UCaaS Market Exploding, Enterprises Increase Adoption

Synergy Research Group just released data from Q2 highlighting an explosion of growth in the unified-communications-as-a-service (UCaaS) market. According to the report, growth is being driven by rapid UCaaS adoption among large enterprises, while a high number of legacy private branch exchange (PBX) systems across the business landscape creates massive upside potential for the market. Read on for a summary of Synergy’s report and what it means for businesses.

UCaaS Defined

Synergy defines UCaaS as a communications service where providers host and develop their own proprietary cloud PBX solutions. These solutions are enabled by public-switch-to-telephone network (PSTN) connectivity and provide integrated UC applications like conferencing and instant messaging and presence. The result is what Jeremy Duke, Synergy’s Founder and Chief Analyst, calls “a richer and more cost-effective communication system.”

UCaaS Growth Snapshot

  • The UCaaS market is accelerating at an annualized rate of 29%.
  • In total, the market is generating revenues exceeding $400 million per quarter and approaching $2 billion annually.
  • Retail UCaaS services make up over 80% of the total market.
  • The smaller wholesale segment of the market is building at 45%.

Synergy’s report also lists the UCaaS space’s 2017 market leaders. Based on quarterly revenues and subscriber totals, RingCentral is top of the list, with 8×8, Mitel, BroadSoft and Vonage rounding out the top five. The market continues to be heavily concentrated in the United States, accounting for over 80% of all revenue for Q2.

Can the UCaaS Market Keep It Up?

The answer is, most likely, “yes.” In the analysis, Duke noted how UCaaS is shifting from being a communication tool for small companies to an enterprise-level solution. This growing enterprise adoption, coupled with a large amount of organizations expected to migrate away from outdated technologies in the near future, suggests the market is trending upward.

“We are seeing an up-market acceleration of UCaaS adoption, moving from serving mostly smaller sized organizations now to gaining traction in businesses of over 100 seats and over 1,000 seats. Given that the displacement of premise PBXs remains low today, there is ample ground for UCaaS to find strong growth in displacing these legacy systems over a long stretch of time,” Duke stated in a release on the Synergy website.

To get more insights from Synergy’s UCaaS market report, read the full release here.

What Does This Mean for Businesses?

With the UCaaS market continuing to grow, now is the perfect time for companies of all sizes to evaluate how they can create a more flexible, integrated collaboration experience for their workforces. UCaaS may not be right for every organization, but it does offer benefits that business leaders are wise to consider.

At Select Communications, we’re committed to helping companies align their collaboration requirements with the right tools and technologies — whether that includes UCaaS or another solution. To help you better understand if UCaaS can benefit your organization, read our blog post, “Why Switch to UCaaS?”