Video Conferencing Market Diversifies, End Users Investing in Peripheral Tech

Video Conferencing Market Insights, Analysis and Commentary

Video conferencing solutions continue to move into the commercial foreground, with video conferencing hardware achieving pre-COVID-19 volume and value growth of 28% and 9% respectively in 2019, according to a new report from Futuresource Consulting. The report, which covers all aspects of video conferencing hardware, combines desk research, sales data from vendors across seven key geographies, and channel interviews carried out by Futuresource in the US, France, Germany, and the UK.

COVID-19 has accelerated the alignment of communication methods with video conferencing and collaboration tools, creating clear opportunities for vendors operating in the sector. However, Futuresource expects this to be far more than a short-term opportunity. As employees become comfortable with their newly-discovered collaboration tools and employers begin to reap the benefits, the post-COVID-19 world will continue to rely on remote communication and highly dispersed workforces.

Video conferencing solutions occupy a range of product segments across software and hardware, namely pure cloud solutions, software-agnostic peripherals (SWAPs), room hubs, team collaboration displays, integrated codec hardware and telepresence.

Pure cloud solutions enable video conferencing without tying end-users to particular locations or endpoints and can be used within a browser or as applications on mobile devices. Software-agnostic peripherals are hardware devices used with cloud conferencing software to create higher quality video conferences with the option of multiple participants per endpoint. Room hubs are touch panels, generally on the meeting room table, which allow users to control both conferencing and other meeting room functions. Team collaboration displays are interactive displays designed to facilitate in-room and remote collaboration, typically with built-in audio and video conferencing capabilities. Integrated codecs comprise both traditional hardware-based video conferencing and closed solutions where hardware and software are tightly integrated and controlled by a single vendor. Telepresence offers the highest quality video and audio communication, couple with high costs. It is largely the preserve of corporate boardrooms and government installations where security concerns may prohibit the use of cloud conferencing.

Room Hubs Riding High, Dominated by the Big Three

“Room hubs are now firmly established and on track to achieve the strongest volume and revenue growth within the sector,” says Adam Cox, Senior Analyst at Futuresource Consulting. “We expect global value to grow from US$448 million in 2019 to $US2.8 billion in 2024, driven by convenience and simplicity, while allowing companies to keep rooms video-ready at all times. The US leads the way in room hubs, followed by EMEA. The technology is far less pronounced in APAC, where customers are more price sensitive and reluctant to invest. Moving forward, the biggest challenge to the growth of the room hub market is the locked-in nature of room solutions, particularly at a time when users are favouring flexibility.

“While many cloud vendors offer room solutions, the market is increasingly dominated by Microsoft Teams Rooms, Zoom Rooms and Google Hangouts Meet. These cloud providers have built partnerships with the leading hardware vendors. In a crowded market, these stamps of approval can deliver an enormous advantage. This influence also runs from hardware to software. Should companies with Logitech SWAPs (Software Agnostic Peripherals) choose to pursue a room solution, they will be inclined to install a Tap, which comes in three options, Teams, Zoom or Google. Similarly, companies which favour Crestron will be led towards Teams and Zoom.

“SWAPs have quickly come to dominate the video conferencing market, and now comprise the largest part of the market by volume. Until recently, SWAPs were largely seen as an option for the smaller meeting room and huddle space. However, the arrival into the market of new vendors, particularly from Pro-AV, has changed this perception. It is now possible to have SWAPs in all sizes of meeting area, from huddle space to board room. Nevertheless, small to medium rooms remain the driver for this category. Competition is increasingly fierce, and margins are often tight, particularly in the huddle space. This favours vendors like Logitech who are able to supply at scale.”

Strong Growth in the Americas

North and Latin America continued to display strong growth in 2019, particularly in the corporate vertical, where the region leads the way in introducing tech into smaller meeting spaces. However, there is a preference for the cheapest solution types to be installed into these spaces, which has helped the sub-$1,000 hardware category to drive the market forward. Looking to the education vertical, this continues to play a primary role in bolstering collaboration displays uptake.

Domestic Chinese Brands Dominating

China is key growth region, with its domestic brands dominating and looking for opportunities to expand export volumes. Across APAC and China combined, the corporate vertical grew by 53% in volume last year, predominantly fuelled by China, with rapid growth in education taking place in the rest of APAC. However, the region continues to be incredibly price sensitive, and lags behind other world regions when it comes to implementing collaboration tech in small meeting rooms and huddle spaces.

EMEA Ripe for Expansion

EMEA was the slowest growing region last year for WPS (Wireless Presentation Solutions). However, the trend towards smaller meeting rooms continues to take hold, and businesses in EMEA, particular Western Europe, are investing in collaborative tech for these spaces. The corporate vertical has yet to fully adopt WPS collaboration displays, but the product segment is ripe for expansion, as it gains traction and will soon become a must-have feature.

Investment in Peripheral Tech for Video Conferencing: End User Survey

“More than two-in-three respondents in our end user survey, carried out earlier this year with over 1,000 end users, told us they had seen an increased reliance on video conferencing over the last year,” says Cox. “What’s more, organisations have been investing in tech that will enhance conference calls, with plug-in static camera, plug-in microphone and headset purchases all mentioned by more than 40% of respondents. Although video conferencing activity has accelerated with the rise of social distancing measures, the transition was already in motion. In terms of future spending on equipment, many corporates have applied a short-term freeze, yet we expect this to bounce back quickly.”

The Future of Video Conferencing Solutions

“Short-term, the effects of COVID-19 have put the brakes on the market to some degree,” comments Cox, “though units shipped into both corporate and education verticals this year will still be larger than they were in 2018. Some education projects are continuing throughout 2020, but it is likely that government spending in the mid-to-long term will be significantly reduced. Despite a short-term freeze on spending from corporates, demand will recover quickly and will continue to grow, as screen sharing becomes increasingly essential.”

For further information on Futuresource Consulting’s new WPS and video conferencing report, please contact Matthew Ledgerwood via matthew.ledgerwood@futuresource-hq.com.