Cisco Remains A Step Ahead Of Microsoft In Collaboration Market, According To Synergy

The collaboration market remains a tight horse race between Cisco and Microsoft, but the long-term trend toward cloud solutions makes the field anything but settled, suggests new Q2 data released Friday by Synergy Research Group.

Cisco's lead grew slightly larger in the second quarter of 2015 on the strength of its voice, data and video-conferencing systems, which now constitute a quarter of on-premise deployments, and roughly 15 percent of the overall collaboration market.

But while Cisco remains dominant in the corporate data center, this was the second consecutive quarter in which cloud and hosted collaboration solutions generated more revenue than their on-premise cousins. And cloud revenue grew a healthy 10 percent year over year, while on-premise growth was flat.

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Microsoft leads in the cloud with just under 10 percent market share, compared with Cisco at roughly 5 percent.

As those numbers demonstrate, the expanding cloud collaboration market is still wide open -- no vendor has claimed a double-digit share. Google is challenging with a roughly 4 percent share on the strength of the collaboration tools included in its Apps productivity suite.

John Dinsdale, Synergy's research director, told CRN that the cloud side is far more segmented because it presents "a collection of relatively new and emerging segments where there are a lot of new market entrants."

As the more mature side of the industry, on-premise solutions "are characterized by a smaller number of big players that have been around for a while," Dinsdale said.

In all, it's a broad market, approaching the $9 billion mark for the quarter -- Synergy includes in its calculations enterprise voice, unified communications, telepresence, email, enterprise content management, enterprise social networks and various other cloud communications tools.

Jamie Shepard, senior vice president of strategy and health care at Lumenate -- a Dallas-based solution provider that brings to market several of these technologies -- told CRN that Microsoft and Cisco are way ahead for good reasons.

The tools offered by those two giants allow tighter collaboration between video, meetings, voice, document sharing and other important collaborative functions. They also are strong at controlling and tracking data, he said.

Shepard has observed the Microsoft-Cisco rivalry play out for years, and feels an important aspect of the dynamic not illustrated in the Synergy research is that the two rivals "are coming at collaboration from totally different perspectives."

Cisco entered the collaboration market as a Voice over IP provider, offering unified voice and data solutions.

Microsoft got started with email, calendaring and collaboration through Sharepoint and other customer facing tools.

Both sets of tools are "very collaborative in nature, but both wildly different," Shepard told CRN.

But Shepard said he believes the most important market trend is that "Google's cloud-based collaboration tools are fast becoming mainstream." He predicts Google will surpass rivals, including Microsoft by next year.

The evolution of the market over the past two years has been characterized by Cisco's trying to fend off its top challenger, according to historic data from Synergy.

The networking giant maintained a roughly 2 percentage-point lead through 2013 and until the first quarter of 2014, at which point Microsoft caught up. Cisco jumped ahead again the next quarter, but the margin has stayed razor tight ever since.

Avaya, which focuses entirely on business communications, is in third place in the on-premise market with a 10 percent share, and also in third overall at 5 percent, trailing Cisco and Microsoft.

Other important vendors include IBM, Polycom, Citrix, Mitel, UNIFY and ALE, according to Synergy.

Barely trailing Google on the cloud side of the collaboration market are two telecoms: Verizon and AT&T, according to Synergy.

Shepard expects a breakaway in that part of the race.

"Google is next. Watch them," Shepard said. "The other players won’t be able to keep up, as they are good tools, but add-on tools and not true integration."

Shepard noted that customers are actively debating the merits of cloud verses on-premise solutions.

While Synergy's data shows the market has passed a tipping point in favor of cloud, Shepard told CRN he's seeing many customers shift to favoring on-premise solutions because they feel more comfortable totally controlling their assets.

Synergy also noted that cloud-based teamwork applications are an emerging force and likely to see aggressive growth. Those include Cisco's Spark, along with solutions from vendors like Slack, Cotap and Redbooth.

’Microsoft has been a significant disruptor in collaboration but it is now joined by a range of other disruptive companies, including inContact, BlueJeans, RingCentral, and 8x8,’ said Jeremy Duke, Synergy’s founder and chief analyst, in a prepared statement.

Duke pointed out that a dozen companies now have annual growth rates in the market above 25 percent, and some have exceeded 50 percent growth.

"Thanks to a strong position across a wide range of segments Cisco continues to fend them off and its market share in Q2 was actually marginally ahead of what it achieved throughout 2014,’ Duke said.