The New Zealand on-premise Unified Communications (UC) market was worth $97.7 million in 2012. This represents a decline of 4.5% from the previous year, mainly due to organisations reducing IT spending and deferring UC investments amid challenging economic conditions. Cost and efficiency pressures are driving the demand for hosted and cloud based solutions, which offer greater flexibility and with minimal maintenance overheads.
Frost & Sullivan forecasts the overall NZ UC market to grow a CAGR of 6.2% from 2012 to 2019. Government and Banking, Financial Services and Insurance (BFSI) are among the main revenue generating sectors for UC in New Zealand. Both these sectors were cautious with UC deployments over the past year, with a marked decline in large deals. Another key factor for the decline in the UC market is the performance of two major application segments. Enterprise telephony and conferencing and collaboration, which accounted for over 50% of revenues, were impacted by market conditions, and experienced revenue decline. Enterprise telephony was particularly affected, declining by 15.6% from 2011.
Changes in business attitudes towards capital intensive UC deployments are driving interest in hosted and cloud based solutions. Organisations are finding it harder to secure funds to invest in expensive UC infrastructure. This is lengthening the decision making process and thereby the overall sales cycle. Organisations are beginning to closely evaluate hosted and cloud based alternatives at the time of their UC infrastructure refresh. This shift in market attitude is forcing UC vendors and channel partners to change their go-to-market strategies.
Audrey William, Head of Research, ICT Practice, Frost & Sullivan ANZ says, “There is a growing demand for flexible and feature rich UC solutions at affordable price points. Vendors such as Interactive Intelligence and Mitel have built their business strategies on addressing this demand, and are experiencing high growth rates. Demand for hosted and cloud based solutions is also beginning to gather momentum as organisations increasingly prefer more flexible solutions that offer usage based pricing. The shift from on-premise to cloud based solutions is tightening profit margins in the UC market. Vendors and channel partners have realised UC related services (including managed services and cloud based solutions) are the growth engine of the future.”
The New Zealand UC market has become a two-tiered market with the top two vendors accounting for over 40% of the overall market and a number of vendors competing for the remaining share. Cisco and Microsoft see each other as the biggest competitors in the market, mainly due to the breadth of UC solutions offered. Both these vendors have a strong collaboration focus and leverage their respective expertise in networks and desktop applications to drive growth.
Contact centre applications were a segment that recorded growth in 2012. While Genesys and Avaya recorded moderate growth, emerging vendors such as Interactive Intelligence recorded triple digit growth. Traditional contact centre vendors will also face competition from cloud based vendors expected to enter the New Zealand market in the next few years. A weaker New Zealand Dollar against the Australian Dollar is making New Zealand an attractive destination for outsourcing customer support functions from Australia. As a result, many Australian businesses moved their contact centres (either partly or fully) to New Zealand. This demand for outsourced contact centres was one of the main reasons the overall contact centre applications market grew in 2012.
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