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COVID-19 revives the video conferencing equipment market

COVID-19 revives the video conferencing equipment market

Author: Prachi Nema, Senior Analyst, Enterprise Communications, Omdia

Once a high-growth segment, the video conferencing equipment market (H.323- and SIP-based endpoints and infrastructure) has struggled, producing uneven growth as economic issues affected various regions and customers and as product segments such as immersive telepresence and hardware-based multipoint control units (MCUs) fell out of favor. As a result, the market for standards-based video conferencing equipment has been relatively muted since 2017. However, COVID-19 is breathing new life into this market and driving broad-based demand for video equipment of all types across all regions.

Over the last few years, video conferencing infrastructure equipment sales have been impacted by the proliferation of cloud-based video collaboration tools including UCaaS, team collaboration, and video conferencing services. For many organizations, cloud is a quick path to provide an easy-to-use, low-cost video conferencing experience without dedicated MCUs and other infrastructure, allowing access from any device, at any time, and from any location. As these services leverage software-driven codecs, they have also hampered the growth of dedicated video conferencing H.323- and SIP-based endpoints from vendors such as Cisco, Poly, and Lifesize. This is primarily because these endpoints do not talk directly with proprietary cloud video conferencing services, so in order to leverage these endpoints in meeting rooms, enterprises must deploy an interoperability solution.

Instead, the market has shifted toward plug-and-play video peripherals (USB conference cameras) that work seamlessly with cloud services and are often considerably cheaper as they do not incorporate a hardware-based codec but connect to a soft codec installed on a Next Unit of Computing (NUC) or a PC/laptop. Many vendors now offer conference cameras that seamlessly interface with soft codec solutions including Logitech, Poly, Aver, Huddly, and Yealink. Peripherals are increasingly becoming comparable to standard endpoints in delivering a genuine, natural meeting room experience, and their low cost and ease of use is propelling widespread usage across SMEs and enterprises.

Although USB plug-and-play conference cameras work perfectly well in meeting rooms, standards-based endpoints offer a higher quality of experience, including high definition audio and video that are simply beyond the scope of conference cameras. Being relatively expensive, many SMEs and enterprises have struggled to justify investments in H.323- and SIP-based video conferencing endpoints. However, during COVID-19, some governments and a number of enterprises in verticals including finance, healthcare, and education have again started leaning toward standards-based video conferencing for data privacy and security reasons. Although a large number of employees in these verticals continue to work from home and the path to return to the office remains highly uncertain for the majority of the workforce, offices are being revamped to ensure that these facilities are ready when employees do start working from offices again. More importantly, they also enable remote workers to collaborate seamlessly with their office-based colleagues. More broadly, Omdia expects COVID-19 to have the following impact on the video conferencing equipment market:

  • A phased increase in video conferencing equipment sales that require installation by on-site personnel
  • A rapid growth in plug-and-play video conferencing equipment
  • Stalled meeting room projects will resume in 2H20 as enterprises plan their return to offices in the coming months
  • A decline in huddle room investments as social distancing guidelines limit the usability of these spaces
  • Little investment from industries including transportation, hospitality, travel, entertainment, retail, and events—all of which have been decimated by the pandemic
  • Increasing adoption of cloud-based video conferencing, which will drive USB conferencing camera growth
  • Many verticals finding new video uses cases to wade through the COVID-19 pandemic, including healthcare (telemedicine), education (e-learning), and government organizations, which will drive growth
  • The creation of long-term opportunities for vendors, driven by the shift toward “work from anywhere”
  • In the short term, sales driven by new technologies and evolving meeting room layouts designed to enable social distancing and allow office-based employees to communicate with remote workers

In the long term, Omdia expects the market to be stable with $2.9 billion in revenue in CY24, supported by increasing demand for better collaboration tools and remote and flexible work. However, cloud video conferencing services will be the main beneficiary as they can scale up instantly and deliver video collaboration from anywhere and on any device, including smartphones. The following factors will drive the video conferencing market beyond 2020:

  • Advances and proliferation of technology (e.g., HD video, bandwidth, artificial intelligence) that dramatically improve the user experience and provide greater utility
  • Demographic and communication trends (e.g., distributed teams, acceptance of video among users)
  • Specific industry use cases such as tele-learning and tele-medicine, where video can improve access to services and/or lower costs
  • Organizations are planning to grow their video conferencing infrastructure, a trend Omdia consistently finds in user studies; overall, demand for video conferencing capabilities across mid-market and large enterprises is growing, and Omdia’s March 2020 Unified Communication (UC) Strategies and Vendor Leadership North American Enterprise Survey found that video is an increasingly important component of the UC toolkit, with 88% of respondent organizations planning to use video conferencing as part of their UC solutions by 2021

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