Analysis of the European UCaaS Market Forecast to 2029

Analysis of the European UCaaS Market Forecast to 2029

Market Growth Returns to Normal as UCaaS Proves its Merits Amid Recent Macro Disruptions

RELEASE DATE
22-Dec-2023
REGION
Europe
Deliverable Type
Market Research
Research Code: K982-01-00-00-00
SKU: TE_2023_478
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Description

Macro-economic and socio-political trends have considerably impacted the European UCaaS market since early 2020. The COVID-19 pandemic-related lockdowns triggered a massive shift to remote and hybrid work, disrupted supply chains and business models in many industries, and highlighted the need for digital transformation.

Many economies are now affected by the Russo-Ukrainian war that has further disrupted fuel and food supply chains and has contributed to inflation, increased consumer and business anxiety, and a pervasive economic slowdown. With conditions further impacted by increased unrest in the Middle East, European providers have experienced longer sales cycles, reduced deal sizes, and an overall increased caution in technology investment decision making.

UCaaS has shine in turbulent times. The services have provided the flexibility customer organisations need to navigate quickly evolving customer preferecnes, work styles and business models. European UCaaS installed base and revenue growth both increased in 2022 as organisations adjusted to new realities following disruptive conditions in 2020 and 2021 due to the COVID-19 pandemic. Both metrics are expected to continue stable low double-digit growth trajectories through much of the forecast period. Growth rates and trajectories will vary across sub-regions. This is driven by the differing GDP recovery rates, divergent current penetration levels, the distinctive market propensity to adopt hosted IP telephony and UCaaS services, as well as economic and political exposure to the war in Ukraine and the Middle East.

Competitive pressures and inflationary conditions combined to help stablise prices in 2022. Price declines were more tangible with lower-end service bundles. However, the addition of new features helped providers maintain relative price stability for more full-feature seats.     

The European market remains highly fragmented with the top 20 providers holding a combined 38.3% of installed seats at the end of 2022. Providers in the Others category combined to own 24.3% of installed UCaaS seats. The top five providers combined for approximately 37.4% share of installed users.

Key growth factors in the past have included network ownership, brand recognition, channel relationships and commitment to hosted IP telephony and UCaaS services. Amid shifting macro conditions providers with cloud-native solutions and a compelling web-based or mobile user experience have faired well in comparison to providers that require new circuits and/or hardware installations to deploy their services.

Mergers and acquisitions (M&A) have been reshaping the European competitive landscape in recent years. M&As and partnerships, among other factors, will lead to changes in provider business models. Many providers will emerge from these with more diversified portfolios and go-to-market strategies leveraging both direct sales and a variety of partner resale models.

Author: Robert Arnold

Table of Contents

Why is it Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Impact of the Top 3 Strategic Imperatives on the European UCaaS Industry

Growth Opportunities Fuel the Growth Pipeline Engine™

Scope of Analysis

Scope and Market Definitions

Scope and Market Definitions (continued)

Scope and Market Definitions (continued)

Scope and Market Definitions (continued)

Scope and Market Definitions (continued)

Key Competitors

Key Growth Metrics

Distribution Channels

Growth Drivers

Future Remote Work Plans

UCC Solution Investment Drivers

Cloud or Mobile PBX Services Investments Among Current Users

Growth Restraints

Macro Conditions’ Impact on Investments

Forecast Assumptions

Forecast Assumptions (continued)

PBX/Cloud or Mobile PBX Investments for Remote Desk Workers

PSTN Calling Plan Investments for Remote Desk Workers

PBX/Cloud or Mobile PBX Investments for In-Office Desk Workers

PSTN Calling Plan Investments for In-Office Desk Workers

Mobility is Essential, But Not Critical for All Customers Yet

Importance of Soft Phones

Importance of a Native Mobile Dialer with a Business Phone Number

Desktop Business Calling App (Desktop Soft Phone) Adoption

Mobile Business Calling App (Mobile Soft Phone) Adoption

Installed Users and Revenue Forecast—Total UCaaS Market

Net New User Forecast—Total UCaaS Market

Installed Users Forecast by Sub-Region—Total UCaaS Market

Installed Users and Revenue Forecast Analysis—Total UCaaS Market

Installed Users and Revenue Forecast Analysis—Total UCaaS Market (continued)

Installed Users and Revenue Forecast Analysis—Total UCaaS Market (continued)

Pricing Trends and Forecast—Total UCaaS Market

Pricing Trends and Forecast Analysis—Total UCaaS Market

Pricing Trends and Forecast Analysis—Total UCaaS Market (continued)

Pricing Trends and Forecast Analysis—Total UCaaS Market (continued)

Pricing Trends and Forecast Analysis—Total UCaaS Market (continued)

Pricing Trends and Forecast Analysis—Total UCaaS Market (continued)

Competitive Environment

Service Provider Market Share Analysis by Installed Users—Total UCaaS Market

Service Provider Market Share Analysis by Installed Users—Total UCaaS Market (continued)

Competitive Dynamics

Competitive Dynamics (continued)

Platform Vendor Market Share Analysis by Installed Users—Europe UCaaS Market

Current Cloud or Mobile PBX/UCaaS Solutions/Providers

Future Cloud or Mobile PBX/UCaaS Solution Providers

Importance of a Fully Integrated UCaaS Solution

Growth Opportunity 1: Mobile-first UCaaS

Growth Opportunity 1: Mobile-first UCaaS (continued)

Growth Opportunity 2: AI Infusion

Growth Opportunity 2: AI Infusion (continued)

Growth Opportunity 3: Cloud-connected Calling Enablement

Growth Opportunity 3: Cloud-connected Calling Enablement (continued)

Growth Opportunity 4: CPaaS and the API Economy

Growth Opportunity 4: CPaaS and the API Economy (continued)

Growth Opportunity 5: Contact Centre

Growth Opportunity 5: Contact Centre (continued)

Growth Opportunity 6: Vertical and Frontliner Strategies

Growth Opportunity 6: Vertical and Frontliner Strategies (continued)

Competitors Included in “Other”

Your Next Steps

Why Frost, Why Now?

List of Exhibits

List of Exhibits (continued)

Legal Disclaimer

Macro-economic and socio-political trends have considerably impacted the European UCaaS market since early 2020. The COVID-19 pandemic-related lockdowns triggered a massive shift to remote and hybrid work, disrupted supply chains and business models in many industries, and highlighted the need for digital transformation. Many economies are now affected by the Russo-Ukrainian war that has further disrupted fuel and food supply chains and has contributed to inflation, increased consumer and business anxiety, and a pervasive economic slowdown. With conditions further impacted by increased unrest in the Middle East, European providers have experienced longer sales cycles, reduced deal sizes, and an overall increased caution in technology investment decision making. UCaaS has shine in turbulent times. The services have provided the flexibility customer organisations need to navigate quickly evolving customer preferecnes, work styles and business models. European UCaaS installed base and revenue growth both increased in 2022 as organisations adjusted to new realities following disruptive conditions in 2020 and 2021 due to the COVID-19 pandemic. Both metrics are expected to continue stable low double-digit growth trajectories through much of the forecast period. Growth rates and trajectories will vary across sub-regions. This is driven by the differing GDP recovery rates, divergent current penetration levels, the distinctive market propensity to adopt hosted IP telephony and UCaaS services, as well as economic and political exposure to the war in Ukraine and the Middle East. Competitive pressures and inflationary conditions combined to help stablise prices in 2022. Price declines were more tangible with lower-end service bundles. However, the addition of new features helped providers maintain relative price stability for more full-feature seats. The European market remains highly fragmented with the top 20 providers holding a combined 38.3% of installed seats at the end of 2022. Providers in the Others category combined to own 24.3% of installed UCaaS seats. The top five providers combined for approximately 37.4% share of installed users. Key growth factors in the past have included network ownership, brand recognition, channel relationships and commitment to hosted IP telephony and UCaaS services. Amid shifting macro conditions providers with cloud-native solutions and a compelling web-based or mobile user experience have faired well in comparison to providers that require new circuits and/or hardware installations to deploy their services. Mergers and acquisitions (M&A) have been reshaping the European competitive landscape in recent years. M&As and partnerships, among other factors, will lead to changes in provider business models. Many providers will emerge from these with more diversified portfolios and go-to-market strategies leveraging both direct sales and a variety of partner resale models. Author: Robert Arnold
More Information
Deliverable Type Market Research
Author Rob Arnold
Industries Telecom
No Index No
Is Prebook No
Keyword 1 European UCaaS Market Analysis
Keyword 2 Communication Technology Insights
Keyword 3 Unified Communications as a Service Forecast
Podcast No
Predecessor K741-01-00-00-00
WIP Number K982-01-00-00-00