Demand Favors Hosted IP Telephony and Unified Communications

Businesses in North America are turning to hosted voice over Internet protocol (VoIP) telephony and unified communications and collaboration (UCC) services as they look to focus more on core business functions, eliminate multivendor solutions, and enable greater flexibility during growth or downsizing, according to new research from Frost & Sullivan.

The research firm, in its "North American Hosted IP Telephony and UCC Services Market" report, identified maturing VoIP technologies and new business models, such as cloud UC and UC-as-a-service UCaaS), as the key factors that will propel the market forward. However, it also found that security, control, and reliability concerns will continue to present barriers to uptake.

According to the research, the industry saw& revenue of $1.09 billion in 2012; those numbers are expected to reach $5.95 billion in 2019, spurred by growing demand and the delivery of new services, such as mobility, video, Web collaboration, and contact center solutions.

"Small and medium businesses in North America use hosted services to gain greater flexibility and access to more advanced communications capabilities, while large organizations are making the switch to consolidate infrastructure and streamline vendor relationships," said Frost & Sullivan North America Unified Communications Program Director Elka Popova, in the report. "Going forward, the benefits of cloud solutions for mobile and remote workers as well as increasing service provider focus on service quality and reliability will boost penetration in larger, geographically distributed organizations."

According to Popova, another factor that is expected to hinder adoption of these technologies in some market segments is the heavy investments that many businesses have already made in premises-based communications infrastructure, including some highly customized solutions. Rapid technology and business model evolution and a limited ability to customize or integrate hosted communications services with existing premises-based solutions will also cause some organizations to postpone upgrade decisions, she asserts.

Eventually, though, she expects businesses of all types to abandon their aging premises-based technologies for more flexible hosted VoIP and unified communcations products.

"Cost-effective multitenant solutions are likely to appeal to the SMB market, whereas UCaaS offerings supported on multi-instance platforms help address security and customization concerns in larger businesses," Popova explains. "Even more important is execution. Providers must ensure consistent availability and high quality of service to ensure long-term success in the hosted communications space."

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