According to a recent study by International Data Corporation (IDC), Microsoft has tripled its market share between 1Q 2011 and 2Q 2015 in the Europe, Middle East, and Africa (EMEA) IP PBX and unified communications (UC) platform market and become a head-to-head competitor to the vendors that have traditionally dominated this market. “This is a result of a strategy tuned to the transformations underway in the unified communications and collaboration (UC&C) market. All other vendors and service providers should regard Microsoft’s rise as a call to action,” says Program Manager Michael Vorisek, IDC CEMA.
For many years, the EMEA IP PBX and UC platform market had been dominated by five companies: Alcatel-Lucent Enterprise, Avaya, Cisco, Aastra (now part of Mitel), and Unify (formerly Siemens Enterprise Communications). These players’ market shares used to vary between 10% and 20%, with no other company capturing a comparable slice of the pie. IDC’s research, published in December 2015, shows that this has now changed. Microsoft’s market share has grown from 4.8% in Q1 2011 to 15.5% in Q2 2015, and the company has become the fourth-largest player in the Q3 2014–Q2 2015 period, thus breaking into the long-established leader group.
This is not a random rise of a vendor, says IDC. The companies that had dominated the EMEA IP PBX and UC platform market come from equipment- and on-premises-focused backgrounds. They were too slow to react to the rapidly changing adoption patterns in the market, and Microsoft seized the opportunity. IDC sees related shifts taking place in customer adoption patterns in the EMEA UC&C market today: organisations started using unified communications as a service (UCaaS) instead of deploying on-premises solutions; portfolios have radically simplified, and the number of premium features for which vendors can be charging fees has decreased; customers now require easy access to UC&C functionalities irrespective of end-user’s preferred endpoint; and demand has grown for traceable improvements to business processes as a result of UC&C deployments. Microsoft’s rise has relied on its ability to profit from all these changes.
According to IDC, this is due to the company’s overall strategy. Microsoft understands its UC&C product Skype for Business purely as software. Therefore, it has built the options for cloud delivery and mobile access natively into the product. Businesses pay fees based on end-user functionality, while no charges are added for different access modes or preferred customer endpoints. The vendor is also strongly focusing on as-a-service (aaS) version of the product, Skype for Business Online. Microsoft aaS packages often combine cloud and hardware-based resources for delivering functionalities, while businesses are charged on a “pay-as-you-go” basis. Last but not least, Microsoft bundles Skype for business with other productivity software included in its Office suite.
“Traditional players must either quickly adopt to this challenge or prepare to lose market share,” comments Vorisek. “That goes for equipment vendors right now, but, potentially, for services providers as well.”
IDC’s study Transforming the Market with Cloud and Software Focus: Skype for Business as a UC&C Platform evaluates Microsoft’s strategy in the UC&C market, with particular attention paid to the company’s position in EMEA. It examines Skype for Business’ strengths and weaknesses, and the options left for competitors (both services providers and vendors) to respond. The document leverages IDC’s survey data on customer needs and priorities and our installed base models. It includes further splits of Microsoft Skype for Business revenue and installed base in EMEA, as well as EMEA-level market share information on Microsoft and its main competitors: Avaya, Alcatel-Lucent Enterprise, Cisco, Mitel, and Unify.
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