IDC: Cloud, software options deflate sales of enterprise video systems

Sales for this market were 'dismal' in the first quarter of 2014

Sales of video conferencing and telepresence hardware systems are declining, hurt by an increase in cloud and software-based options that often are cheaper and simpler to deploy, according to an IDC study.

In 2014's first quarter, video conferencing equipment revenue shrank 16 percent worldwide year over year to US$473.5 million, while units sold fell 6.2 percent.

Market leader Cisco took a big hit. Its video equipment revenue dropped 22.4 percent. It sat at the top of this shrinking market in the first quarter with a 40.1 percent share of the revenue.

Polycom, whose revenue fell 8.4 percent, was in second place with a 29 percent share, while Huawei took the third spot with a 7.8 percent share and a 2 percent drop in revenue.

So what's behind the market's depression? Customers are delaying purchases as they look for alternatives that are less expensive, software-based and cloud-hosted, signaling a shift away from hardware-based products, according to IDC.

However, video remains a key component of enterprise collaboration stacks in many organizations.

"IDC believes that among the challenges customers are currently trying to work through are a market transition and determining exactly what, when, and how to provision their video deployments as more software-centric and cloud-based service offerings become part of the enterprise video market landscape," said IDC analyst Petr Jirovsky in the statement.

Looking at a couple of specific market segments, multi-codec immersive telepresence equipment revenue fell 33.5 percent and its units sold dropped 26 percent, while room-based video system revenue fell 10 percent and its units sold were down 1 percent.

Revenue dropped year over year in all major regions, falling 19.8 percent in Europe, Middle East and Africa, 16.4 percent in Asia-Pacific, 13.4 percent in North America and 5.1 percent in Latin America, IDC said.

A silver lining is that "most or all" of this market's vendors are responding to the shift by also offering cloud-based video alternatives, according to IDC.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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Juan Carlos Perez

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