If the cloud-based PBX or hosted voice market grows as much as many expect, it will easily eclipse the value of the business phone system market. That could well be the case even if the number of new sales is roughly half owned switches and half managed services.
On the other hand, hosted voice and PBX switch sales are likely to remain a small part of the overall unified communications market, now dominated by messaging and conferencing, and should remain a small part of the overall business voice market as well.
It might seem logical that cloud voice services would displace nearly all premises switches and “do it yourself” business voice. But the key fact about hosted voice services is that they are more expensive, at scale, than use of a premises switch.
In other words, large enterprises often save money by owning their own switches, rather than buying hosted services.
In 2020, hosted PBX might have claimed 40 percent of all PBX services acquired by mid-market companies and 20 percent of new seats added by enterprises, according to Eastern Management Group. In 2010, hosted PBX was only four percent of all phone systems shipped. Now it’s 28 percent, Eastern Management says.
source: Eastern Management Group
A reasonable estimate of potential PBX and hosted voice market value is that the global business phone system market, plus UCaaS alternatives, in 2014, was less than $2 billion. Assume that is all fixed network related and represents “phone line” services.
If every premises switch customer switched to UCaaS, that might suggest a potential global fixed network business phone line market between $2 billion and $3 billion, including both UCaaS and infrastructure (business phone system) purchases.
The mobility business, and business fixed voice overall, arguably are far bigger revenue streams.
Total global voice public network service revenue might be in the range of $175 billion a year, including consumer and business users. Mobile might represent about $115 billion of that, with fixed network voice contributing $59 billion.
Assume business voice revenue is 30 percent of total. That implies global fixed network business voice recurring revenue of about $18 billion, with business mobile service revenue of about $35 billion.
Contrast that with the estimated unified communications market--which includes those expenditures-- estimated at between $16 billion and $48 billion a year in revenues, or even total business and government spending on communications.
The issue for communications service providers is that much of UC is a feature of an app, not a recurring service.
Some might quibble about whether there is a difference between unified communications as a service and communications platform as a service, which includes a range of features or services including messaging technologies (text messaging or SMS, RCS (Rich Communication Services) and OTT messaging), push notifications, voice services and email, and represents service provider UCaaS.
CPaaS generally is defined as cloud-based way of creating and delivering communication services, as opposed to a premises business switch, for example. Juniper Research argues that “the value of the individual services CPaaS offers is quite low, however.”
The specific value of business voice likewise arguably also is low, though a required feature of business communications.
Indeed, email use is possible at almost zero incremental charge for enterprises, and often at zero incremental charge for consumers. Over the top messaging likewise often is available for no incremental charge for any consumer user, with some possible incremental charges for business messaging apps.
Voice services might be available for use at zero incremental cost, negligible cost or relatively small cost. Many mobile service providers, for example, offer unlimited messaging and voice use in domestic markets, with affordable roaming charges.
Voice assistants, including smart speakers, also increasingly are able to connect callers to public networks. In that instance, voice-enabled speakers simply operate as any other voice device able to connect with the public network and telephone numbers.
Juniper suggests higher value--and implicitly higher service provider revenues--can be generated if the functions are bundled. Some will question the premise.
Unified communications have become “more unified,” adding more functions, over the last few decades. But most of the revenue still is earned by app providers or switch providers, not connectivity providers.
Mobile video calling is mostly dominated by third party app suppliers such as Zoom, or enterprise calling services running over the top of standard internet connections. As always is the case, those apps, use cases and revenues do not flow to the access provider, but to the app provider.
It arguably is the case that simple mobile service is a bigger revenue driver than UCaaS for connectivity providers.
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