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Videoconferencing and Telepresence Market Takes Revenue Hit, Finds Firm

September 20, 2012 | Telepresence Options
Firms' investment plans expected to spur videoconferencing turnaround

September 19, 2012 | By Fred Donovan

Revenues generated by the enterprise videoconferencing and telepresence market dropped to $644 million in the second quarter of 2012, a 6 percent decline, according to a new report by market research firm Infonetics Research.

Infonetics Directing Analyst for Enterprise Networks and Video Matthias Machowinski attributed the revenue decline to economic troubles in Europe, shrinking public sector spending and a shift toward lower-priced video conferencing products.

Market leader Cisco took the biggest hit, with revenues declining 17 percent sequentially and market share shrinking by 5 points. Other vendors tracked by Infonetics include Avaya's Radvision, Huawei, Logitech's LifeSize and Polycom.

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Unit shipments of telepresence and desktop systems were down by more than 45 percent year over year.

One bright spot in the market was PBX-based systems, which posted double digit growth for the quarter, fueled by demand for videophones.

Machowinski expects the current revenue slowdown to be temporary because overall shipments of hardware endpoints demonstrated double digit growth year over year, which suggests continued "strong demand for videoconferencing capabilities."

The Infonetics analyst's prediction of continued strong demand for videoconferencing is supported by recent surveys about investment plans for videoconferencing.

A survey of chief financial officers by consulting firm Deloitte found that investment in videoconferencing capabilities leads the list of technology investment plans. A full 56 percent of respondents said they plan to invest in videoconferencing, followed by data center efficiency equipment (52 percent) and electric vehicles (35 percent).

A Forrester survey found that a majority of firms plan to adopt desktop videoconferencing. The survey of more than 1,000 firms discovered that companies want to improve the quality of their virtual meetings through videoconferencing.

"Mobile executives want video for better work-life balance, managers want it to see that their direct reports aren't distracted, and multicultural organizations want it to foster the trust and improved communication that comes with being able to read the body language of remote team members," the Forrester report explained.

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