Frost & Sullivan Survey Predicts Growth for CSP Videoconferencing

Updated: January 07, 2011

Frost & Sullivan'slatest study predicts ongrowing growth in the North American conferencing service provider (CSP)-based Videoconferencing Services Market. The study reported a revenue growth of 18% in 2009, reaching $184.2 million by the end of the year and projected a compound annual growth rate of 18.4% from 2009 to 2016, bringing the total market to $599.6 million. The videoconferencing services market will likely continue growing for a long time, as more and more companies adopt videoconferencing and find themselves facing unfamiliar challenges such as ensuring interoperability among multiple vendors and across networks and tackling network redundancy.

Growing communications traffic on IP bandwidths will also limit the bandwidth available for video, forcing IT managers to create increasingly complex plans to accommodate bandwidth-intensive services like HD videoconferencing and telepresence. New advances in videoconferencing models will likely complicate interconnectivity between new and old models and different conferencing systems across organizations. Videoconferencing services can help companies address these and other issues associated with the growing market far more effectively and efficiently than most in-house technicians.

The study focused on two different videoconferencing service models: hosted videoconferencing services and the emerging videoconferencing and telepresence managed services model. The managed services model was the clear winner in terms of growth, with a growth rate of 26% in 2009 to reach $115.2 million by the end of the year. Frost & Sullivan predict continued growth for managed services with a compound annual growth rate of 23.4%, far exceeding that of the market as a whole, to reach $503.3 million by 2016. Hosted videoconferencing, by contrast, only grew at around 7% to reach $69.0 million. Writer Melanie Turek identified pricing pressures and lower demand as the primary causes behind this differencein growth, claiming that “companies continue to see better value in buying bridges and employing a provider to manage their videoconferencing infrastructure.”

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