Here's Who Made Gartner's 2015 Magic Quadrant For Unified Communications As A Service
UCaaS Global Market Sees Significant Growth, M&A On The Horizon
Unified Communications as-a-Service is experiencing significant growth in all segments as many large and small players are jostling for position. UCaaS offerings are increasingly functionally competitive with premise-based alternatives and vendors improving their user experience, API connectivity with leading cloud applications and mobile-first user deployments, according to Gartner Analyst Bern Elliot, who co-authored Gartner's Magic Quadrant for Global Unified Communications as a Service.
"It's going to continue to gain in adoption, and some segments are seeing a 20 percent and sometimes 30 percent compound annual growth rate," said Elliot, in an interview with CRN. "When you're in a rapid growth phase there is room and success for multiple participants, which is why there's so many companies [who made the quadrant] … As it matures, then you will see the organic growth slow and companies start competing more for new business. We do expect to see market consolidation, but it's still a little early."
Defining Gartner's First-Ever Global UCaaS Market
UCaaS supports audio, video and web conferencing; voice and telephony -- including mobility support; presence and instant messaging (IM); email with voicemail and unified messaging; and communications-enabled applications such as integrated collaboration and contact center applications.
The two types of cloud delivery architectures deployed in the UCaaS market include multitenant, which all users share a common software, or virtualized, where each user receives its own software. Mobility is also playing an increasingly prominent role in the UCaaS ecosystem through smartphones and tablets.
It is noteworthy to point out that Cisco did not make the list because the criteria for the quadrant were for vendors themselves to have a full UC offer in the market, according to Elliot.
"Cisco has taken the approach of having partners use Cisco infrastructure to offer a UCaaS solution," said Elliot. "Companies such as West, Verizon, AT&T, and others have offers in the market based on Cisco. So Cisco is present as part of other people's offers, but the Cisco offer itself is not full UCaaS."
UCaaS Research Methodology
A total of 20 vendors made the 2015 Magic Quadrant list, representing the biggest global vendors in UCaaS that provide support for communications and collaboration in the three markets of North America, Europe and Asia/Pacific.
The Magic Quadrant ranks unified communications vendors on their ability to execute, and completeness of vision. Gartner places vendors into four categories: Niche Players (low on vision and execution), Visionaries (good vision but low execution), Challengers (good execution but low vision) and Leaders (excelling in both vision and execution).
San Mateo, Calif.-based RingCentral is a UCaaS application specialist, with continued expansion in Europe and new expansion in Asia/Pacific in 2015. Gartner said the company is one of the largest global UCaaS providers that support more than 300,000 companies. Its RingCentral Office solution was internally developed offering a "rich" UC suite with service provider channel partners -- including AT&T, BT and Telus -- which is accelerating market share, according to Elliot.
"They have a very easy-to-use mobile-centric solution that works very well for mobile devices and they do have partners, but they also have a very effective web customer service and web sales operation," said Elliot.
Gartner ranks RingCentral as No. 1 in vision and around the middle of the pack for execution.
Elliot said RingCentral is one of the largest global UCaaS providers in regard to endpoints supported, revenue, market growth and capital investment. In June, RingCentral acquired office messaging specialist Glip to expand its team messaging collaboration suite.
The vendor lacks strong brand awareness for businesses with more than 2,000 employees, and is still maturing its professional services and onboarding processes for large accounts above 5,000, according to Gartner.
San Jose, Calif.-based 8x8 has more than 15 years of experience in the UCaaS market, supporting more than 500,000 employees. Its Virtual Office UCaaS offering is delivered through its own multitenant platform, while recently expanding the solution to support its integrated Virtual Contact Center solution. 8x8 also recently acquired U.K.-based DXI to expand its reach in Europe.
"8x8 has a strong contact center functionality that integrated with their UC offer, and they have strong network management they can offer as well," said Elliot.
Gartner ranks 8x8 No. 3 in vision and among the middle of the pack in execution.
Elliot says 8x8 provides customers a rich set of UC and contact center capabilities at a competitive price, with high adoption rates for VoIP, mobility, IM, presence and contact center.
The company needs to demonstrate that its "many" new channel partners are able to effectively deliver on UCaaS, according to Elliot. Its maturity in Europe and Asia/Pacific is lagging behind its North American capabilities. 8x8's Virtual Meeting lacks integration with leading third-party video platforms and has limited group tools for larger web conferences, according to Gartner.
Omaha, Neb.-based West Corp. offers multiple UCaaS solutions across a common delivery platform aimed at the midsize to small-enterprise market. West's flagship VoiceMaxx CE product is based on virtualized Cisco HCS intended for enterprises seeking a full UC solution. This year, the company is starting to penetrate a handful of larger accounts in the 10,000-employee range, according to Gartner.
"They're a well-established communications service provider with a lot of offers in the market," said Elliot.
Gartner ranks West as No. 6 in vision and among the middle of the pack with execution.
The vendor has a deep base of well-known midsize customers, and its recent brand consolidation and reorganization will help it gain greater visibility, as well as better leverage its broad offer set across its sales channels, according to Elliot.
West doesn't typically pursue installations for more than 5,000 employees and needs to show its rebranding efforts enhance its UCaaS brand to better compete against major competitors, according to Gartner. The vendor is weak in supporting advanced capabilities in mobility, analytics and business process integration.
Microsoft's Skype for Business Online (SfBOL) UCaaS offer has a strong presence, IM and web conferencing. The Redmond, Wash.-based company plans to operate SfBOL as a communications service provider in North America, with a basic telephony feature set Gartner thinks will better suit the SMB market.
The solution continues to gain market momentum and share because it was bundled with Microsoft's broader Office 365 portfolio, and developed an "extensive" ecosystem of partners in professional services, devices, applications, infrastructure and network services, said Elliot. Its Office 365 UCaaS solution targets cost-effective IM, presence and web conferencing for organizations of all sizes.
Gartner ranks the company No. 1 in execution and among the middle of the pack in vision.
Companies view SfBOL as an "integral" part of their IT cloud strategy, and customers are reporting high satisfaction levels with the offer, according to Gartner.
The costs and partner maturity of SfBOL varies across regions, and enterprises planning to deploy the solution must evaluate the features, available functions, support options and partner availability, according to Garner.
"They have a strong telephony offer themselves, but the road map to getting there is confusing," said Elliot. "Sometimes you need partners … and right now it's hard to plan because there are different messages in the market."
Mountain View, Calif.-based Google has its UCaaS Hangouts offer as part of its broader collaboration suite, Google Apps for Work, which is being adopted by SMBs, high-tech companies and universities. The company has UCaaS infrastructure in 14 data centers around the world with a direct sales force and channel partners targeting new accounts, according to Gartner.
"It's a really strong brand and Hangouts is being well received," said Elliot.
Google is ranked No. 2 in the quadrant for execution and among the middle of the pack in vision.
Google's pricing is very competitive, with annual fees ranging from $50 to $120 per user, which is a key factor to it encroaching on Microsoft accounts, said Elliot. Most customers report high satisfaction levels across Google Apps for Work, citing ease of use, APIs to other cloud services and value for the money.
Google doesn't support a native business voice service, which may hinder its competitive positioning against Microsoft.
"They use partners for their telephony, but enterprises would like to have the telephony be integrated in a stronger way and to be able to get that from a single contract," said Elliot. "Right now, you would sign up for the Google contract and sign up separately for the telephony and have someone else manage the telephony functions."
AT&T continues to expand its UC capabilities across the world through its global network footprint and operations, with its strongest services in North America. Its UC Voice offering is a Cisco Hosted Collaboration Solution (HCS) cloud solution or managed Microsoft Skype for Business offering, according to Gartner.
The Dallas-based company provides its own video, audio and web conferencing, while it also markets hosted managed and premises-based services for Microsoft, Cisco and Avaya UC solutions.
"UCaaS is one of many services they're able to offer through their extensive network and sales programs," said Elliot. "Their Strengths: is going to be their ability to take UCaaS and incorporate it into a broader set of global network services."
AT&T ranks No. 4 in execution, but is among the bottom of the pack for vision.
AT&T can scale to support accounts above 10,000 employees and has developed a strong suite of UC solutions based on Cisco and Microsoft that leverage AT&T conferencing and its UC consulting practice, according to Gartner.
The company's broad array of products can be confusing because of the different elements of UC functionality that can be mixed and matched, said Elliot. Gartner said customers want more self-service capabilities for day-to-day management. AT&T also does not support APIs to leading cloud applications, such as Salesforce and ServiceMax.
The company's UCaaS offering, BT One Cloud, supports both Cisco HCS and Microsoft SfB, owning dual data centers for its UCaaS infrastructure in Europe, North America and Asia/Pacific, according to Gartner. London-based BT has "significant" experience via large U.K. public-sector companies, said Elliot. The firm primarily relies on a direct sales force.
"BT can address different market needs with a Cisco offer and a Microsoft-based offer that they can couple with strong network management services," said Elliot.
Gartner ranks BT No. 3 in execution and among the middle of the pack for vision.
BT is a strong global Cisco UCaaS partner and mainly uses its internal team for professional services. The vendor offers a deep base of networks, voice, security, hosting and managed services to complement its UCaaS portfolio, according to Gartner.
The company doesn't aggressively pursue SMB accounts below 1,000 employees outside of Europe and is selective in pursuing "North America-headquarter" accounts, according to Gartner. Gartner said customers want BT to improve its UCaaS self-service portal capabilities and offer more APIs to common cloud applications.
The global communications service provider (CSP) supports two UCaaS offerings, including one based on the virtualized Cisco HCS platform that targets customers with more than 500 employees. Verizon has expanded its partnership with Cisco and now co-markets and co-sells with the San Jose, Calif.-based networking giant worldwide. Verizon also offers Virtual Communications Express based on the multitenant BroadSoft platform targeting the SMB market, according to Gartner.
"Verizon's large, mobile capabilities should help them advance integrated mobile functionality in their offer," said Elliot.
New York-based Verizon is ranked No. 5 in execution and among the middle of the pack for vision.
Its global CSP and strong brand recognition across the enterprise allows it to be well positioned to complement UCaaS with related offerings in wireless, security, managed services, and has bundles that can reduce total cost of ownership, according to Elliot. Its expanded partnership with Cisco also enables it to quickly expand its portfolio.
Gartner said Verizon customers cite difficulty collaborating across multiple working groups, such as sales and installation involved in UCaaS deployment, and want a stronger UCaaS portal. The vendor's UCaaS delivery in Asia/Pacific is still maturing and it's been "late" in maximizing its full wireless potential into the UCaaS portfolio, according to Gartner.
The Seattle-based vendor offers Microsoft-focused solutions for cloud and managed deployments that leverage Microsoft's messaging, collaboration and UC services. Avanade's go-to-market UCaaS strategy centers around virtualized Microsoft Skype for Business (SfB). The vendor has focused on UCaaS initiatives in 2015, including an IT administration service portal, a channel partner program and tools for tracking voice quality.
"They're good at working with larger organizations with complex requirements," said Elliot.
Avanade is ranked No. 6 in execution, but among the bottom of the pack for vision.
The vendor has homegrown tools to cloud-enable SfB, Exchange and SharePoint, and the ability to integrate with the Microsoft Office 365 suite. Gartner said the company has strong consulting and professional services, and is favorable in enterprise accounts with more than 10,000 employees.
Avanade's UC skill set is Microsoft-centric, with limited expertise in offerings from Cisco or Avaya, and it still does not possess a broad package of APIs to third-party IT applications, such as Salesforce, said Elliot. Its UCaaS channel partner offering for enterprises with 1,000 to 5,000 employees is new and has limited market proof points.
CSC's MyWorkStyle UCaaS offering focuses around Cisco and Microsoft technologies, along with Polycom for video -- offering a cost-competitive broad IT solution set, according to Gartner. It can be delivered on-premise, in the cloud or in a hybrid form. All CSC sales are direct.
"They're good at working with complex integrations," said Elliot.
The Washington, D.C.-based company is ranked among the middle of the pack for execution and near the bottom for vision.
The vendor has a cloud-first approach to UC in order to reduce costs and scale delivery, said Elliot. Its Cisco and Microsoft solutions include a detailed road map and semiannual product releases for additional functionality, according to Gartner. CSC has well-established large accounts with a strong global presence, and established data centers and staff in North America, Europe and Asia.
Gartner said MyWorkStyle took 18 months to roll out, with limited new sales and product innovation within the past year. Customers said CSC UCaaS needs to improve its self-service portal capabilities and have more APIs to high-market-share cloud applications.
Challenger: HP Enterprise Services
HP provides cloud, on-premise and hybrid configurations for UC, offering virtualized Microsoft solutions, as well as Avaya-based UCaaS branded as Helion UCaaS OnAvaya. HP also recently introduced services for Google Apps for Work. All sales are direct. The Palo Alto, Calif.-based company has UCaaS capabilities in North America, Europe, Asia/Pacific and Latin America, and is registered as a VoIP service provider in more than 20 counties.
"They're global professional services organization is really what would be differentiating about them," said Elliot.
HP ranks among the middle of the pack for execution, but is second to last in the quadrant when it comes to vision.
HP already has more than 10 multinational corporation UCaaS accounts and can address complex enterprise deployment with legacy integration requirements, according to Gartner.
The vendor hasn't improved its UCaaS market position in the past year in terms of adding new product features, expanding market share or promoting the UCaaS brand, according to Elliot.
"They target a segment very well, which is the large complex organizations that already have a relationship with HP, which means they're kind of going into their base and seeing what needs assistance in developing the UC solution," said Elliot. "It's hard to say they're really doing vision work here -- it's almost niche work."
The privately held Cambridge, Mass.-based company uses a proprietary multitenant platform that includes open-standards-based web APIs to facilitate UC application integration, according to Gartner. ThinkingPhones leads with a direct sales approach suited for high-end retail, health care and high-tech companies, with recent investments in stronger security processes.
"Their own platform is very successful in delivering high-quality user experience based on that platform and the network management that goes with it," said Elliot.
Gartner ranks ThinkingPhones No. 2 in vision and among the middle of the pack for execution.
Gartner said ThinkingPhones has a strong innovation engine through internal R&D and acquisitions in 2015, including Contactive and Whaleback Managed Services.
Elliot said the vendor has formalized its sales processes -- relying on a combination of field sales, inside sales and channel partners, which played a role in growing revenue by 40 percent over the past year.
ThinkingPhones is one of the smaller UCaaS providers, which makes it difficult to keep pace with the larger competitors, while brand awareness remains low even in North America. Although it has a strong customer service, it struggles to keep up with business growth, and customers are reporting its new hires take a few months to become proficient, according to Gartner.
Visionary: Orange Business Services
Orange Business Services' UCaaS product is Business Together as a Service, which can be delivered virtualized on Cisco HCS or Microsoft private cloud SfB. UCaaS is a core business for the Paris-based vendor with the company spending "significant" resources industrializing the processes, R&D and customer support, according to Gartner. Its solution is sold primarily via direct sales.
"They have a strong global perspective on their UCaaS go-to-market," said Elliot.
Orange is ranked No. 4 in vision and among the middle of the pack for execution.
Orange Business Services
The vendor can support UCaaS customers with global needs, owning services available in more than 80 countries. Orange's internally developed UCaaS portal is more intuitive and functional than portals offered by many competitors supporting Cisco and Microsoft, according to Gartner.
Gartner said customers cite the company can be inflexible to work with and slow to respond to service requests. The Paris-based company has limited brand and marketing resources devoted to North America.
Ottawa-based Mitel has its MiCloud UC suite based on the cloud virtualization of its premise-based platform, which includes telephony, collaboration and MiContact Center.
"Mitel bases their UCaaS solution on their own product, and they have successfully made the transition from being an on-premise focus provider to being an on-premise and cloud provider, and that’s a very difficult transition to make," said Elliot.
The vendor sells both directly and through the channel with its UCaaS workload managed by Mitel in its own data centers. Mitel is ranked No. 5 in vision and among the middle of the pack in execution.
Mitel is making strides outside its "strong presence" in North America, expanding into Europe with services retailed in U.K., Germany and France, said Elliot. The vendor's partnership with Vidyo has improved its video capabilities, and its acquisition of Mavenir this year will enhance its mobility capabilities, said Gartner.
Gartner said its UCaaS brand isn't resonating strongly in the enterprise market, particularly for businesses with more than 3,000 employees. There's a wide variation across the capabilities, experiences and geographical coverage of Mitel's 500 channel partners, according to Gartner, where customers must investigate the match of the partner to their requirements.
Visionary: Vonage Business
The Holmdel, N.J.-based vendor has gone on an acquisition spree of UCaaS companies over the past two years, including Vocalocity, Telesphere, SimpleSignal and gUnify. Vonage also acquired iCore in September, which also made this Magic Quadrant.
Elliot said some of the acquisitions leverage an underlying BroadSoft platform for UCaaS that complement Vonage's value-added intellectual property, such as its Zeus self-service portal. The vendor offers a full UC suite of services with a focus on telephony and mobility --selling both directly and through the channel.
Vonage ranks among the upper half of the quadrant for vision, but the lower half in regard to execution.
Elliot said Vonage has the potential to be a long-term market force through its acquisitions and implementations. Vonage pricing is competitive, which the company attributes to its automated provisioning tools.
The integration of its UCaaS companies will take time to mature. Customers primarily are VoIP-focused and do not use the full UC stack, according to Garner, while its web and videoconferencing offerings have low adoption rates.
Interoute's UCaaS solution is part of its One Bridge product portfolio based on Microsoft SfB. The privately held London-based firm's Strengths: is in its SmartPoint for video services and One Bridge for communications and collaboration.Its UCaaS architecture is designed for agility and cost-effectiveness, according to Gartner.
Interoute has deep roots in Europe with its legacy business in enterprise voice and data network services. "They're an established European communications service provider that can leverage Microsoft across their network," said Eillot.
Interoute is ranked among the middle of the pack for vision, but second to last in execution on the quadrant.
The company is strong in Microsoft technology and has an Infrastructure-as-a-Service approach that is flexible and scalable. Interoute supports a complete reference architecture with defined firewalls, headsets, gateways and video endpoints, and provides a PBX replacement in dozens of countries, according to Gartner.
Its business and brand recognition is geared toward Europe. Interoute is "significantly" smaller in terms of revenue and staff than many other European communications service providers, with fewer financial assets to expand into the North American market, according to Elliot.
Niche Player: NTT Communications ( Arkadin )
NTT Communications combines UCaaS capabilities of its Tokyo-based NTT Corporation and its 2014 acquisition of France-based Arkadin. Its UCaaS offering for large enterprises, Arcstar, was initially based on Cisco HCS but has since expanded to include Microsoft UCaaS. The vendor also has an SMB UCaaS offering, Arkadin Total Connect, which has a legacy in conferencing services and the Microsoft UC stack, said Gartner.
"They're not as established in North America as they are in Asia/Pacific," said Elliot.
NTT has made several acquisitions in the past five years, including Dimension Data, Gyron, Netmagic and Virtela in order to expand outside the Asia/Pacific market, according to Elliot. The company is ranked among the middle of the pack for vision, but near the bottom for execution.
Gartner said NTT supports a "rich" stack for large enterprises and also supports multivendor UCaaS environments based on Google and Microsoft technology.
NTT Communications and Arkadin business units are run separately, and their UCaaS road maps are separate as well, according to Gartner. Brand recognition is low outside Asia/Pacific.
Niche Player: ShoreTel
Sunnyvale, Calif.-based ShoreTel recently launched its Connect Cloud product line, drawing from its "feature-rich" on premise application architecture, said Elliot. Connect Cloud was not available in the market when creating the Magic Quadrant, so 2016 will be a major UCaaS transition period for ShoreTel, according to Elliot. The vendor's legacy offer is ShoreTel Sky, which was acquired from M5 Networks in 2012. The company saw steady revenue growth in the UCaaS market over the past year and possesses a "top 10" North American market share position, said Elliot.
ShoreTel ranks among the bottom groups for both vision and execution.
The vendor continues to expand its UCaaS sales distribution base, according to Gartner. Its Sky UCaaS is strong in mobility and supports an integrated contact center functionality.
The majority of Sky's installed base is made up of businesses with fewer than 50 employees. Gartner said ShoreTel needs to create a stronger base of midsize enterprises.
Niche Player: Star2Star Communications
The Sarasota, Fla.-based company UCaaS solution is "well-suited" for organizations with multiple distrusted sites, said Elliot. "They're not well known, but have a very disrupted, highly replicated architecture," he said.
Its architecture combines a centralized multitenant UCaaS service with a survivable appliance installed at each distributed site, according to Gartner. Star2Star recently unveiled StarBox CCM 2.0 to help onboarding and support for large enterprises with complex dialing needs.
The vendor ranks last in both execution and vision on the quadrant.
Star2Star has a cost-effective solution with strong local survivability and a protocol optimized to work well over networks with limited broadband, according to Gartner.
Star2Star does not support high-end endpoints, while its web-conferencing and video capabilities are lagging behind competing UCaaS providers. Gartner said its customer service also can get stretched due to its small size.
Niche Player: iCore
Washington, D.C.-based iCore has been purchased by Vonage for $92 million. The privately held network and UCaaS provider had notable technology enhancements in 2015 including support for an expanded base of APIs, updated customer portal, Microsoft and Google integration and a better contact center experience.
iCore was near the bottom of the quadrant for both execution and vision.
Gartner says iCore's revenue had been growing above 20 percent for the three years due to being "well-established" in deployments between 1,000 to 5,000 employees, according to Gartner.
iCore had little brand recognition even in the U.S. and was one of the smallest UCaaS players in the market. Gartner says some customers were unaware of expanded features or capabilities the company released over the past year.