Cavell’s set of 2024 Cloud Comms Market Reports surveyed more than 100 service providers across the UK, Europe and US.
The findings also reveal that mobile UCaaS services are growing in importance, now accounting for more than 15 per cent of the market.
However, the total available market is reducing because the same number of on-premise PBX users are not moving to become cloud PBX users. Instead, many enterprises are putting some or all their employees on collaboration-only licenses without an external PSTN functionality.
Other key findings include:
• 62 per cent of providers are diversifying their portfolio to ensure the resilience and adaptability of their telecommunications business;
• 48 per cent are building AI capabilities into their products - to drive cost reduction in operators businesses;
• One third (33 per cent) of users will be Microsoft Teams voice enabled by the end of 2028
Cavell has also noted a reduction in both margin and revenue streams relating to traditional cloud communication and UCaaS services for more than 36 months now. This has been acknowledged by more than 40 per cent of respondents who have recognised a decrease in UCaaS revenue.
Dominic Black, director of research services at Cavell, said, "Historically, providers won new users by migrating from on-premise solutions. However, as the market has matured this has changed as there are fewer on-premise deployments to migrate. This will drive more competition and the need for providers to differentiate whilst also potentially starting pricing consolidation.
"Indeed, we have seen from our research that the proportion of customers being won from a competitor's UCaaS solutions has been increasing steadily in the last few quarters. Our latest research shows that nearly half (49 per cent) of cloud communications providers have won the majority of their customers from competitors, which is the first time this figure has matched the percentage won by migrating from on-premise solutions."
He added, "Our research also shows that Microsoft Teams continues to grow in importance in the enterprise segment with a significant portion of the market enabling voice services within Microsoft Teams. Operator Connect is growing in importance, but Direct Routing is still the most adopted solution at the moment - although this is going to change in the future. Teams Phone Mobile is still in its infancy in many markets with only a few operators having launched services.
"The convergence trend is also being accelerated by the increasing overlap between the communications, IT, and productivity sectors enabled by collaboration solutions such as Microsoft Teams. Modern collaboration solutions now offer capabilities that would have previously fallen into different areas of technology. Now, as these solutions become more popular globally, partners who traditionally would have focused on IT services are encountering established communication partners and vice versa."
Cavell discussed the current state of the market at its recently held Cavel Summit Europe London, which was attended by close to 400 senior figures from telcos, cloud comms service providers, MSPs, channel providers and vendors.