How Big is UCaaS Market, Really?

At 54 million seats, the worldwide addressable market for hosted PBX in 2018 is valued at $20 billion, Eastern Management Group estimates. Other estimates of global demand have been higher, in the past in the broad unified communications market, including numerous different products.

Some will question the actual “addressable market” sizing. Asia region actual sales are closer to $2 billion annually, according to Frost and Sullivan estimates. The U.S.market is in the range of $4 billion. Some claim the European market was in 2016 more than $10 billion.

source: CoMMfusion

source: CoMMfusion

The other problem is that such forecasts almost always include multiple product categories under the “unified communications” umbrella, including contact center, collaboration, premises PBX and hosted PBX, plus SIP trunking revenues and sometimes professional services as well.

Additionally, although unified communications as a service is a business product, some analysts looking at use of voice over IP more broadly also report relatively big numbers, as they include consumer voice revenue.

The point is that aggregating numerous product segments on a global basis often can lead to bigger numbers, even when the addressable market in any single country is fairly modest.

The point is that the hosted PBX market almost certainly is much smaller than many of the headline numbers would suggest.

In principle, if every business “voice” account is considered as the potential market, and if all unified communications features are assumed to be part of that “voice seat” market, and if we include professional services and the value of access services related to supplying voice,  it might be possible to develop a $30 billion figure for annual unified communications products and services revenue, in total.

Phone system revenues might be included in those figures as well, since, at least in principle, every business “seat” or “user” might be sold as a hosted PBX service, even if, in reality, that never has been the case.

It is one thing to say a potential or addressable market exists, when a new or substitute product is available. Whether that potential emerges in the form of actual sales is the issue. Up to this point, business hosted UC has vastly lagged premises switch implementations.

Scale accounts for much of the demand shaping: larger enterprises almost always find the cost of a premises solution to be better than that of a hosted solution. In essence, owning turns out to be cheaper than renting, at scale.