just yet; plenty of small and mid-size organizations want software as a service, and others need to tap hosted offerings periodically, for large special events.
Flat-Rate Pricing. All the trends above are changing how web conferencing vendors price their systems. Traditional per user/per minute rates are quickly giving way to flat-rate models that let companies use an unlimited amount of conferencing for a single fee. On-net applications are priced this way, according to the traditional software model: You pay for a user license, then 18%-20% annually for maintenance and support. Now even service providers are getting into the act, offering named or concurrent user licenses for a single annual fee (and free participant attendance up to some pre-set number, which seems to hover around 25 people). That ensures users can conduct as many online meetings as they want or need, without incurring overage charges—or the wrath of their managers. This shift in pricing is critical for IT (whose budget-based buying decisions don’t look kindly on unpredictable per-minute charges), and it’s the only way to ensure web conferencing becomes a day-to-day business communications tool.
While the global demand for web conferencing is rising, the hyper growth seen in early years of technology inception is starting to ebb, thanks in large part to those same increased pricing pressures. And while there is an emphasis on integrating web conferencing with widely used communications and business applications, point products still currently dominate usage. Today, web conferencing is still primarily proving its value and ROI as an "external facing" tool, driving better enablement of business goals for sales, marketing, training, and investor relations. For more on the new research, please visit www.frost.com.