Magazine article CRM Magazine

Enterprise Video Conferencing, Telepresence Revenue Down: Broader Macroeconomic Factors and Cautious IT Spending Could Be the Reasons, IDC Finds

Magazine article CRM Magazine

Enterprise Video Conferencing, Telepresence Revenue Down: Broader Macroeconomic Factors and Cautious IT Spending Could Be the Reasons, IDC Finds

Article excerpt

Despite the promise of low-cost communication, the enterprise videoconferencing and telepresence technology market saw a 10 percent decrease in revenue year-over-year for the second quarter of 2012.

According to the latest IDC Worldwide Enterprise Videoconferencing and Telepresence Qview report, worldwide revenue totaled $564 million, the lowest since the first quarter of 2011. Research points to a number of macroeconomic factors, from the European debt crisis to the continual economic recovery in the United States, as causes for holding IT spending at a steady if not stagnant pace.

"We had actually forecasted some revenue growth this year, but unfortunately, the economy resulted in a cautionary spending environment," says Rich Costello, a senior research analyst for the enterprise communications infrastructure service at IDC. "We saw that ... caution in areas like government spending and other public-sector areas and education."

Several enterprise videoconferencing vendors have been negatively affected by this caution. Cisco Systems saw a 23.7 percent year-over-year decrease in the second quarter for its videoconferencing revenue, and Polycom experienced a 4.3 percent year-over-year decrease, the IDC report indicates.

"We think some of the activity related to the tough economic environment will ... linger through the third quarter, possibly into the fourth quarter, but we do expect there to be a rebound in IT spending in 2013," Costello projects.

In Gartner's latest worldwide IT spending forecast, research vice president Richard Gordon said, "There has been little change in either business confidence or consumer sentiment in the past quarter, so the short-term outlook is for continued caution in IT spending." That caution was reflected in the growth rate in reported IT spending, which has steadily decreased.

Worldwide IT spending on telecom equipment reached $340 billion in 2011, up 17.5 percent from 2010. In 2012, estimated spending was at $377 billion, up 10.8 percent from 2011. The forecast on telecom equipment in 2013 is $408 billion, up 8.3 percent from 2012's forecast, which is less than half of what it was in 2010.

According to Forrester Research's latest "European Information and Communications Technology Market" report, spending on communications equipment is expected to drop 1.7 percent between 2012 and 2013, with computer equipment expected to remain flat; computer software purchases are expected to grow by 1.7 percent.

Despite all fingers pointing to IT reining in spending until 2013, IDC predicts interest in enterprise videoconferencing and telepresence will continue, Costello says. …

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