Cloud communications emerged approximately two decades ago and, since then, business models and value propositions have evolved dramatically. Market power has shifted many times across vendors and service providers as various factors, including innovation velocity, strategy ingenuity and pocket depth, pushed certain participants to the top of the ladder, only to favor others a few months or years later.

Telcos and communications service providers (CSPs) dominated the early hosted telephony and unified communications-as-a-service (UCaaS) market. They had recognized that their future success would be tied to a converged Internet Protocol (IP)-based network and many had smartly begun disrupting themselves and their legacy Centrex and circuit-based telephony services. Capitalizing on the power of their networks, customer bases and highly symbiotic relationships with hosted IP telephony pioneers such as BroadSoft and Metaswitch, telecom operators were the first to launch private branch exchange (PBX)-replacement services that provided a robust feature set and the service reliability most businesses expect. However, as Internet access became faster, more reliable and nearly ubiquitous in many countries around the world, nimble and innovative over-the-top UCaaS providers using their own proprietary platforms gained traction and visibility, challenging telco supremacy in the cloud communications space.

Highly impactful demographic and socio-economic developments will continue to reshape the environment in which businesses operate and leverage technology for success. The new trends will favor technology companies with strong expertise in a variety of business software tools. So where does this leave the telecom operators and other UCaaS resellers? How can they position for success as the market rapidly evolves?

As UCaaS markets around the world increasingly mature, service providers will need to find new ways to stay relevant and thrive. Telecom operators will need to make important decisions about whether to host and manage UCaaS platforms on their own networks, resell third-party UCaaS services and/or provide value-added services around third-party UCaaS solutions. Service provider strategies will be determined by their existing capabilities and vision for what role they wish to play in the market.

This market analysis provides an in-depth perspective on technology and market trends impacting the UCaaS market and the different market participants. More specifically, it identifies threats and growth opportunities for telecom operators. The study also provides examples of best practices in the UCaaS industry and recommends strategies for success. This analysis can be leveraged by market participants to identify partnership opportunities, enhance their portfolios and develop sustainable growth strategies.

Author: Elka Popova