Video comms market grows by 3.5%

The video communications market, which includes immersive telepresence, videoconferencing endpoints and videoconferencing infrastructure, has experienced moderate growth in Australia despite many businesses being reluctant to invest in IT in 2009, according to Australian Video Communications Market 2010, the latest market analysis to be released by Frost & Sullivan.

The study estimates that the value of the Australian video communications market for 2009 was $52.6 million, representing growth of 3.5% over the previous year. The report suggests the increase, while lower than previous years, is significant as it is one of the few areas of IT investment during a year of otherwise cautious spending.

Audrey William, ICT Research Director - Australia and New Zealand, said, “Government continues to be one of the largest video communications end-user segments in terms of revenue, with federal and state government contracts accounting for the some of the biggest wins of the year.”

She added that the professional services segment, which includes legal, accounting, hospitality and architecture firms, also reported strong demand for video solutions designed to boost productivity. Firms in the legal and accounting segments, in particular, deployed a number of telepresence and videoconferencing solutions in 2009.

New vertical market users to emerge included mining, energy and utilities, and media. The report suggests that the ability to limit travel between remote geographic locations is one of the driving factors behind the growing demand for video within these segments.

“One notable change was a decline in revenue from one of the biggest adopters of video communications solutions, namely, the banking, financial services and insurance segment. This was mainly due to a cautious approach towards any IT spending due to the impact of the global financial crisis (GFC),” William points out.

Frost & Sullivan anticipates a revival in video deployments over the next two to three years as businesses begin to re-invest in video communication to improve productivity and reduce travel. The report forecasts a compound annual growth rate of 15.7% in the 2009 to 2016 period.

Vendors and the channel

“Polycom and Tandberg dominated the Australian market in 2009, together accounting for nearly 80% of overall market share. Among the other vendors, Cisco grew strongly, buoyed by major wins in the government and corporate segments. LifeSize also began to gain customer mindshare as a provider of low-cost, high-definition videoconferencing solutions,” explains William.

She elaborates, “The major channel partners were the two carriers, Telstra and Optus-Alphawest, and large-scale systems integrator Dimension Data. Other notable channel partners with specific strengths in audio-video or vertical markets included iVision and Rutledge Engineering.”

One area of opportunity highlighted in the report is that of the managed services segment. Although there is a strong preference among businesses to manage video maintenance tasks in house, the complexity of running an immersive telepresence solution, combined with the increasing affordability of such solutions through bundled offerings, is expected to deliver an increased demand for managed services suppliers in the years ahead.

In conclusion, William commented, “2009 was an interesting year for the video communications market. It was a period of consolidation amongst the leading players, with Cisco and Logitech announcing acquisitions of Tandberg and LifeSize respectively. Customer demand was turned on its head with the GFC causing a slow-down among traditional segments and the emergence of new markets. In 2010, we expect to see a continuation of steady market growth as revenues are driven by demand for productivity and remote location video solutions.”