Cisco Pulls Ahead In Enterprise UC Race Against Microsoft

Cisco Systems is pulling away from main competitor Microsoft in the enterprise unified communications collaboration market as revenues from the market hit an all-time high, according to recent data from Synergy Research Group.

Microsoft and Cisco each owned about 14 percent of the enterprise UC market in the first quarter of 2014, but Cisco jumped ahead to 16 percent during the fourth quarter, while Microsoft dropped to 13 percent.

Thatcher Alexander, president of Alexander Open Systems -- an Overland Park, Kan.-based Cisco and Microsoft partner -- said he is expecting to see double-digit growth in the company's Cisco UC business this year.

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"Microsoft always started at the desktop, so they had a lead in the collaboration application space, but Cisco has really closed the gap as of late, and is building on its voice install base with applications like (the instant messaging service) Jabber," said Alexander. "Cisco recognizes that conversations are starting at the desktop, migrating to collaborative meetings with interactive workspaces that include voice and video."

Cisco benefited from a 9 percent increase in revenues from the third quarter to the fourth quarter, while Microsoft’s sequential growth was just 2 percent. Third place went to Avaya with just under 6 percent market share, followed by IBM at 4 percent and Polycom at 3 percent.

Scott Perry, team lead, collaboration at the Crofton, Md.-based solution provider Force 3 -- a Cisco and Hewlett-Packard partner -- said Cisco offers best-in-class products and feature capabilities.

"Cisco also approaches their portfolio with a holistic view, providing their customer a true end-to-end solution, comprised of all Cisco- designed and -built products," said Perry. "(They) deliver a solution for the network all the way down to the end-user device without having to rely on other third-party products."

Perry said Force 3 has seen double-digit growth year-over-year for the past four years in the UC space.

Synergy Research Group said revenues from the market hit an all-time high at $8.5 billion during the fourth quarter of 2014. Total revenues for the quarter were up 2 percent year-on-year, with strong growth in hosted voice and UC-as-a-Service, hosted contact center and enterprise instant messaging. Revenues grew 6 percent from hosted and cloud solutions, which account for almost half of the UC collaboration market, according to the research group.

"Cisco saw a very nice year-end bump in its telephony revenues which helped it to distance itself from Microsoft," said Jeremy Duke, Synergy Research Group's founder and chief analyst, in a news release. "The real bright spot for Microsoft is that it has clear leadership in hosted (and) cloud solutions, which are also the highest-growth part of the market. Cisco dominates in premise-based solutions, but the general trend is for hosted (and) cloud revenues to catch up with and surpass premise-based revenues."

Solution providers say they are seeing a wide adoption of collaborative applications, which are becoming expected in the workplace because of the way people communicate in their personal lives.

Alexander said his company is seeing "impactful upgrades" of the centralized systems hosted in their corporate private clouds.

"Voice is no longer the foundation of business communication, it is simply a component of the conversations that more often than not started from a person-to-person text message," he said. "We are also seeing both the ... voice phone and large-room systems moving toward on-demand video phones or a combination monitor and video phones -- such as Cisco DX80 (device)."

Perry said he is seeing the collaboration market expanding and a number of large federal agencies getting on board after "fighting long battles" with aging and legacy Private Branch Exchange equipment.

"We see the enhanced capabilities that collaboration delivers within our (Defense Department) customer spaces as well as civilian and Intel groups," said Perry.

According to the research group, revenues from UC collaborations came from enterprise voice, UC applications, telepresence, email software, enterprise content management, enterprise social networks and a range of hosted and cloud communications and applications.