Business Spending On Video Conferencing To Hit $3.8 Bn

Global business spending on video conferencing will reach $3.8 billion in 2016, driven by an increasing focus on cost-cutting and productivity, according to Ovum.

In a new forecast and report, the independent telecoms analyst predicts that revenues from business video conferencing will grow at a compound annual growth rate (CAGR) of 5.79 per cent from 2011 to 2016, making it one of the fastest growing markets in ICT.

Business spending on immersive video conferencing, often called telepresence – high-end video conferencing carried out in custom-built rooms where participants can see each other in life-size images – will grow even faster. Ovum predicts that telepresence will grow at a CAGR of 19.49 per cent over the same five-year period to become a $1.1bn market in 2016. Major orders for telepresence have already been signed by many global organisations, including HSBC, GlaxoSmithKline and News Corporation, whose executives are using the technology for highly interactive meetings as a replacement for traveling to face-to-face meetings.

“Enterprises are seizing the huge opportunity that video conferencing offers them to cut costs and improve productivity by reducing business travel. They are starting to use video conferencing much more frequently because of ongoing economic concerns, continued efforts to reduce their carbon footprint, enhancements in video technology and price reductions that are improving the business case. The next five years will see solid increases in expenditure from businesses in every region around the globe,” said Richard Thurston, Ovum analyst and author of the report.

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“The improved quality of telepresence in terms of both visual and audio quality is resonating strongly with many large businesses,” continued Thurston. “But these systems are complex to manage, and we forecast that businesses will opt for third-party managed services from operators, systems integrators and equipment vendors to help them with their telepresence installations.” Accordingly, Ovum’s forecast shows that business spending on managed services will increase at a CAGR of 11.5 per cent from 2011 to 2016.

But Thurston issued a note of caution to suppliers. “Operators and vendors must not forget to assist customers to prove the business case for video conferencing. One offering will not suit all businesses, and some businesses will experience longer payback times than others for their video conferencing investments. Technical features must be left for a second conversation.”