Worldwide UC&C Revenues Grew 7.2% in Q1 2023, Driven by UC Collaboration and UCaaS Solutions, While the CPaaS Market Grew 10.2% on Sustained Demand for Messaging Platforms, According to IDC

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NEEDHAM, Mass., June 23, 2023 – Worldwide revenues in the Unified Communications & Collaboration (UC&C) market grew 7.2% year over year to $15.4 billion in the first quarter of 2023 (1Q23), according to the International Data Corporation (IDC) Worldwide Quarterly Unified Communications and Collaboration Tracker. For the full year 2023, worldwide UC&C revenue is forecast to grow 8.2% year over year to $64.2 billion. In volume terms (units/lines/licenses/seats), the worldwide UC&C market grew 7.7% year over year in 1Q23 to 587.6 million. The slightly lower growth rates in revenue compared to volume indicates continued downward pricing pressure per unit sale.

"Businesses continue to increasingly invest in cloud-based UC Collaboration and UCaaS (including telephony) solutions, while moving away from strictly hardware-based, premise-based IP PBX/UC systems," said Jitesh Gera, research manager, Unified Communications and Collaboration at IDC. "Anything that provides more communication flexibility and interoperability at a lower cost has buyers' attention. Interoperability and integration are key for the success of videoconferencing systems and cloud-based UC collaboration vendors, and equally key for their clients' outcomes as well. The benefits that a cloud-based approach brings only increase with the AI capabilities being rolled out, handing enterprises the keys to drive value across their business quickly and cost-effectively."

Meanwhile, worldwide revenues in the Communications Platform as a Service (CPaaS) market grew 10.2% year over year but declined 3.5% sequentially to $3.6 billion in 1Q23 due to economic uncertainty and an elongated sales cycle. CPaaS includes messaging, voice, video, and email as some of the key segments. As of 1Q23, messaging accounts for the largest share of CPaaS revenues at 67%, while voice accounts for 15%. For the full year 2023, CPaaS revenues are expected to grow 13.3% year over year to $15.7 billion.

"The CPaaS market is maturing, and companies are rationalizing their spending in this segment," said Courtney Munroe, research vice president, Worldwide Telecommunications Research at IDC.

UC&C Vendor Highlights

• Microsoft extended its dominance in the worldwide UC&C market, increasing its revenues by 22% year over year to $6.6 billion in 1Q23, while gaining 510 basis points in market share to account for 42.6% of revenues last quarter.
• Zoom's revenue grew 1.8% year over year in 1Q23 to roughly $1 billion. It overtook Cisco to acquire the distant second place by market share, accounting for 6.8% (down 40 basis points) of the market last quarter.
• Cisco witnessed a sharp year-over-year decline of 16.1% in its 1Q23 UC&C revenues, amounting to $911 million. Its market share fell 160 basis points to 5.9% in the last quarter.

CPaaS Vendor Highlights

• Twilio, Sinch, and Infobip accounted for almost half the worldwide CPaaS revenues in 1Q23. However, the competitive landscape is changing rapidly with some of the relatively smaller players growing much faster than the leaders. For instance, Route Mobile grew 48% year over year while Vonage also saw higher-than-average market growth in the last quarter.
• Twilio accounted for a 23.4% market share (up 120 basis points year over year) with revenues touching $847 million in 1Q23.
• Sinch's revenue fell 4.4% year over year to $590 million, while its market share fell 250 basis points to 16.3% of the worldwide CPaaS revenues in 1Q23.

The IDC Worldwide Quarterly Unified Communications and Collaboration Tracker provides total market size and vendor market share data in an easy-to-use Excel pivot table format that includes. IP Telephony/UC Systems (IP Phones, IP PBX/UC Systems), Enterprise Videoconferencing Systems (Videoconferencing Room Endpoints, Huddle Room Endpoints, Videoconferencing Infrastructure), UC Collaboration, and Managed/Hosted Voice/UCaas (Hosted Voice/Public Cloud UCaaS, Managed Voice/Private Cloud UCaaS). Measurement for the UC&C Tracker is provided in vendor revenue and unit/line/license/seat shipments. Additionally, the Communications Platform as a Service (CPaaS) market is covered as an optional add-on.

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